Groupon has a new deal up for grabs, but don't pull out your credit card just yet. As the company continues to pull away from the volatile daily deals business, it is launching a premium channel for discounted restaurant reservations born out of its Savored acquisition last September. The latest offering from Groupon points to a new model, and perhaps burgeoning strategy, where prepayment and vouchers need not apply.
Groupon Reserve kicks off with more than 600 restaurants featuring discounts as high as 40 percent in 10 major U.S. cities, but that's just the beginning. Groupon isn't shy about sharing its plan to expand to more industries and cities using the same variable pricing structure.
"What we're trying to do with Savored and now with Groupon Reserve is introduce the yield management model that's been so successful in the hotel and airline industry to the restaurant industry," Ben McKean, founder of Savored and GM of Groupon Reserve, tells ClickZ. "We provide restaurants with a reservation platform where they can carve out specific inventory that is otherwise going empty."
Many restaurants have trouble filling all of their tables Sunday through Thursday, but some restaurants might have empty tables over the weekend. The idea is to fill those seats, even if it requires the restaurant to offer a 20 to 40 percent discount on those otherwise vacant tables. Empty seats on airplanes, vacant rooms at hotels, and lonely restaurant tables are all missed opportunities with unavoidable associated costs. Now that Savored's restaurant reservations platform is integrated into Groupon Reserve, McKean and his team are searching for other ways to make the premium channel an integral part of the online deals marketplace that Groupon wants to become.
"Groupon Reserve is an important step in our journey to become the leading marketplace for online deals, where consumers can come to Groupon and discover great businesses at unbeatable prices," notes Groupon CEO Eric Lefkofsky in a prepared statement. "Reserve provides these businesses with a yield management solution to bring customers through their doors at the times they need them the most."
And don't expect to pay upfront or have to sheepishly inform your server that you have a voucher when you show up for that meal. Groupon Reserve is taking a different approach to customer acceptance and redemption at the point of sale.
"We felt like it was important that we have voucher-less redemption," says McKean. "If you're a high-end restaurant, maybe 10 to 20 percent of your tables are there with a discount so the majority of the diners in the restaurant are not there with a discount. You don't want customers that are there paying full price finding out that the guy next to them is actually getting 20 to 40 percent off. We made it so it's a discreet system and restaurants are incentivized to make it work well."
Groupon Reserve plans to grow into other categories the site is well known for such as beauty spas, travel, entertainment, and products - all at a discount, of course. "If you think about it, this model absolutely applies to additional verticals," says McKean.
"It really enables the customer to use Groupon as this online deals marketplace rather than just getting an email in the morning and seeing what's in that email," he says. "Now that we have significant consumer scale, we really expect this to accelerate and grow very quickly."
Groupon Reserve is live in Atlanta, Boston, Chicago, Denver, Los Angeles, Miami, New York City, Philadelphia, San Francisco, and Washington, D.C.
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Matt Kapko has been writing about mobile since 2006, before it became cool. Based in Long Beach, CA, he has covered mobile entertainment, digital media, marketing, and advertising for several business media outlets. A former editor and reporter for RCR Wireless News, paidContent, and iMedia Connection, Matt is a regular freelance reporter for ClickZ. You can follow Matt on Twitter at @MattKapko or drop him a line at firstname.lastname@example.org.
March 19, 2014