Restaurants That Partner with Groupon Got Bad Reviews

Poor Groupon. First, it had to restate its earnings from a "gross profit" of $270 million to an actual loss of $413 million, then the wheels of its IPO wagon started falling off. Now this bad news: a study by computer scientists at Cornell found that partnering with Groupon actually hurt a restaurant's reputation.

These guys have studied over 16,000 Groupon deals in 20 US cities between January and July this year. They monitored each deal every ten minutes or so to determine how sales varied over time and also counted the number of Facebook likes that each deal generated.

At the same time, they collected Yelp reviews--some 56,000 of them for 2,332 merchants who ran 2,496 deals--examining how merchant reputations changed before and after a Groupon deal. [...]

But their most controversial finding is that a Groupon deal seems to have an adverse impact on reputation as measured by Yelp ratings. Their analysis shows that while the number of reviews increases signifificantly due to daily deals, average rating scores from reviewers who mention daily deals are about 10% lower than scores of their peers.

So these Grouponers (or are they Grouponies?) are unhappy with the service even with 50% off coupon? Sounds like a case for this Tumblr blog!

Link - via bon appétit


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From what have found working in restaurants is that whenever there is a sale or deal it brings in a different kind of customer. They are usually more rude, more demanding, and less satisfied.

For instance when I worked at Subway and they would do 5 dollar footlong month, the customers that came in would want on average twice as many vegetables and sauce on their sub than normal customers, would complain that extra cheese and meat wasn't free and would usually end up being more rude then the regulars who come when there is no deal.

If groupon brings in this same class of people who possibly want as much as they can get for as little as they can pay it would make sense that they would leave bad reviews that normally the restaurant would not receive.
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But... weren't they already receiving bad reviews before Grupon?

From the six months prior to the Groupon offer, there's already a tendency towards lower reviews. Perhaps they were already failing and thought Groupon Costumers could help them increase their rating... but they didn't improve what was already wrong, so they just got a lot of unhappy clients.
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Cognitive dissonance may work double-time here. At the time they pay less for a meal, the Grouponers have less reason to rationalize the value they're getting, so they see it as worth less. Then, once their discount is no longer available, those among them who really needed the discount have a strong reason to rationalize the experience as not having been that great anyway, since they can no longer afford it.
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