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Groupon Scores Hit With Businesses, Deal-Hunters

While many businesses are happy to gain new customers with their offering on Groupon.com, one business owner says too much Groupon could put a small establishment under.

Groupon Scores Hit With Businesses, Deal-Hunters Groupon Scores Hit With Businesses, Deal-Hunters

Deal-hunters love Groupon.com, the company that harnesses group-buying power to offer online coupons to local establishments at sometimes mind-blowing discounts. Local businesses love it too.

Boogaloo recently offered its second Groupon in six months, and Teddy Bloom, front-of-house manager for the Maplewood restaurant, said he is "definitely" happy with the results.

"It brings in people who may not have been to Boogaloo before," he said. "They like their meal and they say they'll definitely come back."

Each day, Groupon.com offers subscribers a coupon good for a big discount at a local eatery or other establishment—if enough people want it. The business offering the Groupon sets the number of buyers it needs for the deal to fly.

Customers must buy the Groupon by midnight that day, but their credit card isn't charged until the minimum number is met. If not enough people bite, the deal is cancelled. Coupons are good for a year.

"The idea is connecting customers to local businesses that we've vetted and we feel are quality merchants," Groupon spokeswoman Julie Anne Mossler said. "We do that by offering a discount of 50 to 90 percent off, and that's done by just getting the power of the group together."

If you caught Boogaloo's Groupon, you paid $13 for a coupon worth $30 on your next meal.

The restaurants might not make money with such deep discounts, but Bloom said the advertising and good vibes makes it worthwhile for the businesses.

"If we get new customers coming in, they recommend us to their friends," Bloom said. "Even if we don't make that much on the Groupon, we definitely profit from it just by getting new clientele."

Blooms said the restaurant has seen an uptick in business after each Groupon, with the restaurant busy for days afterwards.

"This has kind of given us a full house throughout the week," he said.

But not all restaurant owners are crazy about the Groupon philosophy.

Paula Anderson, owner of Maplewood's Nosh, said although she offered a coupon as the "Hot Sauce Deal of the Day" on Saucemagazine.com, she wouldn't consider doing Groupon.

"We could never afford to do Groupon," she said. "It would put us out of business."

Anderson said her menu features free-range, organic, locally grown food. The Sauce coupon was for $6 off a $15 bill, she said.

"For some items that may not even cover our food costs," she said. "Our average tickets aren't big enough."

Bill Sanders, co-owner of Ray's Donuts in Brentwood, said Groupon gave his business effective advertising when the doughnut store recently offered a $4 coupon for $10 worth of doughnuts and coffee.

"Advertising is expensive. This way you break even but yet you get an influx of new customers, maybe 60 percent who have never been there before," Sanders said. "What's better than that?"

Anderson doesn't think the coupon is sustainable for her restaurant. She noted a friend recently bought 25 $25 restaurant coupons for $2.50 each.

"A small restaurant could technically sell a big-discount coupon and so many people showed up to redeem them, it could put them out of business because they don't recoup the money to buy more food," she said.

But Mossler said the business tells Groupon how many customers it needs for the deal.

"They might say 10 or they might say 100," she said. The Groupon is issued only when the number is met.

There are others who aren't Groupon fans. "A lot of people [using coupons] end up stiffing the waiter," Anderson said. "The waiters hate them. Every single server I know is like, 'Oh, we hate those things.'"

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