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In the Media




Coupons on Danforth Break Patterns; Greektown Restaurant Attracts New Customers
Through Group Discount




Chloe Fedio, Toronto Star - Thursday, October 13, 2011

Lambros Vassiliou has 558 customers in-waiting for his 75-seat Greek restaurant on the Danforth.

It might seem like a dream come true for a small-business owner, but Vassiliou knows the guaranteed clientelle will likely come in at a financial loss. Each has purchased a $50 voucher for just $24 on the group buying website, dealfind.com.

Still, Vassiliou believes it's a way to give Avli an edge on a strip with many Greek restaurants.

"It's a nice way to treat someone for dinner, and, realistically, you're only paying for yours. It benefits the customer," he says. "I recommend it. It's a very good way to let a lot of people know about your restaurant - and they actually experience it."

Vassiliou is one of a growing number of restaurant owners offering deep discounts for food and drink to those who purchase in advance. The marketing strategy secures customers, who make a financial commitment to come to the restaurant weeks or months before they actually sit down at a table. And for Vassiliou, who opened Avli at Chester and Danforth in 1995, group coupons beat the more traditional forms of advertising.

"You can advertise on the radio, newspapers, TV - and that costs money. You pay upfront and you have no idea if anybody is going to come in to your restaurant," he says.

Dealfind is the polar opposite, explains Gary Lipovetsky, president of the Toronto-based site.

"There is no upfront marketing investment on the side of the merchant, and zero risk," he says. "The only cost associated with the deal is sharing a portion of the sold vouchers with Dealfind after the deal has expired. So it's the first truly pay-for-performance option for business, with tremendous brand-building upside."

Business owners tap into the site's registered database of users, who sign up for daily emails on bargains close to home on everything from carpet cleaning to spa packages. The company promotes deals in 48 markets in Canada and the U.S.

It's just one of dozens of sites offering discounts of 50 to 90 per cent, alongside Living Social, Wagjag, Deal-of-the-Day and Groupon.

Social media has caused a shift in marketing strategy, says Alan Middleton, a Schulich School of Business marketing professor.

"We're looking for more immediate business contacts, networks and results from all the marketing and communication that we're doing," he says. "What's sprung up is a number of different organizations that not only help you connect, but also offer an incentive."

Unlike traditional coupons that offer a discount at the time of purchase, people actually invest in group coupons, prompting them to use the vouchers much more quickly, Middleton explains.

"The incentive is the change. It has the advantage of being a very good trial-inducer. Going to a restaurant - unless it's right next to where you live or work - requires a change in your pattern of life. What these restaurants are trying to do is to get people to get into new patterns."

Although a discount of more than 50 per cent may seem counter-intuitive, it gives restaurant-goers an excuse to splurge on dessert and alcohol, Middleton notes - and the upsell is where the profit comes in.

"Substantially subsidizing the cost of the basics is often a play. Once you've got them in the restaurant, you can shift them onto the other high-margin stuff. It's a disguise."

Vassiliou sold vouchers for the first time last November. A year later, he has learned that many diners who come in with a voucher won't spend more than the face value. However, a taste of one of the restaurant's signature pies stuffed with onion and lamb or chicken and mushroom might turn bargain-hunters into repeat customers who will pay full price in the future.

"This deal is not to make money. I'm lucky if I can break even on my food cost," he says. "It makes people come in. That's the bottom line."

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