After I posted a couple of months ago that L’Angolo Italian restaurant on Nicholson St had closed, a discussion developed in the comments about their use of discount coupons. I have a strong personal distaste of and aversion to the discount coupon or voucher offers proliferating online. I see them as unscrupulous and unethical schemes designed to benefit their creators, not business or customers.
I also consider their use to be a sign that the restaurants who participate are doing so in a desperate attempt to survive when faced with few customers and ongoing losses. But trying to earn new customers with a loss leader makes no sense and cannot be sustained.
We can discuss Brunswick St’s Cruzao Arepa Bar as an example. I liked it when it first opened, but then it became apparent from repeated visits that the service was consistently slow and haphazard, and the coffee deteriorated in quality. Now I only go to Sonido on Gertrude St for arepas.
Cruzao seemed to be struggling for customers and changed its business model, becoming more of an evening bar with live music and less a daytime cafe. It also started using coupons, and there are some strong complaints on a commercial review aggregator site about the consequences.
Offering ‘all you can eat’ can be deceptive if the eating time is limited (two hours) and the service continues to be slow, meaning that they never deliver enough food. In other words, you run out of time before you run out of appetite and you feel cheated. All you can eat becomes barely enough and perhaps not even worth the (discounted) price.
Coupon companies in the US are facing increasing scrutiny about the legitimacy and efficacy of their business models. Coupons are basically a loss leader for restuarants and perhaps also for the coupon companies, leading to suggestions that they are Ponzi schemes.
Coupons may also lead to a restaurant receiving more negative reviews, as we have already seen with Cruzao. Offering loss leading services leads to an inevitable reduction in quality, which is then justifiably criticised by consumers.
What’s the point of making a loss on providing a poor quality experience to new customers? How can that be considered a sensible marketing initiative designed to convert new customers into repeat visitors?
Coupons did not help save L’Angolo, and they seem to be contributing to the creation of more negative reviews for Cruzao. As I previously argued, the sign that a business has resorted to coupons is a sign that they are trouble. To me that means the experience they’re offering may not be very good and is best avoided.
This article questions the growing number of deals and coupons and indicates that consumer complaints about them are increasing. Consumer Affairs Victoria has some helpful advice for consumers and businesses.
Vouchers appeal to greedy people with a desire for cheapness over quality. Discerning customers may realise that they are likely to get what they pay for and, therefore, the desperate marketing of these dubious offers should be ignored.