The storefront dining room at hotdog stand Wiener and Still Champion, 802 Dempster St., is notably compact. There are four booths and a couple of tables, plus a garbage receptacle within an arm’s length of most seating. Just five footsteps separate the one-door entryway and ordering counter.
So when owner Gus Paschalis issued a $4 Groupon for $10 worth of his inventive cuisine – including country-fried bacon and cornmeal-battered franks – last October, he foresaw some logistical problems.
“The first day – it’s just craziness,” he said. “The line was out the door, and we’re not the fastest place to begin with, since we’re making everything from scratch.”
Paschalis added that wait times exceeded a half an hour during the first week’s lunch rushes, when regular customers already flood the Dempster Street eatery. The final count of Groupons sold for the 60 percent discount easily surpassed 2,500, he said.
But Paschalis is hardly an outlier as more and more daily-deal startups expand into Evanston and task small-scale business with handling sometimes overwhelming numbers of bargain-hunters. Some Evanston restaurateurs are even beginning to resist the Groupon-fueled craze altogether, citing what bopNgrill owner Will Song described as a “completely oversaturated” market of deal purveyors.
“There’s so many competitors out there that it’s hard to keep track of which is which,” he added, referring to Groupon imitators such as LivingSocial, Scoutmob and Daily Candy Deals.
Groupon spokeswoman Julie Mossler said she does not blame Song for being essentially fatigued by all the collective-buying ventures. But Groupon edges the contenders because it “pioneered the space” and maintains deep local knowledge of individual markets, she added.
“We don’t consider them our competitors,” Mossler said. “We consider them our clones. We weren’t one of the first – we were the first.”
Song’s American-Korean burger shop, 1903 Church St., across from Evanston Township High School, first offered a $5-for-$10 Groupon last August. He said a close friend working for Groupon at the time convinced him to commit to the sale, but not without a cautionary preface.
“He was like, ‘Just be ready because that’s your only chance with first-time customers,'” Song recalled. “There was definitely a pretty big surge for the first week.”
But he quickly heeded his friend’s advice before the deal’s debut and hired five new employees in advance. Although this precaution curbed the initial frenzy, Song said the 50 percent discount’s popularity – more than 1,500 Groupons were purchased – resulted in customers basically “bombarding” his business for a short time.
The ramped-up volume was still unsuprising, he added.
“I had heard stories about how the Groupon effect can be intimidating,” Song said.
The temporary influx of bargain-hungry eaters is especially grueling for smaller operations, said Philippe Andre, wine director at Oceanique, 505 Main St. The French-American restaurant has now issued three Groupons with more than 3,000 total buys, a point of pride for Andre, who added that Web-based strategies are “very important” to the family-owned business.
And although he said Oceanique has managed smooth service in the face of Groupon droves, Andre acknowledged other restaurants’ troubles. He said many local eateries fail to realize the vast range of daily-deal emails and end up facing enormous crowds throughout the Groupon offer’s eligibility period.
“They don’t understand what they’re getting themselves into,” Andre said. “The sheer logistics are, ‘You’ve got to put a cap on these things.’ If you can’t handle it, you can’t handle it.”
This perfect storm of torrents of anxious customers and countless Groupon mimics has inspired some City entrepreneurs to shun the daily-deal concept altogether. Eddie Lakin, who owns Edzo’s Burger Shop, 1571 Sherman Ave., first received a soliciting call from Groupon two weeks before his downtown restaurant opened in October 2009.
Now, he estimated he fields about two to three calls per week from Groupon-like vendors – all of which he outright declines.
“I can’t even keep them all straight,” Lakin said. “Anyone gets wind of a new business opening and the calls start.”
His main objection, though, centers more on the economic efficacy of offering, for example, $10 worth of food for $5. Because Groupon typically absorbs half of the discount prices, Lakin said that leaves him with a measly $2.50, 75 percent less than the revenue he could have garnered from a regular customer.
Consider average food costs of 30 percent and the conflict becomes even more obvious, he added.
“I just don’t see them as financially wise,” Lakin said. “It’s something people do as a loss leader.”
Groupon’s marketing pitch that 20 percent of deal purchasers won’t even redeem their daily discount, thus allowing him to pocket their unused money, also fails to impress him. Mossler clarified that such a talking point is “not really part of our selling strategy.”
“I don’t want to sit here and hope people don’t use a coupon,” Lakin said.
Meanwhile, other business owners are contemplating whether their introductory experiences with Groupon warrant another go-around.
Song said he’ll most likely turn away future daily-deal proposals, primarily because his first effort was meant as a gesture to his Groupon-employed friend.
Andre confirmed he certainly would be open for a fourth Groupon, but also noted that Oceanique accepts expired discounts out of customer appreciation. Thus, although his first three Groupons are well past their expiration dates, he still honors first-time diners who otherwise would not have reserved a table at his restaurant.
“Honestly, I don’t even really care [about expiration dates],” Andre said. “At the end of the day, it’s real hard work and effort.”
And even Paschalis admitted he wouldn’t mind another inundation of Groupon groupies if he could properly prepare.
“The benefit is getting your name out there,” he said. “I would definitely do it again. You kind of live and learn. It’s worth it.”
Multiple business owners interviewed for this story confirmed that Groupon informs its vendors to expect 10 percent of deal redemptions to occur within the first week and 20 percent within the first month. Mossler declined to comment on these specific figures but said they are “not totally off.”
