Report: Online coupons help consumers and restaurants

Daily online deals, or so-called "social coupons," help restaurants and consumers, according to a new report from the Cornell Center for Hospitality Research (CHR). Many restaurateurs’ concerns about offering a social coupon -- including that coupon users might tip poorly, overwhelm the staff and won’t return once the coupon period is over -- don’t hold true, according to the study, "Restaurant Daily Deals: Customers’ Responses to Social Couponing."

"There was some evidence of ’cannibalization,’ as 44 percent of those using a social coupon reported being frequent customers, but the coupons also brought back infrequent customers and attracted a substantial percentage of new customers," said Sheryl Kimes, professor at Cornell’s School of Hotel Administration who co-wrote the study with associate professor Utpal Dholakia of Rice University.

New customers in particular would not have tried the restaurant without the daily deal offer. All customer groups said they considered the restaurant to be a good value, even without the discount offer, she added.

Over the past year, restaurant operators report that they have been inundated with sales pitches from such social coupon websites as Groupon, LivingSocial, OpenTable, Restaurant.com and Savored to run daily deals for them via websites, Kimes said. With the rising popularity of social couponing, restaurateurs in many categories are considering the benefits and concerns related to group discount promotions.

Kimes and Dholakia surveyed 931 U.S. consumers to determine who uses restaurant daily deals, what they think about such deals, how they use them and whether they intend to return to the restaurant in the future.

The authors found few substantial differences between respondents who bought daily deals and those who hadn’t. Both groups said they would tip on the full value of the check (not the discounted amount). They also said they felt equally well treated at the restaurant and would consider returning to the restaurant even if they had to pay the full price.

But there was one difference: Those who buy social coupons like to be "market mavens" who stay on the cusp of market trend and price information. In terms of demographics, they were significantly more likely to be younger, be married and have a higher income than those who didn’t use coupons.

"These customers like to feel that they are ahead of the curve on market trends, and once you have provided them with good value, they will be just as loyal as other customer groups," Kimes said. "It seems fair to say that a well designed coupon deal will benefit both the restaurant operator and customer."

The full report is available at http://www.hotelschool.cornell.edu/research/chr/pubs/reports/abstract-15899.html.