Is Groupon Good For Restaurants?

There's been a lot of recent talk and articles written about Groupon and its competitors, specifically on whether they really do any favors for the restaurants that sign up for its services. Groupon, for one, charges a 50 percent commission. And though the restaurants do get seats filled, their margins are squeezed.
Some restaurateurs are complaining that the deals aren't financially sustainable and demoralizing. Then there's the question that The Boston Globe asks: "Will people simply start eating their way from deal to deal, never becoming repeat customers?" Slate ponders whether Groupon will eventually "cripple the merchants that rely on it."

story focused less on the controversy and more on the economic theory behind Groupon, asking local, noted economist Richard McKenzie, professor at UC Irvine, to chime in on the phenomenon.

"If somebody is willing to scan the newspapers, clip the coupons, go to the store, and redeem the coupon you can be fairly certain that that individual is a price-sensitive individual," he says, which I take to mean that Groupon is really nothing new, just a more popular extension of what us cheapskates have always been doing: taking advantage of deals.

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