As someone who operated the same restaurants for over 18 years before closing them due to Covid-19. My focus is about longevity, sustainability and the building of a restaurant’s own brand, something that is critical when margins are thin and every dollar counts. Hence, in my view the cons outweigh the pros:
1) These platforms claim that they are offering restaurants a revenue tool to apply dynamic pricing to their operations. This is misleading as what these platforms are offering is not dynamic pricing but simply dynamic discounts.
2) The adoption of a system that only offers discount pricing is a simple one-sided view that forces restaurants to focus on continually offering discounts. Instead of looking at how to do things better.
3) Nothing ever remains a secret, so slowly and surely restaurant’s regular customers will find out and then are incentivised to book through these platforms to have access to the discounted offers. This process will end converting a restaurant’s regular customers to being regulars of Groupon, Eat Club and First Table and not the restaurant.
4) These discount platforms use your restaurant to claim wider market penetration, build up their databases and direct customers to the best deal (greatest discount), which is not necessarily your restaurant. Such that they are getting you to compete in a potential pool of unashamed spiralling discounts.
5) These discount platforms claim that you can marginally cost your beverages and/or food during off-peak periods. There are many conflicting views concerning marginal costing, one important aspect being the volume of these discount bookings that the restaurant gets. Further, if the marginal costing process for the volume of bookings generated is wrong, then the restaurant can easily incur real losses during those discount periods. Plus, it is well known that it is next to impossible to recover losses incurred during quiet periods during busy periods. The alternate view is to ensure that you should be able to scale your operations and costs like a “piano accordion”. That is, designing your kitchen, bar and menus to be able to operate with minimal staff when you are quiet and then incrementally add additional staff during busy times.
The pro argument, of course, is that these discount platforms can generate short term cash when you really need help.