Google Offers Makes NYC/San Francisco Debut

Today, Google Offers has arrived on the shores of Manhattan (along with San Francisco and Oakland).  Even though it’s still in Beta, it is clear that Google feels that Offers is ready to go head to head with Groupon, LivingSocial and the other daily deal services. I think it’s fair to say, with more flexibility for both owners and customers, Google Offers is set to muscle into the daily deals market. Google won’t overtake Groupon any time soon, but Google Offers seems like a serious competitor in the future.

To see how Google Offers is different, let’s look at Midtown’s first Offer of the Day and see how it stacks up.  The first Offer of the Day is from Ayza Wine and Chocolate Bar, a superb Midtown restaurant and a Gourmet Marketing client. As a result, we have firsthand knowledge of the restaurant’s expectations and how it fits into their marketing strategy.

In the Ayza offer, a customer pays $5 for $10 worth of food and drink. Notice how the deal is much more reasonable than the average Groupon Deal of the Day. Compare the Ayza deal to a Groupon deal in the Upper West Side going on today: for $37 at a Japanese restaurant, you get $84 worth of food and drink. Certainly, at this point, Ayza will probably not get the same number of people participating in the deal. Part of that is because Google Offers is nowhere near as popular as Groupon. This may not be all bad as a restaurant as Ayza is out to get the right customers, targeting those that are likely to return without the deal.

Despite its subtlety, Ayza’s deal has clear advantages, besides taking such a massive hit financially. First, a customer doesn’t have to commit to a full meal. To try out a new restaurant, many people would prefer a light lunch rather than a heavy dinner. In the case of Ayza, the meal doesn’t have to be a big event (although I imagine Google wouldn’t prevent a restaurant from a generous deal), and they don’t need to eat the entire menu.

Second, because Ayza’s deal is more reasonable, the deal has less appeal for customers who prioritize the price over the food. Restaurants that do Groupon’s Deal of the Day waste a lot of money on customers who would never pay full price. While these customers are eating in one restaurant running a Groupon deal, they are scheduling their next meal at another Groupon restaurant.

The fire-sale price of Groupon also undercuts a restaurant’s prestige. Customers will ask if the food is really worth the full price if the restaurant is willing to sell a whole meal at half-price.  In contrast, a deal like Ayza’s says we will give you a nudge into our restaurant, but we will earn your future business through our food and service. To simplify things, Google Offers goes into effect whether or not hundreds of people flock to participate. No one is unhappy if the discount doesn’t get enough to buy the coupon.

Google has also made little improvements that surely will please restaurant owners. Google doesn’t withhold the check as Groupon does. With Groupon, restaurants are left to accommodate the additional customers without any additional funds. Certainly, this comparison does not take into consideration Groupon Now!, which is entirely another beast as it can only be redeemed that day.

Competition is always welcomed in the restaurant business. More and more, big companies try to bully around independent restaurants and many times do it with impunity. Google Offers promises to give restaurants another option free of many of the extremes of Groupon’s Deal of the Day.