Groupon does not look so good on paper. Last week, they went from making $15 million to losing $15 million after they restated their 4th quarter earnings. And Wall Street is losing faith as it is down 7% in trading. It does not help that the accounting methods of Groupon have been described as both unusual and fragmentary by financial analysts. Its stock went from $26 right after its IPO down to $15 in the last few days.
As a business, Groupon seems to have let their business spiral out of control. Increased demand of refunds and getting involved in complicated, expensive deals are adding extra unpredictability to an already unpredictable market. Medical and travel deals have been identified as a particularly risky area that Groupon isn’t prepared for.
After the initial honeymoon with the press, it is clear that Groupon has become both the graveyard and divine intervention for desperate businesses, especially in the restaurant business. They do not appeal to healthy restaurant with their inflexible pricing. It doesn’t make sense for them. Relying on Groupon is not sustainable for a small business and it is no surprise that Groupon may not be sustainable itself.
It is a lopsided company. It has an army of salesmen/women, but does not evaluate the business that are signing up for a Groupon. This is besides the point for most restaurants considering Groupon. But maybe these signs will make restaurant owners fee;l confident that they aren’t missing the cure to all the marketing challenges they face.
Sign up for Gourmet Newsletter
Subscribe to our newsletter to get access to exclusive content.Get this newsletter