Eat $100 of the restaurant's haute chow and pay just $50 under its wildly successful Groupon promotion, which was pitched last month. (Diners have all summer to use the offer.) Order The Prime Rib's signature dish, which normally costs $47.95, and pay only a little more than you would at Outback.
"We certainly don't want to dilute our brand," says general manager David Derewicz. But, he said, the restaurant likes using online coupons "to drive business in our direction during typically slower, hotter months. It's worked out fine."
Maybe he'll still feel that way after Groupon bargain scroungers descend, order $500,000 in food and pay for only half of it. (Less than half, actually, because Groupon takes a cut of the coupon proceeds.) The Groupon fad is in full bubble, but Baltimore restaurateurs say the Groupon experience is sweet and sour.
Investors, who will get a crack at Groupon stock in the initial public offering announced last week, are likely to have similarly mixed results. Restaurants are a key industry for Groupon, but many want nothing to do with the company. To try to win them over, Groupon is already sharply cutting the percentage that it takes from each coupon sale, according to eatery proprietors. That will hurt its revenue.
Copycat sites such as LivingSocial, Google Offers and Baltimore-based Chewpons ensure that price-cutting pressure will increase. And some restaurateurs have decided that their first Groupon promotion was also their last.
"I'm not really interested in doing another Groupon unless the math changes dramatically," said Mike Sproge, co-owner of The Falls, a casual American place in Mount Washington.
The Falls sold hundreds of coupons good for $20 of food on Groupon. The coupons cost $10. Groupon kept $5. The Falls got the other $5, which meant it lost money on many diners, especially those who used the coupon to pay for most of the ticket.
"One lady asked for a calculator so she could do the math on her meal," Sproge said. After presenting the coupon, "she ended up spending like 15 cents."
Before trying Groupon, The Prime Rib offered discounts through sites such as DealOn and OpenTable Spotlight. Derewicz said that the diners who patronized those sites often blew the money they saved with coupons on desserts, nice wines and other extras — "a vast overspending pattern that we don't normally see." That made a winning deal for everybody.
But the Crepe du Jour bistro in Mount Washington was overwhelmed with customers cashing Groupons just before they expired.
"It was very intense the last three days," said owner Mustapha Snoussi. "There were some people who were very nasty," some who spent only the $25 coupon amount and some "who don't even tip."
"The Groupon experience just pushed me away," he said.
Derewicz declined to disclose the terms of The Prime Rib's Groupon deal, but he implied that it was better for the restaurant than Groupon's traditional half-and-half division of the coupon proceeds.
"A lot of them will start out negotiating 50-50 splits," he said. "What you really want to do is 70-30 or 80-20."
The more coupon revenue restaurants and others negotiate to keep, the less chance Groupon will turn a profit any time soon.
After The Falls rejected a new deal, Sproge said, Groupon offered the restaurant 60 percent. He thinks the company might have gone even higher. (Groupon, which is restricted in what it can say publicly in advance of the stock offering, did not respond to an email seeking comment.)
Many restaurants don't want Groupon on any terms.
"We were shocked to see that The Prime Rib did it," said Eddie Dopkin, proprietor of S'ghetti Eddie's and Miss Shirley's in Roland Park. "At Miss Shirley's, I really don't want to be a discount center. At this particular time I don't have any interest in it."
The Rusty Scupper said no to Groupon, said general manager Ed Prutzer. So did Petit Louis, Charleston and other restaurants run by Tony Foreman and Cindy Wolf.
"We just don't believe in discounting our seats," said Foreman-Wolf spokeswoman Allison Parker-Abromitis. "I used to get approached every day several times a day" by Groupon and Groupon clones, she said.
"It's very aggressive marketing on their part. Now I only get one call a week. I can only think that's because we say 'no.'"
Unlike eBay, Amazon and other successful Internet ventures, Groupon doesn't enjoy the self-reinforcing network effect that knits together customers and vendors. People with stuff to sell go to eBay because that's where the buyers are. Buyers go to eBay because that's where the sellers are.
But bargain hunters can get discount coupons in the newspaper, direct mail and all over the Web. Anybody can build an email list and offer daily deals.
When it comes to doing business with Groupon, restaurants are likely to mimic many of the diners showing up at their hostess stations with cheapo Groupon coupons. They'll come once and never again.
jay.hancock@baltsun.com
