May 19, 2011, 12:19 PM

Groupon buys lunch

To promote Groupon Now, the daily-deal leader offers discounts for $1 in Chicago.

Lead Photo

Daily-deal leader Groupon Inc. is promoting the launch of its location-based discount program by offering one of its largest promotions to date: $1 deals, good tomorrow, for hundreds of merchants in the Chicago area.

Groupon will offer the deals through the new Groupon Now service, which enables consumers to access limited-quantity, time-specific deals from merchants within a consumer’s vicinity. Consumers must use Groupon Now deals within a few hours or at most a day after purchase, unlike traditional Groupon offers, which are valid for up to a year. The program aims to give merchants a chance to gain sales during slow hours—for instance, a restaurant might offer a discount good during the period between lunch and dinner that day.

Consumers can access Groupon Now from iPhone or Android apps, Groupon’s mobile site, or by entering their ZIP codes on Groupon.com. For now, Groupon offers the new service only in the Chicago area.

The $1 price offer is available only tomorrow, and purchased vouchers are good only for defined time windows that day. Groupon Now offers typically cost more. For example, with a voucher bought this morning at Groupon Now for $5, consumers can get $8 worth of food at a downtown pizza restaurant through 2 p.m. today, when the voucher expires. Current deal categories include food, exercise, entertainment, shopping and beauty services.

“We’ve been working on Groupon Now for a long time, and we’re giddy with excitement to finally launch,” said Andrew Mason, founder and CEO of Groupon. “We’re so impatient for people to give it a try, we decided to make it easy by footing the bill ourselves this Friday.”

Vouchers for the $1 deal promotion go on sale at 6 a.m. Central time Friday at Groupon.com/now or via Groupon’s iPhone and Android mobile apps. Participating merchants include 7-Eleven convenience stores and such area restaurants as Carson’s, Piece Brewery and Pizzeria and Geja’s Café.

Bob Wagner, manager at Piece Brewery, says one or two customers every other day have redeemed its Groupon Now vouchers since the program began about 10 days ago. For one deal, consumers have been able to pay $10 for a Groupon Now voucher worth $15 in food and non-alcoholic beverages. Tomorrow, consumers will pay $1 for $25 worth of food and non-alcoholic beverages.

The restaurant is capping at 25 the number of vouchers it will offer for each of three time-specific windows, he says. Wagner says he doesn’t want the restaurant overrun with customers it can’t accommodate. The first 25 vouchers can be redeemed only between 11 a.m. and 1:30 p.m., with another 25 good later in the afternoon and another 25 between 10:30 p.m. and midnight. “We don’t want to jeopardize our customers and we want to be able to staff correctly so that we do this the right way,” Wagner says. He adds that he expects the deals will sell out because there are many Groupon users in the area.

Dean Carson, owner of Carson's, a downtown barbecue restaurant, said on Friday that he expected word to travel fast about Groupon's offer for a $1 slab of ribs at his restaurant. But what he didn't expect was that customers would be pounding on his restaurant's door at 5:30 a.m., but they were. The restaurant doesn't open until 11:30 a.m. "Any chance you get to cause a frenzy, the advice is to cause one," he says. "Groupon has and are going to cause a frenzy today. That said, our phones are ringing off the hook and at this particular minute it is not quite as much fun as I anticipated."

Carson says the early morning customers alerted him to some things that were missing in the fine print of the Groupon voucher. Groupon did not list that the deal was for carry-out orders only and that the offer wasn't valid until 11:30 a.m. Carson says he quickly called his Groupon representative and they fixed the errors immediately."This is a kick-off day for Groupon and understandably I think they are scrambling today," he says.

Groupon is paying the restaurant the full price for the slabs of ribs, so Carson says he won't be losing any money in the deal and that the restaurant is ready and capable of fulfilling the needs of 1,000 extra carry-out customers.

 

 

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