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Tuesday
Jul022013

Groupon Rolls Out New Dining Scheme

Scott Olson/Getty Images(CHICAGO) -- Thanks to Groupon, you can get a discount now of up to 40 percent at such upscale eateries as New York's Le Cirque, Miami's Bistro Moderne or L.A.'s Chaya Brasserie just by making a reservation.

Nice as that may be for you and fellow diners, it's bad news for companies, including OpenTable, that compete in offering discounted restaurant bookings online. Groupon, by expanding its Reserve booking service, in effect is telling them: "I'm going to eat your lunch."

Groupon CEO Eric Lefkofsky calls Reserve an important advance in his company's goal to become the leading marketplace for online deals. "As Groupon has evolved," he said in a statement, "we've seen growing demand from our customers for upscale offers and exclusive experiences. Reserve gives the most prestigious brands a new way to reach our large and desirable audience."

Groupon says it serves 41 million users through its several discount services and deal offers. Reserve, which was first introduced three years ago in a limited invitation-only version, is now available for free to any Groupon customer. It offers discounts at 600 restaurants in 10 U.S. cities.

OpenTable, in business since 1998, says it seats 12 million diners monthly and has served 450 million cumulatively. It caters to 28,000 restaurants around the globe. It declined to comment to ABC News.

Ben McKean, general manager of Groupon Reserve, says his service has the advantage of offering restaurants a unique value proposition: yield management. "No one out there today is focused on providing that to restaurants," he tells ABC News.

What Reserve does for restaurants is comparable to what Hotwire.com and services like it do for hotels and rental car providers: By raising or lowering the price of a restaurant seat, according to demand, it allows restaurants to fill tables that otherwise would sit empty. Restaurants tell Reserve how much excess capacity they have, and when they have it. Reserve prices it and sells it.

Lefkofsky, in his statement, says, "Whether it's because of a slow night or a last minute no-show, even the best restaurants have empty tables. Reserve provides a yield management solution to bring customers through their door at the times they need them the most." Says McKean, "It's the major reason restaurants have to work with us."

Reserve gives diners a discount off their total check (including beverages), without their having to prepay or make use of vouchers. Diners pay nothing for the service, says McKean. It makes money by charging restaurants what he calls "a small fixed fee, per diner."

Copyright 2013 ABC News Radio