Elements Bistro - RIP

Drove by Elements Bistro on New Britain Avenue the other day to find paper on the windows and a hand scrawled message - NEW RESTAURANT COMING SOON.

Stopping by the Elements webpage, the note:

Elements Bistro has closed it’s doors for business. A combination of a bad economy, bad weather, pending reconstruction along New Britain Avenue, as well as competing with the Center and Blue Back was more than we could manage any longer.

For those of you that have unused gift cards, please email elementsbistrowesthartford@gmail.com, we will do our best to take care of you as soon as possible.

From all of the staff at Elements, we want to thank you for your patronage, support and mostly your friendship. Remember when one door closes, another door opens!

Kind of sad - was a good place, and a nice alternative to Tapas or Corner Pug in that end of town. Elmwood seems to be on the verge of something - with the new Stop n' Shop, the relocated Crazy Bruce's, the spiffed up CVS, and the new location of West Hartford Yoga. Too bad Element's could not hang in there. Hopefully something new and interesting will take advantage of the space.

Groupon Redux

So I cranked out the following analysis in a fit of pique over on Facebook. Decided not to put it there (why stir things up) but I'll put it here. In lieu of actual blogging, which I have been doing little of, lately.

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So here's one way to think of it. East-West sold 345 "groupons" this morning. They sold $10 (lunch) and $15 (dinner) "deals", worth $20 and $30 worth of product. Let's average it at $12.50 and $25.

Now, Groupon takes the money from the Groupon, and sends something to the restaurant. I don't know the details but for low value deals like this it's at maximum 50% (and could be nothing, I've read that for $10 deals, Groupon takes $100%).

So East-West has just assumed liability for $25 (average) x 345 = $8625. They (hopefully) get paid $7.50 x 345 = $2588. So today's Groupon advertising cost them a bit over $6000.

Now folks will bring friends, buy more than the Groupon amount, etc. (all good) - and a certain percentage wll not be redeemed. But that $6000 in lost receipts is coming from somewhere. Assuming that the restaurant is making 10% profit on gross receipts (very optimistic, from what I have read), then East West needs to boost sales $60,000 to break even on the Groupon.

It works out fine if there are a lot of empty seats or folks visit during off-peak hours. But I don't go to East West on weekend nights - it's often full with a wait for a table. So one can assume that some of the Groupon customers are going to be taking seats from full priced customers for a while.

One can do an awful lot of advertising and buy a lot of goodwill with existing customers for $6000. But I think Groupon sales folks are pretty good at communicating "you don't have to pay anything, look at all the new customers, and we'll send you a check!" and businesses do not figure out how much all this advertising will be costing them in the long run.

I do think Groupon makes sense for a lot of businesses - if you can steer customers to off peak or slack times, if you have extra capacity, if you are new in the market or are branching out into new areas.

OK, I'm done kvetching (no, really!).....but please, if you DID buy a Groupon this morning, please tip your server based on the full, regular price of the meal. One of the gripes about Groupons is that folks tip based on the post-groupon bill - so the server / staff gets the raw end of the deal. And undertipped waitrons might be cranky and take it out on customers - even the full-fare ones. Yet another hidden cost of the Groupon experience.

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I've been a long time customer and fan of East-West Grill from the very start, and I want them to stay in business. Have no idea how well they are doing these days. But I would hate to think that one bad decision to advertise with Groupon might push them under.....so call all this sturm und drang self serving.....

Groupon - No!

This morning's Groupon deal is one of my favorite little Thai restaurants (East-West Grille) - a converted old diner that service great lunch and dinner, and has recently branched into some amazing breakfasts. I noticed it in my In Box, and one of my Facebook friends posted it to his wall.

Noooooooooooooooooooo!

I've been looking into Groupon lately for some clients, and it's not always good news for the businesses who sign up for the service. Some businesses have been driven under ...by the flood of Groupon business - often one-time customers who do not come back without a "coupon" - and in the meantime, having to staff up for the high volume, alienating regular customers (due to Groupon volume), and subsidizing the Groupon customers. Hey, we all know the folks who boast of getting a basket full of groceries for $0, through shrew sales shopping, rebates, and coupons. Not exactly the target demographic for a successful, ongoing business.

Groupon is reportedly pretty aggressive at selling themselves and their unique "deals" (encouraging businesses to agree to 50% off or more deals, etc.), and not permitting a cap on the number of deals sold. Would be one thing if one could limit the number of Groupon deals that one processes per day (like a service business that takes reservations, you could string it out for months) - but it's plausible that a restaurant could be full of groupons for days or weeks following the offer.

For low dollar deals, the business will probably get zero dollars for every Groupon sold or redeemed. (Groupon takes a high percentage of the receipts, 100% for offers under $10). Imagine trying to run a small restaurant for a few weeks with ZERO receipts, as your tables are full of folks with Groupon offers.

Here's one business's experience: Posies Cafe - a bakery / cafe that is probably not too different from my hometown restaurant in terms of scale and economics.

Bottom Line: I have been an East-West customer from Day 1, love their food, and especially their breakfasts. Would hate to see them driven under by a (perhaps foolhardy, and yes most certainly free will) decision to work with Groupon. But if, three or six months down the road, we read about the restaurant closing, I told you so, and I will sorrowfully take my Cassandra-like derriere elsewhere for Thai food.

As for me, I'm not purchasing a Groupon. I'll buy one for a place that I've never been to and would like to try out. But I value local businesses too much; I'll pay full price for my next lunch and consider it a fair trade....