What a Groupon actually costs a restaurant

If you own a restaurant, you have probably had the call. Groupon’s pitch is straightforward and it is not dishonest: no upfront cost, no media spend, and you only pay when someone actually buys. Compared to handing a thousand dollars to Facebook and hoping, that sounds like a better deal.

The part worth understanding before you sign is not the fee. It is the math underneath it.

The split, in Groupon’s own numbers

A Groupon spokesman gave the example plainly to FSR Magazine: a restaurant offers a Groupon for $25 that gives the customer $50 worth of food. The customer pays $25. Groupon keeps $12.50. The restaurant earns $12.50.

So the restaurant serves $50 of food and receives $12.50 for it.

That is the standard structure. Groupon’s merchant terms describe a revenue share rather than a fixed fee, and the split varies by deal — but 50/50 on the discounted price is the common arrangement, and it is the one most small businesses are offered.

Now put your own food cost into it

Here is the number nobody else can calculate for you.

You know what $50 of your food costs you to put on the table. Every restaurant owner knows that number to within a point or two. Take it and set it next to $12.50.

For a lot of kitchens, those two numbers are close. For some, the cost of the food exceeds what the deal pays. That is not Groupon being unfair — it is arithmetic that follows directly from a 50% discount split two ways, and it is why the advice you will find on every restaurant forum is some version of only run one if you can afford to lose money on it.

Groupon does not hide this. Their own merchant guidance suggests structuring offers to push people to slow days, encouraging higher-margin add-ons, and using the fine print to protect full-price sales. That is honest advice about how to survive a deal. It is also an admission of what the deal does on its own.

The second cost, and it is the bigger one

The revenue split is the cost you can see. The one that shows up later is who walks through the door.

A Groupon customer chose the coupon first and the restaurant second. Some of them become regulars. Many of them are working through a list, and when the deal ends, so does the relationship. You paid to feed them at a loss on the theory that they would come back at full price, and the ones who do are the ones who justify the whole thing.

That is the bet. Sometimes it pays. But you are the one carrying the risk, and you carry it in food and labor rather than in dollars you chose to spend.

What you are actually buying

Strip it back and a daily deal is a customer acquisition cost. You are spending margin to get a stranger in the door.

That is a legitimate thing to spend money on. The question is whether it is the cheapest way to do it, and whether the cost should be open-ended.

With a deal, your cost scales with how many people redeem. A campaign that goes better than expected costs you more, not less. There is no version of Groupon where you serve a hundred deal customers and pay less than you would for ten.

The other way to do it

ShoutShot works the other direction. You pay a flat monthly membership and we take nothing from your sales. Not a percentage, not a commission, not a cut of anything a customer spends in your restaurant.

Post one short video a day — a special, an event, a new dish, or just what is good today. It goes into a feed of local businesses that people scroll to find places to go. Your reach is not throttled and it is not auctioned. A business paying $29.99 reaches the same audience as anyone else on the platform.

If you want to attach a deal, you can. If you do, the entire value of that deal goes to you, because we are not in it. And if you would rather not discount anything at all, post without one. Most businesses do.

The cost is the same either way: one flat monthly price, and every dollar a customer spends in your restaurant is yours.

The comparison, plainly

Neither of these is a scam. They are two different bets. One says the way to get customers is to give away margin and hope they return. The other says you should be able to show people what you do, for a price you know in advance, and keep what you earn.

We think most restaurants would take the second deal if anyone offered it. So we are offering it.