Twitter and the Food Industry [Groupon]

After reading some recent reviews on LTH where twitter has come up in the discussion, I wanted to hear other perspectives on twitter and how it specifically relates to the food industry (restaurants, chefs, industry info, etc).

No, I am not a marketing exec for twitter but I do use it for 2 different businesses I work with and I wanted to see if others find it to be positive, negative, or just neutral in relation to their interest in the food industry.

My thought is that it can have great purpose in the cases of people like Ellen Malloy, Wait Watcher, John the Bristol, as well as journalists like Michael Nagrant. Without twitter, I wouldn't have found Ellen Malloy's blog which is an interesting and honest read about the business side of the industry.

Your thoughts?

Hi,

I have three twitter accounts, which are somewhat idle. I did find Ellen Malloy via Facebook. What she writes about can be used in other disciplines as well.

Some Twitter conversations remind me LTH-the-listserv before it was LTHforum.com. Once we had the forum, it pretty much died away.

Regards,

I find Twitter especially useful when it comes to food. In addition to the Wait Watchers, and John from The Bristols of the world, it's usually pretty interesting to see what Grant Achatz and Rick Bayless are up to as well as some other local food bloggers/writers that aren't as active on LTH.

Also, not food-related, but Shit My Dad Says is pretty hilarious.

gotta say I dont have much use at all for Twitter, Ive never sent a text message, and if someone texts me I dial there number and call them, not interested in typing a message(seems like going backwards in time imho).

I am not anti technology(I like all the newest electronic toys), but I dont find the need to follow anyones life minute by minute, and I dont need to be staring at my cellphone or pc non stop. 10 hours a day at work is more than enough for me.

Restaurants that only relay specials, or other info only by Twitter kind of annoy me, just keep your website up to date.

I saw the results of an intersting study of what a sampling of Tweets content consisted of, 40.55% were put into the pointless babble category, way to much noise vs substance for me to bother.

jimswside wrote:I saw the results of an intersting study of what a sampling of Tweets content consisted of, 40.55% were put into the pointless babble category, way to much noise vs substance for me to bother.

How exactly does that differ from LTH? Whereas lately, LTH is heavy on repeat Kuma's posts saying "me too," inquiries as to where the "best" brunch, hot dog, taco, etc. places are, and the fifth page about the latest burger joint, it seems strange to say that, at times, I feel like the Chicago food folks on Twitter are talking about a broader spectrum of food-related information, even if it occurs in a series of 140-character tweets. I, too, was reticent about this type of media, but if you can't beat 'em join 'em.

jimswside wrote:Restaurants that only relay specials, or other info only by Twitter kind of annoy me, just keep your website up to date.

To me, this is a great use of twitter. I don't have the time (or the inclination) to visit every restaurant's website and click through the various pages to get at information, so I find it very useful if a restaurant I'm following tweets me their news directly. On the other end of the spectrum would be restaurants who see Twitter as a vehicle to fire off bad, exclamation-pointed ads, such as "Come to our restaurant tonight!!!!!!" But, I think most would agree that is a bad use of twitter and restaurants who chose to advertise rather than relay any information (in terms of specials, pictures, etc.), get some pushback from the people on twitter.

I also agree that it's useful in a similar way for food journalists (or any journalists) who tweet their new stuff. I rarely go directly to New City or the Chicago Reader's websites, but I rarely miss anything that the Michaels Nagrant or Sula have written.

A different example of twitter use is Ellen Malloy -- she uses twitter for PR purposes, to discuss the restaurant industry, and to talk about her hens. All very interesting, and I, too, didn't know her prior to Twitter.

I also enjoy getting the rapid-fire, real-time restaurant information from people eating at a certain restaurant. If you've just had a stellar version of biscuits and gravy at a restaurant, by all means, tell us about it and don't wait to go home and type something.

Finally, it puts us more in touch directly with chefs. Bayless is a prime example of this, but also Rob at Mado, who will tweet periodically about ideas he has for dishes, or what he's doing in the kitchen.

In sum, I think Twitter is a boon for the people with the hand-helds, who are on-the-go and always looking at their feeds. In addition to this convenience, it has put me in touch with a broader spectrum of Chicago food folks, and in that regard, I like it a lot.

Tower gotta say I dont have much use at all for Twitter, Ive never sent a text message, and if someone texts me I dial there number and call them, not interested in typing a message(seems like going backwards in time imho).

I am not anti technology(I like all the newest electronic toys), but I dont find the need to follow anyones life minute by minute, and I dont need to be staring at my cellphone or pc non stop. 10 hours a day at work is more than enough for me.

Restaurants that only relay specials, or other info only by Twitter kind of annoy me, just keep your website up to date.

I saw the results of an intersting study of what a sampling of Tweets content consisted of, 40.55% were put into the pointless babble category, way to much noise vs substance for me to bother.

Well said Jim....I couldn't agree more.

aschie30 wrote:
How exactly does that differ from LTH? Whereas lately, LTH is heavy on repeat Kuma's posts saying "me too," inquiries as to where the "best" brunch, hot dog, taco, etc. places are, and the fifth page about the latest burger joint.

touche',

I see your point, thought I dont think LTH has quite as high of a percentage of babble, I do see a drift towards Chowhound like mundane dining posts like you mentioned at times.

If it works for the on the go folks thats great, & I can see how it could. I on the other hand am chained to a desk 10 hours a day, and have all the time in the world to check out restaurant websites.

Hi,

I haven't been able to grasp Twitter. I resisted Facebook until ealier last year. The one benefit for me has been meeting food history people from throughout the world. I'm still waiting for one friend in Greece to post on her homemade pork gyros.

I was at a food related conference last week in NY. The guy right behind me is one of my facebook "friends." While we really didn't know each other, we did via various interactions.

There was one speaker who was there to extoll the benefits of Twitter. He was completely glued to his mac the entire time. At one panel, there was a lively discussion on print media and blogs (forums). One of the panelist glared at me announcing I was probably going to write up the whole dialogue. I replied, "I may never find the time, but the guy over there has been tweeting the entire time. I am not the one to look out for." I still haven't gone back to figure out how to find that conversation.

If I could multiply myself and my time, I might do tweet more diligently. The challenge for me is time.

Regards,

as a restaurant owner/operator, I use Twitter in a number of ways, but the one that's been most surprising to me is the way it allows me to interact and get to know customers personally.

i have a search term set up on Twitter so that I can easily locate any tweet containing the name of my restaurant, so by checking every day or so, I can see what people are saying about the restaurant and reply directly to them.

usually, after interacting on Twitter, the customers will introduce themselves the next time they're in the restaurant, and the relationship becomes something that goes a bit beyond that of customer/restaurant owner, which is nice.

it's definitely a very useful tool for quickly announcing specials and such, and it's certainly a very effective marketing tool that takes very little time, money, or effort, so from a restaurateur's perspective, it seems like a no-brainer.

but the "getting to know your customers" part of it was something I hadn't anticipated.

aschie30 wrote:
In sum, I think Twitter is a boon for the people with the hand-helds, who are on-the-go and always looking at their feeds. In addition to this convenience, it has put me in touch with a broader spectrum of Chicago food folks, and in that regard, I like it a lot.

Me too. Touche'.
--Rich

Some ideas are best expressed in 140 characters. Prime examples are Roger Ebert's tweets where he just points to some fact or site that he feels deserves to be recognized. No exposition. No discussion. Just a point or a link and done. If it catches my interest, I follow up. How could it not be valuable to be nudged here or there by a sharp mind?

Re: The "white noise and babble" comments. I understand what you are saying but as a user, you can control who you read so if someone is no longer providing information you want to read about, the unfollow but is your way out.

Well, this really doesn't apply to Chicago (unfortunately), but in Los Angeles, the use of Twitter has led to an explosion of interest in food trucks, now that you can track them online:

http://listorious.com/ZagatBuzz/los-angeles-food-trucks



^^^
me thinking about taco trucks...

In addition to this convenience, it has put me in touch with a broader spectrum of Chicago food folks, and in that regard, I like it a lot.

There are many, many layers of the food community in Chicago.

For instance, there are less than a handfull of people who participate in Culinary Historians from LTHforum. There are people who go to Culinary Historians program who would rather die than go to Chicago Foodways Roundtable programs, though it is the same organization. Roundtable doesn't always do food samples, which seems to bug some people.

Few Culinary Historians people go to ChicaGourmet events and vice versa. Few from ChicaGourmet go to Culinary Historians or read LTHforum.

I know of three LTHforum people who belong the Les Dames d'Escoffier (spelling suspect). I would like to join and I may now finally qualify, but it is expensive. Many Dames also belong to International Association of Culinary Professionals, but not all.

I have a friend who belongs to several professional Chef chapters. I occasionally go to some events, almost nobody knows of LTHforum or Culinary Historians. I brought another Chef friend to an event who never knew it existed and didn't think any 4-star Chef in Chicago belongs. I know some who do, but they are not the hip people.

There are meetup.com oriented people, just as there are chowhound or egullet. There are folks who zero in on wine and others beer, they don't usually overlap.

Gardners are not usually mushroomers, though many mushroomers become birders and vice versa. When I was a Master Gardner volunteer, I got all the mushroom questions.

I travel in several circles because each group offers something the other's don't. Between them all, I have a very complete food life. My homebase on the internet is LTH. My food history homebase is Culinary Historians, Chicago Foodways Roundtable and Greater Midwest Foodways. I like the links to people beyond Chicago interested in food history on facebook.

When I was with the historical society, I met many in the museum field. A lot I learned on running not-for-profits, I learned from that experience as well as my relationship with Chicago Public Radio.

Some call it networking, I call it following my interests.

Regards,

Interesting post from Ellen Malloy (found on twitter) about how groupon effects restaurants economically http://unplugged.restaurantintelligenceagency.com/

jtobin625 wrote:Interesting post from Ellen Malloy (found on twitter) about how groupon effects restaurants economically http://unplugged.restaurantintelligenceagency.com/

The main value of Twitter to me is that it points to longer posts like this...and news alerts re: food busts, closings, etc., seem to show up on Twitter more quickly than they do on any other single site.

• Let's say a restaurant participates, 5772 Groupons are sold.
• If they had sold that many dinners full price, $80, they would have raked in $461,760.

I stopped reading here.

cilantro wrote:

• Let's say a restaurant participates, 5772 Groupons are sold.
• If they had sold that many dinners full price, $80, they would have raked in $461,760.

I stopped reading here.

Yeah, that article made me long for a 140 character limit.

jtobin625 wrote:Interesting post from Ellen Malloy (found on twitter) about how groupon effects restaurants economically http://unplugged.restaurantintelligenceagency.com/

What a confusing post. I had to read the first three paragraphs twice to understand what she was talking about.

Once I got to her calculations I realized that she forgot to calculate how many people don't actually use their coupons, which I have no doubt is significant. There are studies out there that show anywhere from 20% to 60% of people actually use gift certificates and coupons that they own, regardless of whether or not they paid money for them. This is a number the Groupon people would not want to publicize ("They say I'm unlikely to use it?! Then I'm not buying it!")

So, she says the restaurant is making $20 right away on 5772 groupons. Let's be conservative and say 60% are used. That's 2309 unused groupons or another $46k of free money (and that's being conservative, 25% usage would be $86k). And I'm not sure I agree with her back of the envelope calculations that get her to -$76k.

The other issue is that I think like a clearance sale, Groupon is as much about cutting losses as anything. Rent and staff costs are sort of already a loss at that point, regardless of whether you bring in Groupon-discounted bodies or not.

I'd be interested to see someone do similar calculations on Restaurant Week, which also seems to appeal to bargain hunter customers who get sort of a stripped-down experience. My guess is neither discount system is noticeably higher or lower than the other when it comes to converting a certain small proportion into repeat customers.

Also, this bit of false logic made me chuckle:

- Let's say a restaurant participates, 5772 Groupons are sold.
- If they had sold that many dinners full price, $80, they would have raked in $461,760.
- They instead are going to gross $230,880 after the discount.

It sounds like she's saying that, Groupon or no Groupon, 5772 people will show up for dinner. Does this mean that she assumes Groupon has no effect on drawing in customers who might not have otherwise come to a restaurant, and that those same 5772 diners would have showed up for dinner regardless? From her calculations, it would seem so.

The way I see it, if you're doing well already, you don't need Groupon. If you're not getting the traffic you want/need, then you consider doing a Groupon in hopes that it'll spread awareness of your business (and you probably count any Groupon-related net loss as advertising expense). But to say, "we had 700 customers two months ago, and 3500 Groupon users last month...if it weren't for that damn Groupon, we could've had 3500 full-price customers this month instead" is wishful thinking.

eatchicago wrote:Once I got to her calculations I realized that she forgot to calculate how many people don't actually use their coupons, which I have no doubt is significant. There are studies out there that show anywhere from 20% to 60% of people actually use gift certificates and coupons that they own, regardless of whether or not they paid money for them. This is a number the Groupon people would not want to publicize ("They say I'm unlikely to use it?! Then I'm not buying it!")

So, she says the restaurant is making $20 right away on 5772 groupons. Let's be conservative and say 60% are used. That's 2309 unused groupons or another $46k of free money (and that's being conservative, 25% usage would be $86k). And I'm not sure I agree with her back of the envelope calculations that get her to -$76k.

Fine point, EC, though unlike gift certificates (which never made the slightest bit of sense to me), I think people probably buy Groupon coupons with a "date" in mind ("I'll buy this coupon and use it for dinner on X date") rather than a gift certificate, which people give (for some odd reason) and then leave it up to the recipient to figure out how and when to use. I'm guessing the Groupon usage rate is higher than 60%, but that's just my speculation, and it'd be interesting to see the actual numbers.

Mike G wrote:The other issue is that I think like a clearance sale, Groupon is as much about cutting losses as anything. Rent and staff costs are sort of already a loss at that point, regardless of whether you bring in Groupon-discounted bodies or not.

Yeah, that's kinda what I meant by "not agreeing with her back of the envelope".

Related anecdote: The downtown Wow Bao used to serve soft-serve ice cream with syrup and fresh fruit and nut toppings. This past summer (before they got rid of the soft serve) they started doing free soft serve every friday for a few straight weeks. You got a small cup and one syrup choice for free, no purchase necessary. Each topping added was 35cents.

Standing in line for my free cup one day, I noticed that a solid 3/4ths of the people were opting for a topping and I realized that this was a loss-cutting measure just as much as it was a marketing tool. If they were throwing out a chunk of money worth of unsold material every week, they were easily re-couping a third of that back by pretending to give it away. Add on the handful of people who now have wow bao in their head as a nice, clean place to grab a bite to eat downtown, and it was a winning maneuver for a short period of time.

Groupon should be used the same way: offer one up once in a while when things slow down and it'll cut your losses a bit and tack on some free marketing.

Manny's uses it for dinner only, when they're commonly just selling the stuff from lunch that's likely to get tossed at the end of the night. Why not give it to a few thousand people at half off instead of chuck it in the trash?

David Hammond wrote:Fine point, EC, though unlike gift certificates (which never made the slightest bit of sense to me), I think people probably buy Groupon coupons with a "date" in mind ("I'll buy this coupon and use it for dinner on X date") rather than a gift certificate, which people give (for some odd reason) and then leave it up to the recipient to figure out how and when to use. I'm guessing the Groupon usage rate is higher than 60%, but that's just my speculation, and it'd be interesting to see the actual numbers.

I'm not sure that's true. It's designed as an impulse purchase ("TODAY ONLY! LIMITED SUPPLY!"). I've used it a number of times when I see a deal that I like and think "I should grab one. I'll figure out when to go later." Then, it sits on my corkboard in my office until I go "uh-oh, we should set a date to use that up before it expires". I think this is a common experience. I've let one Groupon go un-used, and I'm very organized and keep a tidy calendar.

Either way, this is a number that we're likely to never see.

eatchicago wrote:So, she says the restaurant is making $20 right away on 5772 groupons. Let's be conservative and say 60% are used. That's 2309 unused groupons or another $46k of free money (and that's being conservative, 25% usage would be $86k). And I'm not sure I agree with her back of the envelope calculations that get her to -$76k.

Actually, my guess (and it strictly conjecture) is that the Groupon folks are making all that extra money from the purchased, but unused, Groupons; not the restaurants.

stevez wrote:

eatchicago wrote:So, she says the restaurant is making $20 right away on 5772 groupons. Let's be conservative and say 60% are used. That's 2309 unused groupons or another $46k of free money (and that's being conservative, 25% usage would be $86k). And I'm not sure I agree with her back of the envelope calculations that get her to -$76k.

Actually, my guess (and it strictly conjecture) is that the Groupon folks are making all that extra money from the purchased, but unused, Groupons; not the restaurants.

So, Groupon get's 50% of used coupons and 100% of unused coupons? Who would enter into that deal?

My conjecture says this: Groupon says, "You sold 5000 at $10. That's $50,000. After our 50% fee, we're cutting you a check for $25k and it's your responsibility to now honor the coupons."

eatchicago wrote:

stevez wrote:

eatchicago wrote:So, she says the restaurant is making $20 right away on 5772 groupons. Let's be conservative and say 60% are used. That's 2309 unused groupons or another $46k of free money (and that's being conservative, 25% usage would be $86k). And I'm not sure I agree with her back of the envelope calculations that get her to -$76k.

Actually, my guess (and it strictly conjecture) is that the Groupon folks are making all that extra money from the purchased, but unused, Groupons; not the restaurants.

So, Groupon get's 50% of used coupons and 100% of unused coupons? Who would enter into that deal?

My conjecture says this: Groupon says, "You sold 5000 at $10. That's $50,000. After our 50% fee, we're cutting you a check for $25k and it's your responsibility to now honor the coupons."

I'm sure one of us is correct.

Ellen's right, actually. And you guys are too. You're just approaching it from different angles.

Basically, for a restaurant owner, selling Groupons (or similar concepts coupons) amounts to selling twice the food for half the money. A loser, regardless of whose envelope the calculations are done on.

To simplify it:

Say I offer an Edzo's groupon; $40 worth of food for $25 bucks. I cap it at 500 people. I sell all 500 groupons, and Groupon promptly sends me a check for $6250. If only 70% of the groupons are cashed in, I'm going to end up serving $14,000 worth of food in exchange for that $6250. If you assume cost of goods at 30% ($4,200) and a labor cost of 17% ($2,380), it's a loser even before you start figuring in fixed expenses.

In this individual case, volume, which is usually the great fixer of all restaurant problems, is actually a bad thing. The more you sell, the more you lose.

(This, of course, discounts examples such as the Manny's one above, where restaurants are basically just selling food they otherwise would've thrown away, or utilizing labor that would've otherwise just been standing around. I know of almost no situations like this in the restaurant industry, so I have to believe this example is the exception rather than the rule)

However--and this is the big one--if one considers the whole thing as solely a way to cultivate new customers and drive future full price business, it's a great way to get traffic through the door.

The big question, of course, is what kind of traffic is it generating? Do these kinds of offers stimulate people to try new places and then become loyal, repeat, full-price customers? Or do they mostly return bargain-hunters who are unlikely to return and pay full price, or perhaps already-captured regulars who figure "hey, I go there all the time, might as well take advantage of this offer"?

Last I heard, there is a one year waiting list to be on a Groupon. Businesses obviously think there's some benefit.

Hadn't heard that.

Anyway, I think it makes perfect sense for certain businesses. For businesses where most of the expenses are tied up in fixed costs, it's a no-brainer. If I owned a driving range or a bowling alley, I'd be all over it. Or for a business where collecting is a pain, it's a winner, since you get all the money up front.