March 21, 2011
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Groupon started something big: The combination of social networks with consumer incentive programs to generate more business for small companies is a brilliant concept. The company’s spectacular sales growth, global expansion and massive funding all confirm that. But many small business users of Groupon’s services question the value it provides. There have been many well-documented horror stories of mom and pop stores being flooded with “Groupon groupies” that lead to thousands of dollars in losses. While many businesses are happy with Groupon, the company’s success has led to the launch of competitors and “me too” services. Most small business owners don’t have time to experiment with all of these services. Some, however, are worth a second look. One of them is Village Vines.
Solving a big problem for restaurants
There are over 579,000 restaurants across the United States. Almost all of these businesses have a critical problem: excess capacity. You may have to wait three weeks to get an 8 p.m. reservation on a Saturday at a top bistro, but even renowned restaurants have a difficult time filling all of their tables at odd hours. Very few people want to have dinner at 4:45 p.m. or at 11:15 p.m. But in order to ensure that they operate successfully during peak hours, they stay open during the slow hours as well. For each off-peak hour that a large restaurant stays open they lose up to several thousand dollars.
Village Vines helps restaurants fill that excess capacity.
How Village Vines works
Village Vines offers consumers the ability to buy reservations at participating restaurants. The reservations cost $10. In exchange for booking the reservation through Village Vines, the customer is offered a 20, 25 or 30 percent discount on their bill. Restaurants control the reservations that are sold via Village Vines. This gives the owner the option to restrict available reservations to off-peak times when the restaurant may sit empty.
Want to read more on daily discount sites? Check these out:
Why it's more effective than Groupon
Village Vines has several strategic advantages to Groupon:
It sells reservations. Unlike Groupon, your restaurant won’t have 500 people knock down your door at once to obtain the 90 percent discount on your appetizer special. You are selling your excess reservations. Once they are filled, there is nothing more to sell.
The execution is discreet. The 30 percent discount happens automatically. The customer doesn’t need to say or do anything at the table. The waitstaff doesn’t mention the discount. Most importantly, there are no embarrassing coupons to present. This makes it “OK” for an upscale consumer to book through Village Vines. It also prevents other diners from noticing the discount. This has been a problem from many Groupon businesses that have seen regular customers become upset when the table next to them pulls out a coupon and pays less for the same meal.
The discount is manageable and complete. The markup on meals at a typical restaurant is quite high. A 30 percent discount still leaves room for a profit. The discount is also on the entire meal, so the customer won’t restrict themselves to one particular dish.
This isn't for every restaurant
While Village Vines sounds like a very interesting service, there are some important restrictions that restaurant owners should keep in mind.
First, it’s a startup. The company only launched in 2010. Given its early-stage status, there isn’t a sufficiently long track record to ensure that this business model will work.
Second, having a good reputation is important. Village Vines' target business is an established restaurant that wants to fill excess inventory. The brand name of the restaurant is an important component of the model. If your restaurant is completely unknown, it is unrealistic to expect Village Vines customers to pay $10 to make a reservation with you in exchange for a discount.
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Corrie McWilliams 11 months ago
VillageVines recently announced a new name: Savored (http://savored.com); the new name is intended to better reflect the premium caliber of the company's partner restaurants as well as the rich dining experiences the service provides to consumers. The company is now also offering complimentary access to Zagat ratings and reviews. Savored now has a footprint in 10 cities: Atlanta, Boston, Chicago, Denver, Los Angeles, New York, Miami, Philadelphia, San Francisco and Washington DC.