Case Study: Daily Deal Pitches Overwhelm SF Restaurateur

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If daily deals haven’t already reached a tipping point, then San Francisco restaurateur Joe Hargrave believes that day is coming soon. The Tacolicious owner gets between four and nine pitches from daily deal salespeople each month. He struggles to understand why businesses would want to target potential customers who are only after a good deal.

How did you first get introduced to daily deals?
Groupon started, and then they just started hitting us with emails. They aren’t bothersome when there’s only one or two out on the market — you can use them at your discretion. But it’s gotten to the point where Google does it now; Amazon is doing it. There’s just this constant absolutely massive — I don’t even know what it is. We have to be past some tipping point, right? The way my restaurant is [set up] and the way we work, we’re profitable. But we’re profitable for a restaurant, and they’re not huge margins. It’s not like technology companies where we have massive bottom lines and huge marketing budgets. [Salespeople] come in and for the most part want us to discount our food and our product in order to put people in the seats. That equation doesn’t make any sense to me.

I’ve heard that you got more than 40 pitches from daily deal companies last year. What could salespeople do to make a businessperson like yourself more interested?
I really don’t know. It’s funny, I look at it like the food truck phenomenon that’s happening right now. To me, it seems like it’s past its tipping point. Once the Food Network has food truck wars, it’s like, “We’re there aren’t we?” I look at daily deals and I look at food trucks and it’s kind of like everything America does — we take things and we beat the crap out of it. Then a couple of months later you’re like, “Okay, it’s actually functional. I just want it to go away for a while, and then maybe this attrition will be a couple of them.” I don’t know what the answer is, because there’s obviously a business for it. Somebody is making tons of money from all of it.

When Groupon was [first] around a couple of years ago, I had a buddy — and my buddy is notoriously cheap — and he was a Groupon-er. I’m not saying everybody that’s a Groupon-er is notoriously cheap, but he would buy these things because they were cheap, not because he wanted to go to this restaurant. I was watching him and he would say, “Dude, you should join Groupon.” I was like, “Why would I join Groupon so guys like you can [come] in for a discount and never come back?” He’s a coupon clipper. He’s always looking for a deal. I don’t think I want him to be my customer.

If daily deals don’t work, then what kind of advertising does seem to work?
I travel quite a bit to my region of focus, which is Mexico. I spend quite a bit of time down there learning. It’s been a little lean these last few months because we’re building a new restaurant right now, but we put a lot of time into traveling and we spend a lot of time writing about it and posting it on our blog. Then, we use social media outlets to get the word out. We’re also in the Ferry Building, so there’s a constant buzz of food and media types that we can talk to. For me personally, I learned a really hard lesson because I had a pre-existing restaurant in the same space. It was a Spanish restaurant and it scored really well in the press, but the restaurant was never very busy. We wallowed in debt for a couple of years before we made a change to Tacolicious. When we changed to Tacolicious we said, “You know what, screw it. We’re not going to do what we’ve done the last 10 years because the world has changed. This time we’ll come in armed with Twitter, Facebook, and our blog and we’ll get rid of our publicist.” So I no longer pay for PR.

What we do is take this to the street, essentially. We’re kind of bootstrap or grassroots. We create our own campaigns and go directly to the people with information constantly. I feel closeness with businesses that let you in on a personal level. They have anecdotal stories, or something that connects to your childhood, or something that you’ve seen on a trip that you can bring back and share. So, we try to make a real personal connection with our audience. Then again, it could all be bullshit. We could’ve gone about it the first time and had a better concept and been really busy, but it didn’t work that way. So, I’ll go with what’s worked, and what’s worked is talking directly to an audience and not trying to go through a PR firm that goes to the media.

What are your opinions on using location-based applications, like Foursquare, for marketing?
I don’t really get it. I just don’t identify with that side of social media. It seems like games, or something. Maybe I don’t have the personal bandwidth to expand myself like that right now, but I’m just trying to figure out what Google+ circles mean. Between Facebook and Twitter, I’ve found a great way to access an audience. Foursquare, I don’t necessarily understand. I get it on my Google Alerts sometimes, I [see] check-ins from people who checked-in or said something about us on Foursquare, but I haven’t figured it out yet.

This interview has been edited for length and clarity.

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Stephanie Miles is a journalist who covers personal finance, technology, and real estate. As Street Fight’s senior editor, she is particularly interested in how local merchants and national brands are utilizing hyperlocal technology to reach consumers. She has written for FHM, the Daily News, Working World, Gawker, Cityfile, and Recessionwire.