LivingSocial targets the final frontier of the deal marketplace: Free-spending foodies.
The daily deal segment never rests. The latest development: LivingSocial is launching a special fine-dining-only service, hoping to attract high-end restaurants that have previously stayed out of the game. Price of the first offering: $250.
LivingSocial Gourmet (LSG) is a service that “creates exclusive offers for leading restaurants to reach LivingSocial’s most frequent, discerning and high-value restaurant customers,” the company says. The pitch is that high-end restaurant operators, few of whom have entered the daily deal fray so far, now have a reason to do so. LSG envisions itself as providing a channel through which operators can offer one-off deals whenever they want to do something like test new menu items or host a special dinner or wine tasting that would fill the house on a slow night.
Wait a minute. Don’t fine dining restaurants already do this sort of thing on their own? Many do, but LSG wants to make it easier. Instead of having to market these events on their own, operators will rely on LivingSocial to do the heavy lifting. Its marketing efforts will be directed at a curated subset of LivingSocial’s customer base that has a history of spending money on foodie-type events.
This service differs from other LivingSocial programs in that its Gourmet deals involve big-ticket events at fine-dining venues. The initial offer comes from CityZen at Washington, DC’s Mandarin Oriental Hotel, whose dining room is shown above. Its chef, Eric Ziebold, won Best Chef Mid-Atlantic designation from the James Beard Foundation in 2008. Here are the particulars of the CityZen deal:
“Today’s Offer: Pay $250 for three canapés, seven dishes, seven glasses of wine, a champagne cocktail, a beer-and-cheese pairing, take-home pastries and a signed menu in the wine library at a 20-person chef's table. Or pay $1,000 for a private table of four.”
$250? Hey, if LSG proves it can deliver high rollers at a price point like this, other restaurants will sign up in a hurry.
So what’s the cost to the fine dining restaurant operator? LSG isn’t saying. “As part of our company policy we actually don't disclose the specific revenue split of any offer,” LivingSocial spokesperson Jody Gavin tells RH. Translation: Restaurant operators will have to negotiate deal pricing face-to-face with the LivingSocial representative who attempts to sign them up.
Here’s something to think about before the LivingSocial rep shows up. Restaurants deals at the lower end of the price spectrum typically give the customer 50 percent off full menu price, with the deal service provider and the restaurant operator splitting the other half. Thus the operator gives up 75 percent of the price listed on the menu.
That’s fine for those restaurants that offer relatively inexpensive meals and specify that their deals cover “food only.” These restaurants can wind up breaking even if customers buy a full-price beverage when cashing in their food-only offer. This aspect becomes more challenging at big-ticket restaurants, so we’ll see whether the standard revenue split stays in place at the fine dining level. Maybe the LivingSocial Gourmet salesperson will be able to shed some light on strategies you might use.
Gavin says LivingSocial plans to introduce its Gourmet service to high-end restaurants in 10 additional U.S. markets by the end of 2011. It’s worth keeping an eye on, because LSG could be a valuable marketing tool if it lives up to its promise.