Foursquare was on track to revolutionize the restaurant industry until Facebook rolled out its new Deals service. It operates much like Foursquare, only with a 500-million-user head start, and has already delivered a pair of buy-one-get-one offers from Chipotle Mexican Grill. Foursquare has in turn declared war on Facebook, but will either service really help you make more money?
The premise of location-based services that leverage social media is simple. Customers get big discounts, while restaurants enjoy a burst of customer traffic and revenue they otherwise wouldn't get.
Group shopping site Groupon is the monster player in restaurant deals so far. But its offers are something customers buy on their own, not because they know their friends will be buying the same deal on the same day. New competitors like Foursquare, Facebook, Gowalla, Loopt, Brightkite, Whrrl and Google Latitude are, to varying degrees, leveraging location-based social networks to lure customers to their deal partners.
Many restaurants marketers are already using Foursquare to acquire new customers. They offer Foursquare Specials (i.e., discounts and giveaways awarded to customers who check in on Foursquare while at their restaurant) in hopes of extra traffic.
Now Facebook has come up with Facebook Places “Deals” that work a lot like Foursquare offers. Customers check in on their mobile device and receive their reward.
“We launched Places to let you share where you are with your friends and see who's nearby. Now with Deals, you also can see what offers are nearby and share those deals with your friends,” says Facebook.
“You'll see a few different types of deals: individual deals for a discount, free merchandise or other reward; friend deals where you and your friends claim an offer together; loyalty deals for being a frequent visitor to a place; and charity deals where businesses pledge to donate to a cause when you check in.”
The first offers out of the gate included everything from 10,000 free pairs of blue jeans at the Gap to an invitation to a meet-and-greet with a “Husker legend” offered by the University of Nebraska.
But the one that caused the biggest stir in the restaurant world came from Chipotle Mexican Grill. The chain gave its Facebook Places-using guests this deal: two entrees for the price of one on two consecutive weekends in November. Most restaurant industry watchers wondered what was in it for Chipotle, whose units generally have so much business that extra traffic would severely strain their system. It was an unprecedented offer.
But Foursquare co-founder/c.e.o. Dennis Crowley went on the offensive…via social media. He urged his Twitter followers to demand that Chipotle run a Foursquare promotion, too, giving out the Twitter address of Chipotle communications honcho Chris Arnold. “If you heart @foursquare and delicious Chipotle burritos, you should tell @ChipotleMedia to run a 4SQ promo!” Crowley tweeted.
Hundreds of people did. Arnold replied thusly: “Just FB places this time. But let me hear from you #foursquare fans and I'll plead the case.”
Should it matter to you that Chipotle is experimenting with social media-driven deals? The takeaway here is that location-based services are a fast-moving field where what worked best for your restaurant today might not be the best way to go tomorrow. That's why you might want to do a couple of sample deals with one or more services.
And be sure to heed the advice offered at Restaurant Hospitality's recent New Directions Conference: Think about hiring a college kid or similar up-and-comer to administer your social media offers, even part time. It could be money wisely spent.