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Case Study: To Savor or to Groupon
Kelli Ware
School of Business, Liberty University
July 4, 2025
Introduction
Enter the Dragon, an upscale Chicago based restaurant run by Mr. Chang, is faced with
challenges related to demand variability and wants to boost demand during off-peak periods as
well as increase the number of repeat customers (Chopra, 2018). He is presented with two
strategies with options to choose from using Groupon daily deals offering coupons that price
meals at fifty percent off to hundreds of thousands of subscribers or a custom offer to patrons
via Savored that allows him to offer reservations at a discounted rate (Chopra, 2018). Both
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strategies have pros and cons that Mr. Chang must weigh while making his decision. This case
study evaluates the viability of each option to determine the most profitable course of action.
Viability of Mr. Chang Offering Daily Deals on Groupon
There are several factors that must be considered in determining whether offering daily
deals via Groupon is a profitable business venture. Groupon facilitates the implementation of
the dynamic pricing strategy that restaurants can use to attract new customers, drive demand
during off-peak periods and to spark sales of new menu items (Bray & Stamatopoulos, 2021 &
Ong et al., 2017). The platform is extremely popular with hundreds of thousands of users that
will can draw in new customers (Chopra, 2018). Given that Mr. Chang was able to acquire 76
new repeat customers, it cost him $8,700 to do so and to recoup that loss each of the new
repeat customers would have to spend $114.47 ($8,700 / 76) which is almost $80 ($114.47 -
$35) above what they originally spent on the daily deal (Chopra, 2018). Using the daily deal site
also limits how much control Mr. Chang has over revenue. Moreover, the use of daily deals
exposes businesses to cannibalization where current customers purchase the discounted
coupons which deepens the dip in revenue (Reimers & Xie, 2018). Additionally, restaurants can
experience long-term impacts of being exploited by price-sensitive or deal-seeking consumers
who become price discriminant when discounts are offered causing them to visit the restaurant
less (Li et al., 2021 & Reimers & Xie, 2018). Lastly, another overlooked impact of using daily
deals sites is the impact it has on brand image. Enter the Dragon is a high-end restaurant and
offering deep discounts risks the brand’s perception being tarnished because discounts may
signal quality compromises deterring quality-sensitive, loyal customers who pay full price and
desire exclusivity (Cao et al., 2018 & Chopra, 2018). On the surface, using daily deals to attract
new customers seems like a profitable idea because of the increased exposure it provides, but
the cost of listing the deal on a site like Groupon, the small percentage of the new repeat
customers, and the risks of brand perception weakening leaves the restaurant with a negative
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return on investment even with the adjustment in variable cost per table and the $15 increase
in the amount spent per table.
Viability of Mr. Chang Offering Limited Discounts via Savored
Using the Savored platform, Mr. Chang has the ability to better manage profitability for
Enter the Dragon as the platform offers more controls to the user (Chopra, 2018). Allowing
restaurants to limit the number of tables reserved at a discount enables restauranteurs to target
those reduced prices during off-peak periods to drive demand, attract new customers, and
optimize gaps in capacity utilization during slower days (Chopra, 2018 & Ong et al., 2017). In
filling tables that would otherwise be unused, Savored promotes increased revenue without
forfeiting high demand profitability like the daily deal option risks (Cao et al., 2018). Additionally,
controlling discounts mitigates the potential for the bullwhip effect that is amplified by price and
cost variability facilitating demand smoothing and preventing unnecessary stock overages to
cover forecasted demand (Bray & Stamatopoulos, 2021 & Chopra, 2018). Furthermore, limiting
discounted tables safeguards Enter the Dragon’s brand image as limited discounts maintains
exclusivity and allows the Mr. Chang to align pricing strategies with brand positioning (Cao et al.,
2018 & Chopra, 2018). Another advantage of limiting the quantity of discounted tables is that it
maintains operational excellence by preventing potential surges in patrons that can lead to
service quality depreciation, disappointing dining experiences and lowered consumer
satisfaction (Reimers & Xie, 2018). The singular ability to control the quantity of discounted
tables via Savored presents notable advantages over daily deals such as demand management,
brand perception preservation and minimal disruption to restaurant operations.
Groupon or Savored; Which is the Best Option?
Because of the advantages that accompany controlled discounts, undoubtedly, Savored
is the best option for Mr. Chang and Enter the Dragon. Even with the discount rate at the same
level as the daily deal, Mr. Chang has more flexibility to implement more strategic dynamic
pricing tactics that will drive demand, optimize capacity utilization, mitigate cannibalization, and
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reduce impacts of the bullwhip effect. Even though daily deals offer temporal gains such as
increase brand awareness and a short-lived spike in sales, the discounts attract strategic
consumers that are deal hunting and promotes price discrimination leading to the expectation
of lower prices (Bray & Stamatopoulos, 2021). Moreover, according to Li et al., (2022) coupons
and daily deals increase sales, that impact is only temporary and with prolonged use can have
adverse effects (Cao et al., 2018). The flexibility inherent in the Savored option allows Mr.
Change to refine marketing and pricing strategies during various periods to optimize profits
without sacrificing its high-end appeal.
Conclusion
In conclusion, Savored beat out the daily deals of Groupon as the most viable option for
Enter the Dragron. Savored enables Mr. Chang to optimize profits using dynamic pricing to
make data-informed discount decisions that maximize better manage demand variability
(Chopra, 2018). Most critically, Savored’s targeted and customizable approach minimizes the
bullwhip effect that can accompanies demand surges, pricing variations and leads to inventory
overages that could translate to loss of perishable goods (Bray & Stamatopoulos, 2021). The
flexibility that Savored offers enables Mr. Chang to appeal to new restaurant goers, maximize
capacity during low demand periods, and mitigate cannibalization without sacrificing the
restaurant’s brand positioning as high-end (Cao et al., 2018 & Chopra, 2018). By prioritizing
controlled discounts, Mr. Chang can increase foster long-term results that attracts new diners,
maintains consumer loyalty, and optimizes profits.
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References
Bray, R. L., & Stamatopoulos, I. (2021). Menu costs and the bullwhip effect: Supply chain
implications of dynamic Pricing. Operations Research, 70(2), 748–765.
https://doi.org/10.1287/opre.2021.2175
Cao, Z., Hui, K., & Xu, H. (2018). When discounts hurt sales: the case of Daily-Deal markets.
Information Systems Research, 29(3), 567–591. https://doi.org/10.1287/isre.2017.0772
Chopra, S. (2018). Supply Chain Management (7th ed.). Pearson Education.
https://libertyonline.vitalsource.com/books/9780134732459
Li, Z., Yang, W., & Si, Y. (2021). Dynamic pricing and coupon promotion strategies in a
dualchannel supply chain based on differential game. Kybernetes, 51(11), 3201–3235.
https://doi.org/10.1108/k-02-2021-0160
Ong, J., Ng, W., Vorobev, A., & Ho, T. (2017). Groupon and Groupon Now: Participating firm’s
profitability analysis. Computational Economics, 53(2), 617–632.
https://doi.org/10.1007/s10614-017-9736-y
Reimers, I., & Xie, C. (2018). Do Coupons Expand or Cannibalize Revenue? Evidence from an e-
Market. Management Science, 65(1), 286–300. https://doi.org/10.1287/mnsc.2017.2934
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