Two local restaurant and bar owners were fed up with the high percentage of profits they paid to deal-of-the-day sites like LivingSocial and Groupon.
So they launched a local alternative aimed at being a good deal for the businesses that use it.
LiveOnLocal.com will only feature restaurant deals in the Colorado Springs area and the establishments that promote through the site will pay little more than cost for their individual promotions.
Greg Howard, who owns McCabe’s Tavern said he and neighbor Johnny Nolan, who owns Southside Johnny’s, came up with the idea together.
Howard sold about 350 coupons with one of the national sites when they first came out.
“You get 25 cents on the dollar,” he said. “You charge half price and they keep half.”
That was hard to stomach. And on top of taking a big hit, most of the people who bought the coupons were regulars who would have come to the restaurant anyway.
“And now they have a warm fuzzy feeling about LivingSocial or Groupon instead of a warm fuzzy feeling about us and we were the ones who made all the sacrifice,” he said.
Those national deal of the day websites don’t brand the companies that advertise with them. The company or restaurant logo is never displayed and subscribers have to read the fine print to find out who is offering the deal, Howard said.
“So we started at the bottom,” he said. “We looked at what it would cost to run the credit cards and how much it would be to operate the site and have a sales person. We figured it would be about $3 a transaction.”
So, that’s what LivOnLocal.com will charge restaurants to promote with them. There will also be a 5 to 10 cents per transaction that will go into profit, but it won’t be much – 10 cents profit on 1,000 transactions is just $100.
“I know it sounds crazy,” Howard said. “Why would you start a business that doesn’t make any money? The truth is I wouldn’t have started it if I didn’t own a restaurant.”
The new site is a way for him to promote his restaurant and to allow other local businesses to promote themselves. In addition to the deal a day offerings, LiveOnLocal.com will have an events tab where restaurants that promote with the site can advertise their events.
Howard said the new business will focus on Colorado Springs, but he and Nolan will look to expand into other cities in the future.