A pair of local restaurateurs fed up with bad returns from deal-of-the-day websites like Groupon and Living Social have started their own version.
The difference, they say, is that their site — LiveOnLocal.com — is designed to fill restaurant seats rather than somebody else’s pockets.
When Greg Howard, owner of McCabe’s Tavern, 520 S. Tejon St., ran a Living Social special, he was excited to sell 400 deals until he saw that half the names on the list were regulars. And then he realized that the $7.50 he kept from the $30 sales left him in the hole.
He advised friend and neighbor Johnny Nolan, who owns Southside Johnny’s two doors down, not to do it.
After you factor in food, labor and liquor costs, the deals are rarely good for restaurants, Nolan said.
But the two felt like they were missing out on a piece of the action.
“I want to be able to throw a coupon out here and there without spending a lot of money,” Nolan said.
And there’s no good way to do it anymore, he said. Most newspaper advertising is costly and it doesn’t reach as many people as it once did. The mailers are just as expensive, Howard said.
“I do a buy-one-get-one offer, just like half off on Living Social,” he said. “They send out 10,000 of them. I get like 15 of them back in here and it cost me $400 to send it out.”
Media is changing and advertising has to evolve along with it if small businesses are going to survive, Nolan said.
Traditional deal-of-the-day sites created the model, but it’s no good for business owners. So Howard and Nolan have modified the model.
“We keep $3 from every transaction,” Nolan said. “That leaves more than enough for the restaurant owner to cover his costs.”
It’s just enough to pay the website development crew and the sales person. After a while, Nolan and Howard expect it to start generating some profit. But it’s unlikely it will ever be enough for them to quit their day jobs.
The site, LiveOnLocal.com, launched about two months ago. Word is getting out and the site is getting publicity on Facebook. But it’s still just getting off the ground, so for now, it will stay focused on restaurants.
Howard is signed up for Groupon and Living Social deals. There aren’t many restaurants, he said.
LiveOnLocal.com narrows the focus even more to concentrate on local restaurants.
“Local business is important,” Nolan said. “The money you spend here stays here, it doesn’t go to pad some corporation’s books in New York.”
That local focus is the origin of the new company’s name.
“I was in the bathroom when I came up with that,” Howard said.
“Where all great ideas come from,” Nolan said.
Howard realized the whole point of the new site was to get people to support local restaurants and local restaurant owners. So the name was born. Other than regular mispronunciation, Howard said he still likes it and it’s catchy while also getting to the point.
So far, it’s going well.
Nolan and Howard each have been in the restaurant business in Colorado Springs for about 20 years, and they had plenty of contacts to kick-start sales.
Most Westside restaurants that have strong summer business said they would be interested in talking in the fall. They’re busy enough in the summer.
Eastside restaurant owners don’t know the duo as well and it has been a harder sell. But most of the restaurants that have advertised have sold about 25 coupons.
“That’s pretty good,” Howard said. “You don’t want to sell too many.”
He said an eastside restaurant sold more than 4,000 and got swamped when the coupon expiration came up. Service suffered and people complained.
There’s also recently been news about a tattoo artist in town who sold 700 coupons. He’s one guy and couldn’t honor them all.
“There are some ethics involved in that,” Howard said. “He’s an independent business. They shouldn’t have sold that many.”
Safeguards built into LiveOnLocal.com will prevent overselling a coupon, Howard said.
“Once this gets going, you might just have to get up early if you want the deal,” he said.
The two have aspirations of expanding the site once it gains momentum locally. They know restaurant owners in Pueblo and Portland, Ore., which would probably be the first markets where they would expand.