Adam Milne, owner of Old Town Pizza, has seen both sides of the coupon business, and he thinks he has a better idea.
For consumers, coupons are a limitless boon, especially half-off deals like those offered by Groupon. But more and more, businesses are seeing the limitations of offering these deals, starting with getting 25 cents on the dollar for their goods or services. There’s also no way to know when the coupons will be redeemed, which means regular customers might be waiting outside while discounted one-timers are thronging the place.
“Starting about a year ago, I was being approached by Groupon and Living Social, and I thought to myself, ‘There’s got to be a better way,’” Milne says. “At 25 cents on the dollar, you’re losing money, and restaurants were getting flooded on Friday and Saturday nights.”
Milne’s idea is ZapHour, which launched four months ago. It works like this: a restaurant offers one or more “ZapHours” for a particular time and discount, and customers can scoop them up for free from the website or an iPhone app. As the site says, “You only pay the restaurant.”
For example, a restaurant that’s typically slow on Monday evenings might offer six ZapHours—essentially six tables—at 50% off just for that Monday evening. ZapHour members can check the site that afternoon, see what’s available for the evening, and “zap” the offers before they run out.
“Groupon is like a fire hydrant,” Milne says. “It brings in a lot of consumers. But we’re like plumbing: You want a little bit of flow and to be able to control when and where that flow goes.”
Customers, he says, will never have to pay to join or claim deals. Restaurants can join free for now, but will eventually pay $50 a month. Right now all the deals are either 15% off, 25% off, or 50% off. ZapHour won’t keep any proceeds from the purchases.
“Especially in this economy, restaurants are willing to offer great deals,” Milne says. “I just don’t think giving up 75 cents on the dollar is fair. We want to help restaurants to fill empty tables and consumers to get great offers.”
So far, Milne says he has about 50 restaurants signed up, “everything from Oba to coffee shops,” including some places which, he says, never offered coupons before.
“They’re doing it because they can control when the customers come in,” he says. “They can also customize the offer however they like to: day of the week, time, number of tables, and what they offer.”
One such place is Saint Honore Boulangerie on NW Thurman street. Marketing director Mina LaFountain says the café had never offered coupons, in part “to maintain a brand image that’s a little distant from discounts.” But she says they went with ZapHour, because it solves some of the problems with coupons.
“We have offered five free sandwiches on Monday, and now we’re doing 50 percent off the first $5 spent,” she says. “We witnessed the problems caused by Groupon, but we think what Adam has set up is really smart.” She says of the first ZapHours offered, three to four were taken each day.
Milne wants to expand to other segments beyond restaurants and says that, although he’s received calls from “all over the country,” he wants to keep it local at first. He says national chains won’t be excluded but aren’t as likely to take up the offer.
“People want to get a great deal, but they also want to make sure their favorite local restaurant isn’t going broke doing it,” he says. “And this is working better with local businesses; they are the owner, and they make the decisions. The small businesses are the innovators.”
Innovation is what drives the whole idea, he says.
“I feel really passionate about the restaurant industry, and see this as a way to help the industry from within,” he says. “Hotels can offer a certain number of rooms at a discount when they’re not full. This industry hasn’t really picked up on that.”