Have you been approached by a daily deal site like Groupon or Living Social for your food truck or restaurant? What about a site run by a TV station or newspaper?

Groupon daily deals

If you have, chances are you’ve thought about what a daily deal would mean for your business. And maybe you’ve jumped at the opportunity to be featured. But, that could cause problems.

Daily deals are just like any other business decision. They have to be thought about and discussed with business partners, family and friends. Then, a decision should be reached on whether or not to move forward.

To help you with the decision making process, here are the pros and cons of putting your food truck or restaurant up on a daily deal site:

Why you should participate in a daily deal promotion

1. Lots of exposure

We’ve done one daily (well, it was weekly) deal on Fab.com. It was awesome exposure that led to meeting great customers, a couple retailers, and a frenzy of online sales. At the very least, daily deals give you exposure to an email list that is likely thousands of customers. And if you’re lucky they’ll buy your product.

2. A small revenue bump

Revenue Bump from Daily Deal

The Fab.com deal landed us $800 in sales for the week. It was better than nothing, but not what I was expecting. However, a sale is a sale. You’ll likely make some money from your daily deal, but it won’t catapult you to success.

3. Re-orders are awesome

The repeat purchase is where daily deals work their magic. Did you give great service? If so, customers will be back. Or, they’ll spend more than the deal’s face value. That’s practically pure profit! Once a customer, always a customer. With food products, that tends to be the case.

4. It’s only one day (or a short period)

You’re not running your daily deal for a month. Often times, it’s just going to be crazy for a couple days. This means you can plan for the increase and hire help accordingly (or grab family and friends — the best helpers!)

5. Nothing ventured, nothing gained

You’ll only know if daily deals work for your company if you try them. Try something once. If it doesn’t work, don’t do it again. If you strike gold, keep doing it. But, you’ll never know unless you try them.

Why you should not participate in a daily deal promotion

1. If you can’t make a profit

A lot of companies run deals knowing they won’t profit off the deal. Or, they think everyone will come back and buy a 2nd or 3rd time. Unfortunately, that’s not the case. With such tight margins, there’s little wiggle room. Make sure you’re making money on the deal. Calculate product cost, shipping and handling expenses, as well as gas money to get to the post office. It adds up quickly. Then, determine the number of deals you have to do to break even.

2. No guaranteed sales

There, I said it. There may be a chance you don’t get many sales. The Fab.com buyer told me to expect between $3k-$5k in sales. Clearly, we didn’t come near that number. Don’t get your hopes up, but be prepared for chaos to ensue. Plus, I’m sure your products are so delicious, people will want to buy them.

3. It’s a ton of work to pack & ship orders

Stack of shipping boxes

Have you ever been lost in a sea of packing boxes, bubble wrap, and fragile stickers? It’s a shipping jungle. We coordinated over 100 shipments to go out the door with our Fab.com sale. How long did it take to pack all the orders? Probably 5 hours. And if you’re paying several employees $10/hour your costs add up, slowly eating away at any chance of profit. Streamline your packaging and shipping to save money.

4. You may not be able to meet demand

A lot of the readers of this blog are super-small food producers – many of you producing in your homes. Could you meet the demand of a daily deal site? Not meeting demand leads to customer service nightmares. That ultimately leads to poor word-of-mouth and unhappy customers. And last time I checked, food was about happiness and smiles, right?

5. Your experience may differ

I talked to several different food producers before making the leap to try Fab.com (and soon to be other daily deal sites). Every producer has a different experience. One may break sales records. Others may go belly up and hope to recover. You never know. What does that mean for you? Your experience will be different. Focus on delivering great customer service and an awesome product. Everything else will fall in place.

Have you tried a daily deal? How’d it go? I’d love to hear your story below. Plus, if you liked this post, get notified of new posts directly to your inbox right here…..