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NYTimes and Reuters: Seviche finds itself in the middle of Groupon IPO controversy

by Staff

Seviche's post-expansion exterior.

The New York Times’ DealBook Morning Take Out blog has picked up a Reuters “MediaFile” post connecting Louisville to a huge pending Wall Street IPO that’s looking more and more tenuous.

In its initial public stock offiering launched this week, Groupon featured Highlands restaurant Seviche in its roadshow to investors in a segment titled “Why Seviche loves Groupon.”

Trouble is, the restaurant’s new investors aren’t Groupon fans. Which Reuters found out about, leading to the MediaFile report, “Seviche doesn’t love Groupon anymore.”

And Seviche Chef Anthony Lamas’ long time GM questions an assertion by Groupon executives that the iCoupons led to the restaurant’s big expansion.

Why does this matter? Because the Groupon IPO, once projected to raise $25 billion, is struggling after businesses, investors and market regulators are increasingly skeptial about the longterm ability of internet coupon offers to build loyal customer bases.

Here’s the main bit from NYTimes:

Seviche, the merchant prominently featured in Groupon Inc’s now-trundling IPO roadshow, is no longer keen on jumping on the daily deals bandwagon. Worse, one of its general managers is mildly contesting (Groupon CEO Andrew) Mason’s account of the benefits of their promotion run in 2010. Hap Cohan, general manager of the Louisville, Kentucky-based restaurant, said on Tuesday the Groupon was in fact run by previous management (the restaurant brought in new investors over the past year). The new owners do not immediately see the benefits of a Groupon, at least not now. He said Groupon ran a daily deal for Seviche in February 2010, offering a $60 voucher for $25 to about 13,000 Groupon subscribers in the Louisville area and about 800 bought it. That deal generated roughly $20 of gross profit per customer, Mason said. And it didn’t include repeat business from the  exposure, he added.

The problem, according to Reuters, is that Groupon takes credit for Seviche’s big expansion earlier this summer, a point Cohan poo-poos.

The restaurant’s expansion was related to a real-estate change that his business made, including securing a new lease. “It really had nothing to do with the Groupons,” Hap told Reuters in an interview.

The post reveals alot about Seviche, which has garnered incredible local and national publicity over the past year. Hmmm, new investors! No one ever sent us a news release about that! Eight hundred people went to Seviche out of a 13,000-person Groupon offering, or 6 percent. Is that good, or bad? And $20 per customer profit on a $25 coupon? Do diners typically go that far past the coupon value?

These posts have us making a list of follow-up questions.

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