There's still no such thing as a free lunch, but new online discount coupons are slicing local restaurant prices to the bone.
While recession-weary consumers may be happy to buy a $50 dinner for $25 at websites like Groupon.com, a participating restaurant makes only $12.50 -- an unprofitable deal for the restaurant.
Groupon.com, one of several deep-discount websites doing business in the Twin Cities, claims it can help restaurants, health spa operators and other retailers reach new consumers who can be turned into repeat customers.
"You may barely break even on Groupon customers the first time," said David Rangel, Groupon's director of merchant services. "But if you bring them back once or twice, you'll get a terrific return."
One local restaurant owner called Groupon's program "borderline predatory" because it's aimed at restaurants hurting from the recession.
"They know the restaurant industry is on the ropes, and they are offering people a quick fix. ... They are preying on people's fears," said Lenny Russo, chef and co-owner of Heartland Restaurant in St. Paul, who refused to participate in the coupon program.
The coupon deals jeopardize the restaurant industry, bringing short-term revenue, though not enough to cover the cost of buying, preparing and serving the food, he said.
Others say it's too early to tell whether Groupon, which entered the Twin Cities market six months ago, will hurt local restaurants or boost traffic as promised. Restaurants can control their costs by restricting the number of coupons -- known as Groupons -- that can be sold.