A conceptual model of profitability determinants in online deal promotions for online-to-offline restaurant merchants

With advancing information and communication technologies, the online to offline marketing approach has become significant to consumers’ purchasing behaviors. The profitability of merchants who use online deal promotions is a question due to lower the price for marketing purpose. The purpose of this study is to examine and construct a conceptual model of profitability determinants of online deal promotions in food and beverage industry. Questionnaires were collected from restaurant owners who have previous applied online deal promotions. Logistic regression was applied to examine the probability and average marginal effects on major profitability determinants in deal promotions. We found that upselling, employee satisfaction, and face value positively influence the probability of profitability, where depth of price discount is a negative factor toward profitability. Upselling is the most important positive factor found in this study. Restaurants who use deals sites promotions might combine some in-store promotions to increase deal voucher customers to spend more than face value during their visit. The more upselling amount from the voucher customers, the more profits merchants can obtain from the voucher discount marketing.