Groupon needed a ton of boots on the ground because no one knew who Groupon was and they didn't have existing relationships with millions of businesses. I think Google could automate a lot of it with good results.
Too automated and surely it'll fill up with crap offers?
Big overlay on google maps: "Get 0.5% off your total bill at Joe's Pancake House when you order at least sixteen pancakes!"
PS. Man, I feel like pancakes now
I still think you need to have people on the ground. And lots of them. As a small aside, I work for a Groupon-clone website in a non-US market. I've built a very nice Internet-based redemption interface for the business owners to check the clients' coupons. Guess what? ~75% of them don't even have Internet at the POS, they print their coupon lists at a home computer and somehow manage all the clients we send them manually. We also manually create accounts for about half of them, because, apparently, creating an user account on our Drupal-based website is too damn difficult.
Maybe this time is different, and all the tech-savy small-business owners from out-there will go directly into Google's arms. I personally doubt it.