Also, the owner mentioned utilising many different discount/coupon programs. Groupon may stand out because it's kind of emblematic, but there's no reason to think from anything that has been said that it was the majority of their coupon activity. Is there?
An interesting trend I've noticed with Groupon is that, at least in Chicago, it's a great way to kill your Yelp rating. The sudden surge in business tends to be much more than the business is really prepared to handle, and everything naturally suffers when that happens. Particularly in Groupon's hometown, where their high market penetration means they act as the engine behind a veritable tsunami of deal chasers that roves around the city, randomly swamping unsuspecting mom-and-pops and neighborhood holes-in-the-wall.
I used to be a regular customer at Drew's. But I have a habit of ceasing to go to restaurants for a month or two when I hear they did a Groupon. (Not out of protest or anything. It's just that flooding a place with Grouponers tends to make it a less pleasant place to eat.) I'm definitely not the only person I knew with that habit.
Their menu basically consists of expensive vegan
hot-dogs and fairly generic sandwiches, which is
a tough sell in Chicago when you have some very
good food around for very cheap.
If I had to speculate, it seems like the restaurant was likely faltering already, and the owner tried to attract new customers with some Groupon deals. It didn't end up generating the kind of revenue he had hoped, it didn't result in new returning customers, and the restaurant closed down. I think if you have a restaurant that is really great and you want to the word out, Groupon can be a real driving force in getting people in the door. However, if you cannot guarantee the kind of experience that is going to make them come back, and/or you are already walking a tight line financially, it might not be a good idea at all.