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There are always customer acquisition costs. But you hope you get some combination of repeat customers and the customers who do come end up spending more.

For instance one breakfast place we frequent is always running a $20 worth of food for $10. We always end up spending more. Besides soft drinks have ridiculous margins. Movie theaters make most of their money from concessions, food (movie and dinner type theaters) and the bar.

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I see so the primarily utility of Groupon is that businesses can pay for a chance of repeat customers and/or extra spenders? I think the theater is a good example of the latter.

Then the question arises, why can't businesses do this themeselves? Why can't the breakfast place you frequent just advertise $20 worth of food for $10? Why Groupon? Is it because Groupon can send foot traffic on demand for a cut of the sales?

Yes, like Amazon, Groupon has its own traffic which would be hard for a small business to reach otherwise.

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