11/16/2011 12:06 pm ET | Updated Nov 16, 2011

Scoutmob Scuffle: Eli's Restaurant Latest Eatery In Customer Conflict Over Deal Sites

WASHINGTON -- As deal-of-the-day websites flourish, many restaurants are finding themselves at odds with promotions that may harm more than help, irritating and confusing customers without adding to the bottom line. The latest example: Eli's Restaurant, a kosher eatery near Dupont Circle, which is at the center of a dust-up with Scoutmob.

Arlington, Va., resident Menachem Wecker told The Huffington Post that he obtained a 50-percent-off deal for Eli's through the deal site, but was rebuffed when he tried to use it for a sit-down meal. The deal, management said, was just for carryout. The restaurant eventually agreed to honor the coupon, which would have amounted to a $15 discount, but refused to do so in full, taking only $13 off the total price.

When contacted by HuffPost, a manager at Eli's denied that the restaurant didn't honor the coupon, saying that the eatery "had at least like 15 of those [coupons the day before], so I don't know who would tell you that we didn't honor them."

HuffPost caught up with Scoutmob's D.C. editor, Marissa Payne, to find out what happened. The restaurant was initially on board to honor the deal for both dine-in and carryout, she said via email. Payne framed the text accordingly, making note of the "classic restaurant environment with friendly, prompt service."

Payne wrote that "it seems at some point after we published the deal on the site and app (which, by the way, merchants get to preview, including the fine print), the owner of Eli's decided to change the terms unbeknownst to us." She noted that she has since contacted Eli's to get to the bottom of the problem, and the restaurant requested that Scoutmob alter the deal's fine print to reflect the carryout provision.

"Luckily, we were able to negotiate with him to make sure that for those who had 'claimed the deal' (i.e. sent themselves an email or text, [as] opposed to using the app, which is all automized), Eli's will honor it for dine-in. Now, if users continue to have more problems, we invite them to contact us immediately. Bad experiences are not OK with us," Payne wrote.

As for why Eli's didn't honor the coupon in full, Wecker said that management gave him only hazy explanations.

Wecker said that he had been surprised to see on the deal site a restaurant like Eli's, which draws a self-selected clientele because of its kosher certification. He believes it's likely those who claimed the deal were the restaurant's core customers, who would have come anyway and paid full price, rather than first-timers who would provide a onetime monetary boost. Following that logic, the supposedly mutually beneficial partnership with Scoutmob might actually cause Eli's to lose money.

Wecker's experience at Eli's is hardly the only instance of deal site-induced discontent in the D.C. area.

Columbia Heights resident Andrew Mitchell told HuffPost that earlier this year, he bought a $20-for-$40 Groupon deal for Russia House Restaurant and Lounge. Despite the deal's title, which clearly includes the word "lounge," Mitchell said that the Kalorama eatery refused to honor it for sales in the lounge. A closer look revealed that the fine print limited the coupon to the dining area.

Mitchell believes the deal was misleading. He said that the restaurant was unsympathetic to his dilemma, despite the fact that he had brought a large party with him.

"They were very matter-of-fact, like, 'This is how it is.' And there wasn't any room to negotiate,” he said, adding that the experience left a bad taste in his mouth.

In recent months, many restaurants have begun questioning the value of deal sites. Earlier this year, Slate published an article detailing the potential damage that Groupon could inflict:

Prices are likely to erode as consumers come to expect deals. They will wait for sales to buy, and merchants will find themselves competing ever more fiercely. Meanwhile, merchants' brand power will be eroded as consumers look to Groupon (as they do to Orbitz), rather than to the merchants themselves, for the best deals.

Groupon is a particular target of those preaching the anti-deal site gospel. Unlike many of its competitors, Groupon charges a 50 percent commission, which could break the bank for less successful eateries.

In April, the Boston Globe interviewed Joanne Chang, who operates Asian-inspired eatery Myers + Chang and three branches of the bakery Flour, about her dislike of deal sites.

"These companies are making money off of restaurants that are nervous or low on cash and presenting it in a way that makes it sound like such an amazing deal for everyone," Chang says. "In fact, restaurants are getting a fraction of what they need to actually make any money."

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