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Are Groupon deals a sign a business is failing?

Tuesday - 2/18/2014, 6:42am  ET

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UBreakIFix's David Farmer works to repair a cracked iPad in the Cleveland Park store on Thursday, Feb. 6 (WTOP/Megan Cloherty)

WASHINGTON - The beginning of the year is a tough time for retail sales, so when you see a neighborhood restaurant offering multiple flash sales and Groupons, is it a sign its failing?

Business owner Adam Nations says his shop is in good shape. Yes, UBreakIFix is offering a deal to repair cracked phones and tablets because it's a slow time of year, but he says it's also to increase awareness of his business.

"From our perspective, it was merely to a way to get the word out to people we haven't reached already," Nations says.

While he's flooded with new orders, Nations' business can fix more than a dozen devices a day. The businesses that shouldn't offer them, says American University marketing professor Nelson Amaral, are restaurants and massage parlors that can't serve more than a few customers at time.

"Those places, it might be a sign that business is not good because the average customer sits for 30 to 60 minutes at a table and the average massage is 4 and a half to 60 minutes," Amaral says.

And the businesses offering social deals have to plan to have the capacity to take on a flood of customers, he says.

"Most of the people who buy these Groupons are using them at peak hours anyway. They're not going to eat at 2 or 3 in the afternoon. They're going to go when the restaurant should already be busy," Amaral says.

While it doesn't apply to his situation, Nations says he has heard of businesses using flash sales in an attempt to save their bottom line.

"I know some businesses use it as a last ditch effort, but for us -- because we're such a niche business -- it's a great way for us to spread the word about our business," he says.

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