IT WAS THE blog post read ’round the restaurant world. In September, Jessie Burke, owner of Posies cafe in Portland, Oregon, wrote that partnering with online coupon megalith Groupon “was the single worst decision I have ever made as a business owner.” Media outlets like eater.com and The Washington Post picked up the story, in which Burke describes how Groupon sold a whopping 1,000 Posies coupons in one day. Faced with redeeming all those discounts, Burke wound up dipping into personal savings to make payroll.

Not all coupon partnerships end disastrously. In a recent Rice University study, two-thirds of Groupon collaborators reported making a profit off their deals. And magazines, including this one, have used them to score subscribers with great success.

For hospitality businesses, the trick seems to be careful planning. Troy Kindred, who owns the Quartermaster Inn and Restaurant on Vashon, used Groupon competitor LivingSocial to lure urbanites to the island. In a deal he describes as “phenomenal,” he negotiated with the company to cap the number of coupons at 600, and to make the discount unredeemable during busy summer months. LivingSocial gave Kindred the email addresses of everyone who bought the discount; he’s now using them to create a list that he will market to directly.

Jilyan Perry, manager of West Seattle’s Sugar Rush Bakery, signed a contract with LivingSocial stipulating she’d keep 70 percent of her coupon profits—though she said LivingSocial later tried to renegotiate the deal and that she had to make multiple phone calls before her coupon was published on the site.

Hassles aside, Perry would do it again. About 60 percent of the coupon customers are brand new to the bakery, proof to her that the deal will generate new business. “I believe in word-of-mouth marketing,” says Perry, who doesn’t advertise in print or on the radio.

But Seattle restaurant consultant Maggie Savarino, a former food and drink writer, cautions her clients against buying in with the discount folks, comparing their allure to that of payday loan companies.

“Marketing these days takes time, and lots of it. It takes outreach and working your email and client list in an almost old-fashioned way, which is better served by low-cost tools like Facebook and Twitter than these get-cash-quick schemes.”