This is marketing- pure and simple- for the business. That said, if the owner of said flight school wants to "give away" intro flights on the promise of new students, he needs to eat that cost. Asking (or requiring) the CFI to work for free (or practically free) isn't part of the deal. It's the business owner's marketing cost, and that includes giving away the aircraft for next to nothing, as well as paying his employees.
In a flight school environment, anytime you deal with the public, I'd say it'd be wise to have CFI's with some degree of business savvy. It doesn't matter if they know how to run the flight school or not, but they need to know how to sell themselves and keep their students happy, which in turn keeps the flight school happy.
By the way, if people don't know how Groupon works, here's a simple breakdown:
The discounted service must be at least 50% off the retail rate. So, for a $100 intro flight, it needs to be priced at $50 or less. When the customer buys the Groupon, Groupon collects the revenue ($50, in this case). Then, Groupon takes half of that, and pays the other half to the business ($25, in this case). So, for the business owner, he is giving a 75% discount to his new, potential customers.
We used to do a decent bit of work with Groupon on behalf of some clients, and I have to say, that in some instances, it can be a very good marketing tool. The key is, it needs to be a service with a high enough gross profit where you can afford to eat the 75% loss on the revenue side. Also, it works considerably better for the business if it's an industry that's likely to up-sell the customer. For restaurants, this works pretty well- give away a $20 Groupon, knowing that when they come in to use it, they're still going to have a $60 check. Sure, you discounted the original $20 by 75%, but you're making your full gross profit off the remaining $40, and it was likely a sale that you wouldn't have had in the first place, and if you provided a quality service, the customer is likely to return (and we all know that's they key to building a business).
However, in the case of a flight school, I think the rate of conversation of a Groupon "tire kicker" turning into a new student is definitely below 20%. Given that, all the schools that I've seen try this have found it to be a losing battle for a flight school owner.