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Tuesday
Nov222011

Groupon Deal Burns Small England Bakery

Scott Olson/Getty Images(LONDON) -- The owner of a small bakery outside London claims she had to make 102,000 cupcakes when a deal she posted on Groupon took off online, according to reports.

Owner Rachel Brown offered a 75-percent discount on the money-saving website for 12 custom cupcakes, which typically sell for $40 and were available through Groupon for $10, the Telegraph reported.

Brown was prepared to fill a couple hundred orders, but when 8,500 poured in, her small staff at the Need a Cake bakery was inundated and unable to keep up with the demand.

Brown told the Telegraph she lost over $3 on each batch and had to hire additional help to fill the orders at a cost of $19,500, cancelling out a full year’s profit on the business.

“It’s been an absolutely nightmare,” she said in an interview with the Telegraph. “Without doubt, the worst-ever business decision I have made.”

Groupon, the money-saving website which offers daily deals for as much as 80 percent off the original price, has soared in popularity since it launched in 2008. Now in 43 countries, deals are available for everything from dinners to dance lessons, weekend getaways, even medical procedures, and have meant big savings for online bargain hunters.

For businesses looking to expand in a tough economy, Groupon has been viewed as a way to reach new customers.

While Brown’s Need a Cake bakery, located in Reading, Berkshire, did attract a new clientele through the deal, she said the quantity of cakes she was forced to produce was detrimental to the quality.

A Groupon spokeswoman told the Telegraph there was no limit to the number of vouchers that could be sold.

Copyright 2011 ABC News Radio







ABC News Radio