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.
“We take pride in making cakes of exceptional quality but I had to bring in agency staff on top of my usual staff who had nowhere near the same skills. I was very worried about standards dropping and hated the thought of letting anybody down,” she said to the Telegraph. “We are still working to make up the lost money.”
A Groupon spokeswoman told the Telegraph there was no limit to the number of vouchers that could be sold. “We approach each business with a tailored, individual approach based on the prior history of similar deals,” Heather Dickinson, director of International Communications told the newspaper.

source: yahoo