Groupon Deal Leaves Cupcake Cook in the Red

 

Groupon – a website that advertises a ‘deal-a-day’ from television sets to coffee house deals – got a cupcake shop owner into a real pickle as she perhaps failed to read the small print.  The problem was, Rachel Brown – a professional baker and owner of ‘Need a Cake’ with over two-and-a-half decades in the business – somehow forgot to put a limit on how many cupcakes could be ordered.  Thus she received 8,500 orders and had to produce them for £6.50 a box instead of her standard $26 price. This resulted in a loss of $2.50 (nearly $4) per box!  On the error, Brown commented, “without a doubt, it’s the worst business decision I’ve ever made.”

100% More Cupcakes

Brown knew that her cupcakes were popular.  But perhaps she didn’t realize just how popular they were.  She usually bakes around one hundred a month, but due to the deal she had to increase this figure to 102,000!  Since she’d given out such a great deal, so many people responded and she actually made a significant loss on each of the orders.  This put her in a financial loss situation for the entire year! She ended up spending an additional £12,500 (almost $20,000!) on hiring more workers and other expenses to fill the order.  Usually the company has eight workers on staff; due to this order it had to bring in an extra 25 workers from an agency.