|Cupcake calamity: worst possible Groupon deal for British bakery|
When the owner of a small bakery outside London posted a deal for cupcakes on Groupon, she ended up getting more than she bargained for. Rachel Brown (left), who runs Need a Cake bakery in Reading, Berkshire, offered a 75 percent discount on a dozen cupcakes in the spring. She expected the offer would generate perhaps a few hundred orders. Instead, thousands started pouring in.
"We had to cut it off at 8,500 orders," she says. "As soon as we were making, packaging and sending the cakes out we were on to the next order. It was non-stop."
Her 12 custom-made cupcakes were on offer for £6.50. The 75% discount on its normal retailing price of £26 meant that for every batch of cupcakes made, the bakery ended up losing between £2.50 and £3.
Need a Cake normally fills about 100 cupcake orders per month, but suddenly faced with baking 102,000 cupcakes, Brown was forced to hire 25 workers to supplement her normal staff of eight.
Brown ended up spending about £12,500 to hire extra labour and in shipping costs, wiping out a year's worth of profits. It was "without doubt, the worst ever business decision I have made," she says. "It's been an absolute nightmare."
Steve Consalvez, business partner and spokesperson for Need a Cake, said: “The business has been going for 25 years and following the Groupon discount offer, the company has realised it isn’t the way to go forward as it has wiped out profits for this year. However, it will be continuing to build on its successes in 2012.”
The Berkshire-based business supplies to major international food outlets and produces birthday, wedding and Christening cakes, in addition to cupcakes and cake hampers.
Heather Dickinson, a Groupon spokeswoman, said there was no limit to the number of vouchers that could be sold, adding: “We approach each business with a tailored, individual approach based on the prior history of similar deals.”
US-based Groupon is a ‘deal-a-day’ website offering coupons to subscribers, giving discount deals on anything from restaurant meals to spa treatments and only available if a minimum number of people sign up.