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Groupon Deal Destroys Local Cupcake Business

groupon need a cake bakery

 

Financial News Story of the Day – Groupon Deal Costs Cupcake Business $20,000

Groupon, the hot daily deal site that recently went public, has just cost Need a Cake bakery owner Rachel Brown $20,000. Brown initially posted a deal on Groupon offering a 75% discount on a batch of cupcakes that drew in 8,500 customers. The London bakery had to hire 25 extra workers and made 102,000 cupcakes to fulfill the orders placed on the daily deal site. Whether or not the international press generated for the bakery will pan out for Brown in the end is a wait and see game (source: ABCNews.GO.com).

Excerpt: “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.”

Personal Finance Tip of the Day – How to Determine Affordability

One of my favorite personal finance bloggers, FrugalDad.com, had a great post on how you can determine affordability this holiday shopping season. One of his great rules is that if you have to second guess yourself on whether you can afford something or not, it usually means you can’t. I tend to agree as you would never second guess yourself on being able to afford a stick of gum or a bag of chips, simply because you know you can afford it. Your purchasing decisions should be easy unless it’s an expensive necessity like a new refrigerator because your old one died suddenly (source: FrugalDad.com).

Excerpt: “One of the best exercises I can recommend to help gain control of your spending is to convert monthly expenses to a yearly cost. It will immediately help you gain perspective that a monthly bill just doesn’t provide.”

Daily Finance Summary – Dow Down Slightly

The Dow Jones ended the day down yet again due to growing economic concerns including the failure of the supercommittee, Fed inflation talks and the U.S. potentially losing its second AAA rating. Many analysts are predicting a weak Q4 and revising their targets lower although the holiday shopping season is still expected to do well.

Quick Question: Does Groupon help or hurt small businesses?


Related posts:

  1. Groupon IPO Date Set for Next Week