Groupon deal wipes out cupcake baker's profits

A Berkshire baker claims she has lost her entire year’s profits after posting a deal on money-saving website Groupon.

Rachel Brown, owner of bakery Need a Cake, advertised a 75% discount to the website's subscribers but underestimated the demands she would receive. Marketing 12 cupcakes at a cost of £6.50 instead of the usual £26, Brown had to cut off the orders at 8,500 requests and ended up losing almost £3 for every batch she sold. 

The entrepreneur told The Telegraph: "As soon as we were making, packaging and sending the cakes out, we were on to the next order. It was non-stop."

Normally producing around only 100 cupcakes per week, Brown was forced to take on additional staff to fill the orders, resulting in an extra £19,500 in shipping and labour costs.

Reflecting on the discount nightmare, the business owner added it was "without doubt, the worst ever business decision I have made".

Groupon spokeswoman Heather Dickinson told the Telegraph that there was no limit to the amount of vouchers that could be sold on the website. "We approach each business with a tailored, individual approach based on the prior history of similar deals," she said.