A Reading bakery has potentially had up to £25,500 wiped from its yearly profits as a result of a collaboration with a discount voucher website.
Need a Cake, run by Rachel Brown, has made a loss on 102,000 cupcakes made as part of a Groupon voucher deal, which saw 8,500 users signing up to the offer of 12 custom-made cupcakes 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.
Brown had to fork out an extra £12,500 to hire 25 agency staff to help her eight current employees cope with the high demand, whilst funding additional distribution.
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.