Earlier this week, the owner of Posie’s Cafe in Portland, OR, made headlines when she said that her decision to try advertising with Groupon was the “single worst decision I have ever made as a business owner.”

She claimed that Groupon was demanding too high a percentage on the coupons they sold and that Groupon does not let merchants put limits on how many coupons are sold on a deal. That means the cafe was stuck having to honor significantly more coupons than they were financially able to fulfill.

Wrote the Posie’s owner:

There came a time when we literally could not make payroll because at that point in time we had lost nearly $8,000 with our Groupon campaign. We literally had to take $8,000 out of our personal savings to cover payroll and rent that month. It was sickening, especially after our sales had been rising.

Yesterday on their blog, the Groupon folks responded to the post. Most of what they wrote was of the “we’re sorry it didn’t work for you but here are some real success stories…” marketing speak. But one thing they did exception with was the allegation that they don’t allow caps on Groupon sales:

it has always been Groupon policy to allow merchants to cap deals. If a merchant sells too many Groupons, they’ll have a bad experience, the customer will have a bad experience, and therefore, Groupon loses. We’re longer-term thinkers than that. In fact, we have the opposite problem more often – where merchants protest a cap we recommend, convinced they can handle more customers than we think they can.

What have your experiences with Groupon been like? If there are any merchants out there who have used Groupon, we’d love to hear about how it’s worked out for you — for better or for worse.

Too Much of a Good Thing? [Groublogpon]
Groupon in Retrospect [PosiesCafe.com]

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