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Earlier today we told you about a Washington, D.C., waffle joint that claimed it had gone out of business because Groupon didn’t pay it the money it earned from a daily email deal in a timely fashion.Groupon just gave us its side of the story—that the deal was constructed entirely on owner Craig Nelson’s terms, and that he knew the schedule of customer payments before he pulled the trigger on the deal.
UPDATE: Waffle man strikes back!
Better than that, Groupon also gave us the exact financial terms Back Alley Waffles received. The original offer was for $8, for waffles for parties of two or four. More than 660 were bought, according to Groupon. That would have generated ~$5,280 in cash from Groupon customers.
Here’s how it broke down:
According to our records, only 132 Groupons, or 18% sold, have been redeemed since Back Alley ran two months ago, and Mr. Nelsen has received 2/3 of his share of the revenue to date. We always hate to hear that a local business has decided to close, but the maths does not point to Groupon as the cause.
Here’s how Groupon breaks down the payments :
- Paid to Date: $2126.06 (last payment was issued on 7/14/12)
- Cost of 132 Redeemed Vouchers: $679.25
- Difference: $1446.81 we have paid merchant for customers who have yet to come in + 3rd payment (est. $1063.03). Keep in mind this doesn’t include overspend.
Groupon also said:
Mr. Nelsen initially approached Groupon and our merchant advisors structured a deal to best encourage overspend and help his business grow. We also required Back Alley to cap the number of Groupons sold to ensure the feature was in the best interest of both consumers and the merchant. We scheduled his feature on his terms, on a date he selected, under a contract he reviewed and signed.
- The Death Of This Waffle Joint Illustrates Perfectly Groupon’s Cashflow Problem
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