The Waffle Man Shows His Math on How Groupon Put Him in a Cash Crunch
After Groupon said it did not put a Washington, D.C. waffle-maker out of business, the waffle-maker has done a line-by-line take down of that very suggestion, putting the two in a he-said, she-said standoff. The takedown titled "On the indefatigable Ms. Mossler" takes issue with a statement the Groupon spokesperson Julie Mossler gave to the press, including The Atlantic Wire. Here, Craig Nelson the owner of Back Alley Waffles, who claimed the Groupon payment system, which doles out cash in three installments over three months, put him out of business, defends himself against each of her points. Like, the part where Mossler cites records that only 132 Groupons, or 18 percent sold, have been redeemed since the deal began. "The math does not point to Groupon as the cause," she told The Atlantic Wire. To that, Nelson has to say:
That 18 percent represents $2,600.00 worth of waffles for which we laid out the food and labor costs upfront while Groupon collected about $7,000.00 on line, pocketed half, then took our half, and pocketed that too. For 30 days, at which point they sent us a third(!) of our money. Then we had to wait another month(!) for the next third.
In a separate e-mail to The Atlantic Wire, Nelson called that amount "small potatoes to a $1.6 billion-a-year corporation like Groupon, but huge to us." Though Nelson has passed the blame back to Groupon, Mossler has given her company's final word on the matter "I and Groupon stand behind the facts as presented. We genuinely wish Mr. Nelsen the best in any future endeavors," she wrote us. So then, who won: Did Groupon shut-down this waffle maker?
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The facts stand: Groupon gave Nelson a contract that set out its standard terms of payment. After he ran that deal, Nelson had to shut down his shop. Groupon did stick to the terms that it gave Nelson. But he calls that behavior "like a Pay Day Loan outfit, 'Well, you signed it!' as if that relieves them of any culpability for being charlatans," he writes. Groupon, however, points to many other reasons his business might have failed, beyond the daily deal. He had admitted to financial struggles related to his art gallery, as DigitalTrends's Mike Flacy notes. Thus, we have a stalemate.
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Without calling winners or losers, if anything, Nelson's situation provides a cautionary tale for other small, food-service businesses. Nelson ran into trouble because he couldn't afford the customers the Groupon brought him without the payments, an issue others have had with the daily deal site, as we noted the other day. Groupon wasn't right for Nelson, so maybe it's not the best solution for other similar retailers either -- a problem for Groupon, which is always looking for new merchants with which to work. Though, this is an issue others have known about before Nelson closed shop. If it's any indication of the effect Nelson's gripes have had, Groupon's stock is trading down almost 7 percent as of the writing of this post, but has been flat since he started getting buzz on Monday.
