Tuesday, July 24, 2012 at 9:30 a.m.
Back Alley Waffles, a Washington, DC restaurant that served Belgian waffles with fresh-churned butter, has closed after just three months in operation. Owners are blaming Groupon.
An dramatic explanation is posted on their website
Grouponistas, sorry, but I'd rather have my hand slammed in a car door than honor your Groupon coupons. You'll have to seek refunds from your new insect overlords. If you act quickly, you should get your money back by Christmas. 2015.
With online deal company Groupon, bargain-hunters buy a coupon through the website and then flock to the restaurant (or other company) to redeem it. Groupon sends the restaurant a check. All win, in theory.
But Back Alley Waffles, a small shop nestled in an alley, claims the company takes too long to send the money. While the restaurant had to lay out all the money for food and labor up front, owners say it's typical Groupon practice to not send the payment right away. Instead, restaurant owners say, it can take three months to recoup some of the money, which can be devastating for a tiny business.
Back Alley co-owner Craig Nelsen told the Washington Post
that his experience with other deal sites ScoutMob and Living Social had been positive, but Groupon's delayed compensation method was "a backbreaker."
A Groupon spokeswoman denies that the deal site caused the restaurant to shut down, telling the Post, "According to our records, only 132 Groupons, or 18% sold, have been redeemed since Back Alley ran two months ago, and Mr. Nels[e]n 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 math does not point to Groupon as the cause."
Back Alley Waffles, which announced on its website that it is "closed indefinitely due to the bloodthirsty business practices of Groupon," is now selling waffles for $450 each by appointment only. We'll see if that proves to be a better business model.