D.C.’s ultra-cool Blagden Alley near the Convention Center is an inviting spot for a brew and Belgian-style waffle.
But it's closed. The owner says he couldn't cover the cost of doing business after issuing coupons through popular daily deal site Groupon.
“They take half of the money and then they hold on to your half for months before they send you a check,” says Craig Nelson, owner of Back Alley Waffles.
Nelson discovered selling his popular homemade waffles below his art studio made more money than just his mosaics.
But ingredients, rent and labor added up and when Groupon customers flooded in. Without Groupon quickly paying him back, he folded.
“For us as a small business, just starting out, and on a shoe string, it broke our backs basically,” he says. “We had to close.”
The front door rant is going viral thanks to a post on Washington City Paper. It reads: "Grouponistas - sorry but I'd rather have my hand slammed in a car door than honor your Groupon coupons...."
Before offering the discount deal, Nelson admits he should have done his homework. Scores of businesses warn online about the perils of promoting through Groupon. Now he wants other small businesses owners to beware.
From Julie Mossler, Groupon spokeswoman:
"Mr. Nelson 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. According to our records, only 132 Groupons, or 18% sold, have been redeemed since Back Alley ran two months ago, and Mr. Nelson 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."
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