The online group-buying model pioneered by Groupon has become big business, so much so that it's creating growing pains for both the Chicago-based company and the small businesses it's supposed to help.
Greg Gibbs, owner of Chicago Bagel Authority in Lincoln Park, felt this pain firsthand when he signed on with Groupon for a deal-of-the-day in January. His promotion, which cost $3 for an $8 voucher good for any menu item, sold nearly 10,000 Groupons, 10 times more than the top end of Gibbs' expectations.
"This will end up being the year of the Groupon for us, and that's not a good thing," Gibbs said. "We'll count it as a loss. "
After splitting 50 percent of the revenue with Groupon, a standard deal for most businesses, the shop netted about $15,000 for $80,000 worth of food. Gibbs said the promotion hasn't yet translated into additional revenue.
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