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One thing the article does not mention is "breakage": "Breakage is a term used in accounting to indicate gift cards that have been sold but never redeemed. Revenue from breakage is almost entirely profit, since companies need not provide any goods or services for unredeemed gift cards." http://en.wikipedia.org/wiki/Breakage

This article (http://www.journalofaccountancy.com/issues/2007/nov/accounti...) says that the average breakage is 10-19%. Let's say it's 10% to be conservative. Posie's Cafe said that over 1,000 customers bought the promotion. A 10% breakage implies that at least 100 customers bought but never used their Groupon coupon. Posie's Cafe only gets half of this, but it does give them a free $300. I guess that's not that much, but if breakage is 19%, 190 customers would have given them a free $570.

EDIT: using kareemm's datapoint of 30-40% below, the breakage would be $900-$1,200.




i've heard from a few friends in the valley that groupon's avg breakage is in the 30-40% range.


What category of business do they run? How long ago did they run their groupons?




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