Agreed. These things are covered in depth when setting up a Groupon, and Groupon has a pile of resources to help a business prepare to deliver what they're offering.

These stories pop up all the time, though, and the press keeps gobbling them up. I'm no fan of the company, but it's easier to paint Groupon as the villain than the individual business owner who didn't do the math of running their own business properly.

At the risk of stating the obvious, someone with a business that has 4k monthly turnover in cupcakes probably enjoys making cupcakes but is not necessarily an expert in industrial scale capacity planning. Groupon inverts the laws of physics for her business. Customer acquisition is no longer hard, gross margins are no longer $2 a cupcake. A part of me sympathizes.