[LiveTheDream]

    This was a cafe that sold crepes and coffee. They were trying to get people to think of them also as a dinner place. They did a Living Social deal that for $40 let you come in six times (no more than once in a given month) for two entrees and a bottle of wine or a drink of your choice.

    They got 1200 takers.

    Like the auto repair deal, this one is a loser, depending on the customers buying other things to turn it around. Unfortunately for the cafe, the customers with the deal did not buy other things. They would not buy appetizers or desserts. They would just come in once a month for their six months, get their two entrees and a drink, and that's it. The owner says she lost $100k.

This blows my mind. The cafe owner should know exactly how much she is spending for each deal that is purchased. It's a marketing expense; each deal also has some estimated upside (repeat buyer, up-sell on the original visit, etc). By not placing a limit on the number of deals sold, the owner gave herself an unlimited risk. Why not just place a reasonable limit on the number of deals, thus capping the potential exposure to an acceptable level?