Groupon discounts working too well, overwhelming small businesses

Businesses that market themselves through bargain web site Groupon are finding that the strategy works a little too well.

Last year when Philz Coffee of San Francisco offered Groupon users discounted gift cards for in-store pickup, the owner expected a few hundred takers, not the more than 2,000 that came through the door. Jacob Jaber, president of the San Francisco coffee chain, told Bloomberg Businessweek, "I nowhere near projected the amount of people that showed up. We just weren't prepared for it." He ran out of cards, irritating customers, and says he'll probably stick with word-of-mouth marketing from now on.