Too Much of a Good Thing Sinks Yo! Philly's

Yo! Philly's owner Tom Stanley served his last cheesesteak Saturday night. 

He said that it was a Groupon coupon that did him in, pushing him over an already thin line of sustainability.

Before Groupon, said Stanley, business wasn't stupendous at the cheesesteak shop he opened in September, 2009 on Park Street just south of Encinal Avenue. "But," he said, "I was able to stay afloat."

Groupon, he said, "put the nail in the coffin."

At first, when Groupon started calling, said Stanley, he avoided the saleswoman's calls. ("Just like any salesperson.") But when she finally got him on the phone, he said, she was very persuasive: she said she loved his cheesesteak. 

"She said they could open up my business to a whole different customer base," said Stanley. There was supposed to be a two-coupon limit person, but a loophole allowed customers to buy many more Groupons, he said.

"I'd never heard of Groupon before. I'm not a big Internet guy," Stanley said. 

Stanley says the salesperson said he'd sell 100 or 200 of the Groupons, but he ended up selling nearly 900. Nearly 800 of which, he says, have been used.

"They never told me about the cap," says Stanley. A cap would have limited the number of Groupons sold. 

Customers paid $5 for $10 worth of product, Stanley said. But he only got $2.50 per sale from Groupon. And, after tax, that amount was worth more like $1.50 per coupon. Each cheesesteak, says Stanley, cost him "about five bucks each" for the supplies, so each Groupon used meant money out the door. 

"Caps have always been an integral part of deal structure and we continue to offer them to merchants before and even on the day of their feature, to ensure service is never compromised," said Julie Mossler, a spokesperson for Groupon. "While we encourage businesses to use them, it's up to the merchant to agree on the deal structure and decide if a cap is best for them." 

Mossler says the Groupon structure has worked well for other stores in the area. "The majority of our businesses see additional spending on top of the value of the Groupon, and high-quality repeat traffic," said Mossler.

When the Groupon came out on Aug. 4, says Stanley, he quickly began to see change in his bottom line. "Definitely by the end of the month I knew my numbers were completely off," he said.

Before Groupon, he was staying afloat, with lots of other factors to contend with, he said. After, not so much. 

"I have high food costs," says Stanley, who says he imports white Velveeta and other specialty foods from the East Coast. 

On Saturday night, Jan. 29, the final night for Yo! Philly's, Josh Ocasion, 19, and friend Jonathan Montoya, 18, both from San Lorenzo, said they came to enjoy their last meal at the establishment they'd frequented since Ocasion stumbled on it the first day it opened.

"We were just walking down the street one day and we ate here out of impulse," said Ocasion. "That was the first day and our eyes were opened."

"We came back two times the next day," said Ocasion, as he ate his last meal at Stanley's shop.

Stanley, who's originally from New Jersey, says he's not sure what's next for him. "I've had a lot of jobs," he said.

Saturday night, Stanley's shop was already half-emptied, the decorations, a tribute to his love  for Rocky Balboa, mostly down. Coke had taken back the cooler. Boxing gloves still dangled from the ceiling.

"Tomorrow I'll be here cleaning up," said the father of four, who has lived in Alameda for three years.

"It was an expensive lesson," says Stanley, "but I did learn a lot of lessons here." Pointing out the huge can of Cheez Whiz near his grill, he added, "And I can pride myself making it as authetic as possible."

Yo! Philly's gained a following in its 16-month tenure in town: Yelp reviews here.