You're not including Rachel's costs in your calculation of her loss. She's paid for the materials -- flour, eggs, sugar, etc. -- and the labor to make the cupcakes -- including possibly overtime pay. She's paid for the power to run the mixers and ovens much longer than usual. Her cost may be another $1 or more per dozen.
What's devious about Groupon and its clones is the way they present themselves: as a method of risk-free advertising. But there's plenty of risk if your deal sells your product or service below cost. There's the risk of selling too much and generating a huge loss.
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