We've been patiently waiting for this story in the business section of The New York Times entitled "The Latest Entrepreneurial Fantasy Is Selling Cupcakes" by Elizabeth Olson. For all the people who write and ask us questions we can't answer about opening up a bakery, read this article. Then drop us a line when you've opened your bakery - I have a bunch of cupcakery openings from the past two weeks to post about, which further strengthens the case against the legions of cupcake haters and doubters, like Daniel Gross of Newsweek's "The Cupcake Bubble" fame. This story is especially interesting because it's exploring web-only (online) cupcakeries, like Danielle Buckley of Delleicious and Toot Sweet Cupcakes, which are a big addition to the market and seem to be growing (see our cupcake bakery links at right) as well as traditional shops, which are now growing into cupcake chains, like Sprinkles.
There is no Cupcake Manufacturers Association keeping count, but anecdotal evidence indicates that stand-alone cupcake shops have been spreading not just in the acknowledged cupcake meccas of New York and Los Angeles but also in Boston, Denver, Austin, Tex., and lots of smaller places. Nationwide, cupcake sales, according to the market research firm, Mintel, are projected to rise another 20 percent over the next five years at a time when other baked goods are expected to grow in the single digits.
“Cupcake Wars,” a series pilot in which four bakers vie to create the most interesting concoctions, will soon have its debut on the Food Network. “Martha Stewart’s Cupcakes” (Clarkson, Potter), a collection of 175 recipes, was published in June, and spent 11 weeks on The New York Times best-seller list. And the most popular of the cupcake blogs, Cupcakestakethecake, is visited by some 9,000 people a day. At least a dozen blogs chronicle each new flavor — from bacon to s’mores — as well as the best frostings, the quirkiest decorations and the newest twists (so far, the meatloaf cupcake with mashed-potato frosting seems to have been contained within Chicago).
New York’s Magnolia Bakery, which helped set off an earlier cupcake craze when its treats appeared in a “Sex and the City” episode, is now expanding operations into Los Angeles, where its $3 red velvets and devil’s foods will compete with the chai lattes and ginger lemons of Sprinkles Cupcakes, which is based in Beverly Hills but has owner-operated shops in six other cities and plans to open in far-flung locales like New York, London and Tokyo.
And this part looking at Denver's Lovely Confections Bakery as an example is interesting as well:
For each cupcake she sells, Ms. Lovely figures she spends 60 cents on ingredients, 57 cents on mortgage payments and utilities, 48 cents on labor, 18 cents on packaging and merchant fees, 16 cents on loan repayment, 24 cents for marketing, 18 cents for miscellaneous expenses and 4 cents for insurance. That totals $2.45, leaving a potential profit of 55 cents on each $3 cupcake.
So far there are 8 comments in the related piece at The New York Times answering the question "Are Cupcakes a Viable Business?" A sampling:
Look, I like the nostalgia too.
But at some point, there will be too many cupcake stores. We are talking about bite size cake here, people. Even if the flavors get crazy (which they already are) and shop owners start offering Curry-flavored cupcakes, the intense competition will drive out shops and keep costs relatively down.
I suggest a new kind of bakery, something equally cute and nostalgic. I don’t know what it is, but it’s better than trying to join this over-heavy bandwagon. -- G
The cupcake business is attractive because of it’s novelty and new cache. It also provides an allegedly low food cost, the lure of owning a “small bakery,” and it’s got a cute factor. But I believe many of these entrepreneurs underestimate the long term viability of a “cupcake shop.” It doesn’t have the stability of a coffee shop, or the history and nostalgia of an ice cream shop. Nor does it have the volume and sheer assortment of baked goods like a traditional bakery. Sure, some of the smaller and unique cupcake shops with smarter owners will survive and build a customer base that will serve them long term. But right now, with no obvious product difference between shops from one shop to another, I predict a lot of these places will close up within 5-8 years, just like all the new “natural frozen yogurt” shops. It’s a fad, a trend that a lot of people want to be part of right now.
-- T
Cupcakes are as dumb as Pinkberry. Give me a Tarte Tatin or some almonds in dark chocolate. -- Joel
There is no Cupcake Manufacturers Association keeping count, but anecdotal evidence indicates that stand-alone cupcake shops have been spreading not just in the acknowledged cupcake meccas of New York and Los Angeles but also in Boston, Denver, Austin, Tex., and lots of smaller places. Nationwide, cupcake sales, according to the market research firm, Mintel, are projected to rise another 20 percent over the next five years at a time when other baked goods are expected to grow in the single digits.
“Cupcake Wars,” a series pilot in which four bakers vie to create the most interesting concoctions, will soon have its debut on the Food Network. “Martha Stewart’s Cupcakes” (Clarkson, Potter), a collection of 175 recipes, was published in June, and spent 11 weeks on The New York Times best-seller list. And the most popular of the cupcake blogs, Cupcakestakethecake, is visited by some 9,000 people a day. At least a dozen blogs chronicle each new flavor — from bacon to s’mores — as well as the best frostings, the quirkiest decorations and the newest twists (so far, the meatloaf cupcake with mashed-potato frosting seems to have been contained within Chicago).
New York’s Magnolia Bakery, which helped set off an earlier cupcake craze when its treats appeared in a “Sex and the City” episode, is now expanding operations into Los Angeles, where its $3 red velvets and devil’s foods will compete with the chai lattes and ginger lemons of Sprinkles Cupcakes, which is based in Beverly Hills but has owner-operated shops in six other cities and plans to open in far-flung locales like New York, London and Tokyo.
And this part looking at Denver's Lovely Confections Bakery as an example is interesting as well:
For each cupcake she sells, Ms. Lovely figures she spends 60 cents on ingredients, 57 cents on mortgage payments and utilities, 48 cents on labor, 18 cents on packaging and merchant fees, 16 cents on loan repayment, 24 cents for marketing, 18 cents for miscellaneous expenses and 4 cents for insurance. That totals $2.45, leaving a potential profit of 55 cents on each $3 cupcake.
So far there are 8 comments in the related piece at The New York Times answering the question "Are Cupcakes a Viable Business?" A sampling:
Look, I like the nostalgia too.
But at some point, there will be too many cupcake stores. We are talking about bite size cake here, people. Even if the flavors get crazy (which they already are) and shop owners start offering Curry-flavored cupcakes, the intense competition will drive out shops and keep costs relatively down.
I suggest a new kind of bakery, something equally cute and nostalgic. I don’t know what it is, but it’s better than trying to join this over-heavy bandwagon. -- G
The cupcake business is attractive because of it’s novelty and new cache. It also provides an allegedly low food cost, the lure of owning a “small bakery,” and it’s got a cute factor. But I believe many of these entrepreneurs underestimate the long term viability of a “cupcake shop.” It doesn’t have the stability of a coffee shop, or the history and nostalgia of an ice cream shop. Nor does it have the volume and sheer assortment of baked goods like a traditional bakery. Sure, some of the smaller and unique cupcake shops with smarter owners will survive and build a customer base that will serve them long term. But right now, with no obvious product difference between shops from one shop to another, I predict a lot of these places will close up within 5-8 years, just like all the new “natural frozen yogurt” shops. It’s a fad, a trend that a lot of people want to be part of right now.
-- T
Cupcakes are as dumb as Pinkberry. Give me a Tarte Tatin or some almonds in dark chocolate. -- Joel
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