The Cupcake Industry Bubble Going To Burst?

Business By Jackie Updated 14 Sep 2009 , 2:54pm by SugaredUp

Jackie Posted 13 Sep 2009 , 9:29am
post #1 of 19

I read an interesting article this week about the CupCake Bakery Industry:
http://www.slate.com/id/2227216/pagenum/all/

Quote:
Originally Posted by Daniel Gross

The Cupcake Bubble Better enjoy that vanilla cupcake with espresso-ganache icing today, because the cupcake crash is coming!
By Daniel Gross Posted Thursday, Sept. 3, 2009, at 4:36 PM ET

In recent years, the response to a popped economic bubble has been to create a new one. The pierced dot-com/telecommunications bubble paved the way for the housing/credit bubble. That punctured bubble may be giving way to an alternative energy bubble. But I've got my eyes on a smaller, but no less revealing, one: the Cupcake Bubble.

The current recession, which started in late 2007, laid the groundwork for the recent proliferation of cupcake stores in American cities. Lots of people know how to make really tasty cupcakes, which are simple products with cheap basic ingredients. Baking cupcakes doesn't require a large amount of capital investment, and it's relatively easy to scale up without hiring lots of workers. It takes about as much labor to produce three dozen cupcakes as it does to make one dozen. Meanwhile, storefronts in heavily trafficked areas became cheaper with the decimation of local retail. And so in the past year, casual baking has turned into an urban industry... Read the Full Article here:
http://www.slate.com/id/2227216/pagenum/all/




Thoughts?

18 replies
hellie0h Posted 13 Sep 2009 , 10:19am
post #2 of 19

Well, I think Mr. Gross may have some financial smarts, he is off base when he says that cupcakes are simply made from cheap ingredients and takes as much labor to produce 1 dozen as it does 3 dozen??? He obviously has not baked a day in his life.

Even in a bad economy, a tasty cupcake at $4.00 is really a small indulgence. Sure, shops of this type will be more successful in a metro area where there are tons of office workers to pop in for a cc and coffee let alone a tourist with a sweet tooth. Like any business, get too many offering the same product, not all will survive.

Seems to me, he has a prejudice against sugar and cute cupcakes lol.

vickymacd Posted 13 Sep 2009 , 11:25am
post #3 of 19

I agree with the above but in his reference to 'bake 1 doz. like 3' was just a general example in his little brain. He wasn't saying anything about the decorating, etc.

I'm sure he can EAT 1 dozen as fast as he can eat 3 dozen!

Bluehue Posted 13 Sep 2009 , 12:13pm
post #4 of 19

Never mind the *economic* bubble has burst -
I think a bubble in his brain has also burst.

Just goes to show he has no clue what he is writting about -
either that or his burst brain bubble has rendered him a fool -

icon_rolleyes.gificon_rolleyes.giftapedshut.gif

Bluehue.

snarkybaker Posted 13 Sep 2009 , 1:41pm
post #5 of 19

Well we sold twice as many cupcake this June as last JUne, and that is with a new cupcakery opening on our same street. I've heard they're having trouble, but we're growing faster than my cases can keep up with.

Kiddiekakes Posted 13 Sep 2009 , 2:16pm
post #6 of 19

Hmmm...I have written this in a few other threads about cupcake cafes as well.There is a popular one here in the city that has been going strong for about 5 years now.They charge $2.95 a cupcake...basic swirled Buttercream icing.They are lined up and sold out everyday by 1pm and they don't rebake! Kicker is..I have had their cupcakes twice now(SIL brought some over for dessert on supper)..They were dry and tasteless and the icing was so gritty...I know my product is way better but I am neither in a place financially or other to open a big retail storefront.Do you all remember the bagel craze about 10-15 years ago?? Obsolete now..but I don't think that will completely happen to the cupcake industy.

Michelle104 Posted 13 Sep 2009 , 4:37pm
post #7 of 19

I have to respectfully disagree as well. It seems that in the state of the economy these days that people are MORE willing to indulge on what we consider the small things, just to pamper yourself a bit. As opposed to spending lots on vacations and toys and such. I think there may be somewhat of slow down from time to time but I think it's here to stay. JMO! icon_lol.gif

tonedna Posted 13 Sep 2009 , 5:04pm
post #8 of 19

I disagree..with the fact that they are easy. I think some cupcakes have a lot more work. Some people make them look almost like a tiny cake!.
Edna icon_smile.gif

LaBellaFlor Posted 13 Sep 2009 , 5:17pm
post #9 of 19

I so disagee. I know of two cupcake places. One is suing cheap ingredients and one quality ingredients. Both of them are booming. My question for him is has he ever worked in the industry, mainly cupcakes?

tenleysmommy Posted 13 Sep 2009 , 5:35pm
post #10 of 19

I have to disagree as well.We have a little bakery in town that sells cakes and cupcakes,they always sell out of there cupcakes,imho they are horribleicon_sad.gifBut many people are willing to pay for a little treat.It makes them happy when times are rough.

jlynnw Posted 13 Sep 2009 , 5:58pm
post #11 of 19

I work at an ice cream shop and we make ice cream cupcakes. At $10 for 6 we can not keep them in the shop. We also do mini cakes for $10. A 2 1/2 inch cake for $10. A bit steep in my mind but we sell out daily. Our over sales are up 20% from last year and 42% over 3 years back. People want to have small indulgences and will willingly pay for it. Our cupcakery is doing booming business. She has now had to hire on 2 more employees to help as baking the 1 dozen is just like 3 icon_confused.gif She can no longer manager to get them baked, basically iced and out the door with the 3 people plus herself. This guy just needed a topic to write about this week, and probably munching on his cuppie decided hey, this is just a craze to write about. Moron economics. Write about something you know more about or at least have a clue.

heavenlys Posted 13 Sep 2009 , 6:39pm
post #12 of 19

jlynnw~ Oh I would love the ice cream cupcakes!! I was jsut saying that DQ needs to make those. Glad someone is making wish it were closer to me though icon_rolleyes.gif

indydebi Posted 13 Sep 2009 , 8:02pm
post #13 of 19
snowboarder Posted 13 Sep 2009 , 8:02pm
post #14 of 19

I write this as a cupcake consumer. I generally agree with what he wrote, particularly this:

"In America, bubbles form because any good business idea gets funded a dozen times over. That's the American way. Cupcakes are now showing every sign of going through the bubble cycle. The first-movers get buzz and revenues, gain critical mass, and start to expand rapidly. This inspires less-well-capitalized second- and third-movers, who believe there's room enough for them, and encourages established firms in a related industry to jump in."

and this:

"The real problem, though, is that the cupcakes are essentially reactionary... But as reactionaries often do, they've gone too far. I've tried a bunch of these new cupcakes and find them to be way too sweetâsugar on top of sugar..."

I don't think cupcakes are going away altogether, but I do think only those shops with the best product will make it. In my city, 2 cupcake bakeries opened at the beginning of this craze and the cupcakes were fantastic. One these places does classic cupcake flavors, the other is a little more inventive with their flavor combos, but not over-the-top. Both use premium ingredients.

Subsequently, new cupcake shops started opening up around the city and while the shops are all fabulously designed, with highly inventive flavor combinations and twitter specials, the product does not even remotely live up to the hype. I don't know where that $4 I just spent is going, but it definitely didn't go into your mango cupcake with blueberry curd and thai basil buttercream.

That's what keeps me going back to my old favorites- the best ingredients, baked right, simple swirl on the top, consistently good.

indydebi Posted 13 Sep 2009 , 8:23pm
post #15 of 19
Quote:
Originally Posted by snowboarder

...... the other is a little more inventive with their flavor combos, but not over-the-top. Both use premium ingredients.

...I don't know where that $4 I just spent is going, but it definitely didn't go into your mango cupcake with blueberry curd and thai basil buttercream.

That's what keeps me going back to my old favorites- the best ingredients, baked right, simple swirl on the top, consistently good.



I hear this a LOT from my brides. They are just looking for some good tasting cake and food. They aren't looking for super duper exotic no-one-ever-heard-of flavors or foods.

One of my cake-only brides stopped in the other day and was sharing her catering tasting appt experiences. She and her dad went to a couple of tastings and she told me they had no idea what they were eating. She said she didnt' want her guests to GUESS what the food was. She just wanted regular food that tasted great.

Yeah, I"m not buying mango/blueberry/thai flavors either . I just want cake/food that I can recognize and tastes good.

The shops who try to "entice" me to try monkeybutt earwax cake just aren't going to see any of my dollars. And I think that's where they're missing the boat. In their endeavor to be different, they forget to market to their customer base. It's not so much what you want to sell .... it's what the customer wants to buy.

Michelle104 Posted 13 Sep 2009 , 8:27pm
post #16 of 19
Quote:
Originally Posted by indydebi



The shops who try to "entice" me to try monkeybutt earwax cake just aren't going to see any of my dollars. And I think that's where they're missing the boat. In their endeavor to be different, they forget to market to their customer base. It's not so much what you want to sell .... it's what the customer wants to buy.




ROTFLMBO!!!!

maryjsgirl Posted 14 Sep 2009 , 12:46am
post #17 of 19

I don't think the economy had anything to do with the cupcake boom. Cupcake shops were around and popular before the economy took a pooh.

cakesdivine Posted 14 Sep 2009 , 1:30pm
post #18 of 19

I agree totally with snoboarder. Yes cupcakes have been around and will remain so, but what the writer is stating is that the gourmet/specialty cupcake bakery only is a trend...trends come and go, and how long are people in a recessed bordering on depressed economy going to pay those high prices for cupcakes? The bubble is there, and as all bubbles do, it will pop. When you saturate the market at some point everyone loses, there are only so many prospectiive buyers in any given area. Too many offering the same thing in that area everyones numbers drop, and now that there seems to be cupcakes available in more than your local grocer or full service bake shop, the cupcakeries are going to bottom out having the sole item only available. The grocers and bakeshops that offer more will survive AND will continue to sell in the same number range the cupcakes they have always sold. General public does not appreciate gourmet flavors, and therefore will stick with choc and van with simple BC on top. The other stuff is a fad and gourmet foodies may still frequent but lets face it, one in every 5 to 6 people will actually want an odd flavor combination. That in of itself limits your customer base.

But as evidence by what many of you have stated with your opinions...we are in the midst of this bubble therefore you can't see the forest for the trees, and the burst may not happen for years, but I agree with the writer...it is coming, BE PREPARED!

SugaredUp Posted 14 Sep 2009 , 2:54pm
post #19 of 19

I agree with portions of the article. There are just so many of these shops popping up everywhere.... As one of the other posters said, the strong/best will survive.

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