armywife1 Posted 18 Jul 2011 , 9:30pm
post #1 of

I've been watching shows such as Cupcake Wars and Cupcake Girls, and wondering how profitable a cupcake only storefront really is. Anybody with one of these shops care to share? I know it depends on rent, cost of supplies in the area, etc. Just thought a ball park figure would be nice to appease my curiosity. Thanks in advance! icon_smile.gif

30 replies
dchockeyguy Posted 19 Jul 2011 , 1:35pm
post #2 of

Well, I know Georgetown Cupcakes has a line a block or two long every day, so they must be profitable. They opened a second store in Bethesda, and I hear that has a lot of business too.

myheartsdesire Posted 19 Jul 2011 , 1:57pm
post #3 of

I would think it would depend on the people and the size of your city. In my city I couldn't keep the doors open for a month. There just wouldn't be enough people wanting to have a cupcake( I live in kind of a country townicon_smile.gif) But there are places all over that do really well. I would say location and marketing would be imperative to doing well.

christeena Posted 19 Jul 2011 , 2:02pm
post #4 of

You have to know your market's sustainability over the long term. I have a friend that wants to open a cuppie shop in our area due to the "glory" of it all proclaimed on the cupcake shows on TV. Our nearest town has a population of about 3000 - it balloons during the short tourist season. We also have a high rate of unemployment. I have researched a cake shop in our area and do not believe it would last long term after the novelty wore off so I just do cakes for friends and family. What I'd have to charge for a cupcake or a cake to cover all my bases would not fly around here. My friend's husband can finance her so she will give it a go and then sadly, probably close her doors in less than a year. She has no clue what it takes to do this 24/7 in order to be successful but she has her rose colored glasses on and I cannot persuade her to think rationally. She wants to be the next cupcake queen so I will watch and see what happens. Like most real estate moguls declare:
LOCATION< LOCATION< LOCATION! Good luck with what ever you decide! I do not mean to be so negative but these cake shows annoy me as they do not show the whole picture of having your own biz.

NerdyGirl Posted 19 Jul 2011 , 2:29pm
post #5 of

Tv is tv. Can't take it as gospel on ANY topic.

That said, it depends on the location and demand. In my state, I can name at least three "big" cupcake places that have multiple locations now - despite our awful economy. They're located in the more affluent cities, and the demand must be pretty good because there are always people visiting and buying.

bakingpw Posted 19 Jul 2011 , 3:13pm
post #6 of

I'd make a business plan with "real" expenses - i.e. rent/utilities/overhead/labor/product, PROFIT etc. And then figure out how much I could charge per cupcake and determine how many cupcakes I'd have to sell to get that amount. In the end, around here, it wouldn't be sustainable.

QTCakes1 Posted 19 Jul 2011 , 3:43pm
post #7 of

Do you have some type of small non-profit in your area that helps with business plans? I would get with one and see how they can help. We have one in our area and they are a tremendous help with stuff like that. As far as the cupcake shops around here, one shop is always sold out before they close and they are an okay location. Not too noticable, but word of mouth has really got them going. There is another cupcake shop that is in a great location, but they have tons of poduct left over at the end of the day. Not only is location key, but you have to have a GREAT product. The odd location one has the best fricken cupcakes where the place with the great location, well I can get the same product from Wal-Mart for a lot less.

cai0311 Posted 19 Jul 2011 , 3:46pm
post #8 of

There is a cupcake shoppe by me that is very successful. The store recently expanded by opening 2 more stores in the surrounding area. But they are not just a cupcake shoppe, they are a well branded company. A large money maker for them is the icing jars (mason jars filled with their icing) and tiny boxes of cake mix they sell. People from all over the U.S. order from them because they have heard that the "brand" is what you most have to make cupcakes.

Someone I know told me (and this person has an intimate knowledge of the cupcake shoppe $ situation) that they sell an average of 300 cases of icing every month. Not to mention the cake mix and cupcakes they sell. They also host cupcake decorating parties for kids that are a hefty price for parents to pay.

They sell out by 1:00 pm everyday - which is part of their plan. It keeps the appearance of a high demand product and people are willing to pay to get the product.

LNW Posted 19 Jul 2011 , 7:49pm
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I live in (actually about 15 minutes outside) the 3rd largest city in my state and we have two little cupcake places around here. I know a gal opened a shop downtown but its more of a coffee shop/ cupcake place and her cinnamon rolls are the big sellers, not her cupcakes. The other place Ive never even heard of before. I just googled for cupcake places in my city to get the name of the other place I do know of. Its even on the road I drive to get into the city every week and Ive never seen it. Im kind of surprised nobody has opened a really big cupcakes only place around here. But Im also surprised we dont have a Trader Joes or any of those other cool stores the other big cities have. We certainly have the need and the want. The $4.00 vegan cupcakes at Mama Jeans sell out all the time. So we have people here who will pay for them. You should come to Springfield, Mo and open a shop icon_smile.gif

LoveMeSomeCake615 Posted 19 Jul 2011 , 8:42pm

I strongly recommend doing a business plan. That's the best way to determine how successful you would be, and how much you would have to sell to stay in business.

imagenthatnj Posted 19 Jul 2011 , 8:49pm

Agree with CakeMaster2009. Also, it all depends on location. I'm not sure because this was a long time ago, but I thought this girl was near an university. Of course if that's true, she's going to sell a lot.

http://www.mainstreet.com/print/10954

jason_kraft Posted 19 Jul 2011 , 8:59pm
Quote:
Originally Posted by cai0311

Someone I know told me (and this person has an intimate knowledge of the cupcake shoppe $ situation) that they sell an average of 300 cases of icing every month. Not to mention the cake mix and cupcakes they sell. They also host cupcake decorating parties for kids that are a hefty price for parents to pay.



This is probably the key to long-term success for a retail shop -- diversifying beyond a single type of product, especially if that product can be shipped nationally.

There are several cupcake shops around here (Silicon Valley), and based on the rent here for commercial property it's difficult to believe they are making much in the way of profit -- if any -- unless they get a great deal on rent. Many specialty retail shops only survive because they are subsidized by wholesale or custom orders, which begs the question of why you need the retail shop in the first place.

scp1127 Posted 20 Jul 2011 , 8:09am

I don't think my area could support cupcakes only. There are stores in downtown Annaplois, but that is Naval Academy and tourist-driven. Their cupcakes are just ok, but repeat customers is not an issue.

armywife1 Posted 22 Jul 2011 , 7:53pm

I've lived in an area where there were two cupcake shops. One sold jumbo cupcakes for $3.75 a piece. One sold regular sized cupcakes for $1.50 each. There were times when I would drive by the $1.50 shop and they were closed due to selling out. I'm not sure how many cuppies they made per day, though. I think the $3.75 shop made around 1000 a day. Neither one sold any other baked goods such as decorated cakes. I guess that's why I was curious how profitable cupcake only shops were. If the $3.75 shop sold out everyday, I'm sure that would be a great profit, but I'm not so sure that selling out everyday was happening for them. I went in one day and had seen a flavor from the day before at a discounted price.

scp1127 Posted 22 Jul 2011 , 9:41pm

In any business, it still depends on how the expenses are managed.

microunique Posted 25 Jul 2011 , 5:50am

I know the cup cakes has a line a block or to long every day so they must be profitable to all cake shops.

scp1127 Posted 25 Jul 2011 , 6:00am

Only a very few have a line around the block. There are literally thousands of shops with more opening all the time. This industry is reaching a saturation point in many markets. Again, managing costs, marketing, location, and taste will be the biggest determining factors to success.

LindaF144a Posted 25 Jul 2011 , 12:46pm

My shop has been open a week, so I cannot say if it is profitable. I sure do hope it is, for obvious reasons. LOL

I do know that advertising helps. We were slow the first four days. We did have a terrible heat wave come through. I could not say if that was the reason. But on day 5 I changed the sign on the road to say "we have cupcakes" instead of "grand opening". Traffic has increased since then, including yesterday when we were closed but there cleaning the floors. Several people even came in to ask questions even though we had the closed sign up.

So at least in my area there is a need for a shop like this. But I am not a cupcake only shop. I do sell cookies, cake pops and specialty cakes too. The biggest request I get is GF. That will be added this week. Still this week it has been all about cupcakes and the response has been overwhelmingly positive.

Do a business plan for your area and then make sure you have at least one year of expenses in a savings account. Managing costs is the biggest thing. I cut back on everybody hours the first week and have people waiting in the wings to work when business picks up. But I'll be dammed if I'll pay people to stand around. After one week though I can see where work flow will need to happen and how it will need to be staffed. It is a learning experience every step of the way.

But I disagree on the saturation point thing. Maybe in DC where they have something like 5 or 6. Or any other big city like NYC where all the "chain" cupcake places are invading. It will take a few years for Sprinkles to trickle down to the second tier cities like mine. And even then they will go to the city or one of the other larger suburbs that all the chains go to and not my little neck of the woods area. But in my area where there are 3 family-owned stores it is not saturated yet. We all have different tasting cupcakes, even if we all offer chocolate or vanilla or some other flavor. I know that my competition has already been in to buy and taste. People will find the one they like or go for convenience and it will work itself out. I remain ever optimistic that I am in the right spot at the right time.

mplaidgirl2 Posted 25 Jul 2011 , 1:01pm
Quote:
Originally Posted by LindaF144a

But I disagree on the saturation point thing. Maybe in DC where they have something like 5 or 6. Or any other big city like NYC where all the "chain" cupcake places are invading. It will take a few years for Sprinkles to trickle down to the second tier cities like mine. And even then they will go to the city or one of the other larger suburbs that all the chains go to and not my little neck of the woods area. But in my area where there are 3 family-owned stores it is not saturated yet. We all have different tasting cupcakes, even if we all offer chocolate or vanilla or some other flavor. I know that my competition has already been in to buy and taste. People will find the one they like or go for convenience and it will work itself out. I remain ever optimistic that I am in the right spot at the right time.





I don't know if there will ever be a saturation point in NYC. People don't want to go 5-10 blocks away from where they work or live and if your in a tourist zone there could be 2 on the same block and they are still busy. Look at starbucks.. There is one on almost every corner here. I think as long as you know your audience for where your open you'll be fine. The cupcake shops downtown are cool little coffee/cupcake hipster hangouts (sugarsweet sunshine bakery) Midtown is more chains where all the Corporate buildings are (Magnolia, crumbs) And uptown is more of bakerys that also sell cupcakes.

LindaF144a Posted 25 Jul 2011 , 1:08pm
Quote:
Originally Posted by mplaidgirl2

Quote:
Originally Posted by LindaF144a

But I disagree on the saturation point thing. Maybe in DC where they have something like 5 or 6. Or any other big city like NYC where all the "chain" cupcake places are invading. It will take a few years for Sprinkles to trickle down to the second tier cities like mine. And even then they will go to the city or one of the other larger suburbs that all the chains go to and not my little neck of the woods area. But in my area where there are 3 family-owned stores it is not saturated yet. We all have different tasting cupcakes, even if we all offer chocolate or vanilla or some other flavor. I know that my competition has already been in to buy and taste. People will find the one they like or go for convenience and it will work itself out. I remain ever optimistic that I am in the right spot at the right time.




I don't know if there will ever be a saturation point in NYC. People don't want to go 5-10 blocks away from where they work or live and if your in a tourist zone there could be 2 on the same block and they are still busy. Look at starbucks.. There is one on almost every corner here. I think as long as you know your audience for where your open you'll be fine. The cupcake shops downtown are cool little coffee/cupcake hipster hangouts (sugarsweet sunshine bakery) Midtown is more chains where all the Corporate buildings are (Magnolia, crumbs) And uptown is more of bakerys that also sell cupcakes.




You are probably correct. I have that small town mentality. We drive places to get stuff, walking places is a different story. I could see how that would work out given the last time we were there we walked everywhere almost. And boy were my feet tired. I remember my first trip way back when to SF. Every other store was either a book store, or a coffee shop or a bookstore with a coffee shop. This was before chains like B&N or Borders. I remember wondering how so many could stay in business, but because it was a big city it worked out. So the saturation point may never happen.

My own DD had my DH bring her a donut to the shop last week. When I asked here why she got a donut when she was surrounded by cupcakes her response was that a donut was an acceptable breakfast food. Our attitudes and perceptions are everything. So I believe that the cupcake will never go away just like the donut has not gone away. It just depends on the time of day! icon_wink.gif

armywife1 Posted 25 Jul 2011 , 2:52pm

LindaF144, what would you say is the percentage of profit your cupcakes alone bring in? Do you feel without the cookies, etc., that your business would thrive? Also, what is GF? icon_redface.gif

LindaF144a Posted 25 Jul 2011 , 2:59pm
Quote:
Originally Posted by armywife1

LindaF144, what would you say is the percentage of profit your cupcakes alone bring in? Do you feel without the cookies, etc., that your business would thrive? Also, what is GF? icon_redface.gif




I've been open 7 days and have sold nothing but cupcakes, so I can't give you an answer. Nor would I ever. That is private company information that I would not freely give out.

GF is gluten free.

armywife1 Posted 25 Jul 2011 , 3:01pm

Ooops, didn't mean to step over the line. icon_redface.gif

jason_kraft Posted 25 Jul 2011 , 3:58pm

For cupcake stores a typical net profit margin for a successful store is between 10-20%.

jason_kraft Posted 25 Jul 2011 , 4:05pm
Quote:
Originally Posted by LindaF144a

The biggest request I get is GF.



I'm not surprised, in most metro areas there is a huge unmet demand for high quality gluten-free baked goods. You have to be very careful about cross-contamination though -- I know of at least one cupcake store here in the SF Bay area that started offering gluten-free cupcakes but put them in the same display case as non-GF items, needless to say there were warnings about this on local GF discussion groups. If you provide information up front about how you ensure your GF products are safe, the GF community will beat a path to your door.

Another popular option is vegan cupcakes, cross-contamination is less of an issue there.

LindaF144a Posted 25 Jul 2011 , 5:49pm

I have that covered. We use a separate mixing room and display. I am working with some one who is consulting me on cross contamination. This is not something I am taking lightly. Otherwise I would offer it already.

scp1127 Posted 26 Jul 2011 , 4:40am

Linda, what I meant is that researching on the internet, some places are full of cupcake shops. I google cities and look at the saturation. In those cities, and it can happen anywhere enough bakers decide to jump in, the weakest will fall by the wayside. There will be favorites, especially in areas like you mentioned, where people will drive. I was really pointing out that cc shops do not have guaranteed success, as a few posts had mentioned this.

Congrats on your shop. I do what you do, I lead with cupcakes. They go to the site, and see the rest. But definitely, cc's are a great lead-in.

indydebi Posted 26 Jul 2011 , 10:44am
Quote:
Originally Posted by LindaF144a

....her response was that a donut was an acceptable breakfast food.



See, when I hear stuff like this, I always want to know "who makes the food rules?" icon_confused.gif

If I have hot caffeine in a cup in the morning, that's ok.
But if I have cold carbonated caffeine in a glass of ice, people think I'm weird to have that "for breakfast."

If I have pork with cheese on a (mc)muffin, that's ok.
But if I have beef with cheese on a bun, then people think I'm weird to have that 'for breakfast'.

I say swill that cupcake at 7:30 in the morning and enjoy it! icon_lol.gificon_lol.gif

enchantedcreations Posted 26 Jul 2011 , 12:43pm
Quote:
Originally Posted by indydebi

Quote:
Originally Posted by LindaF144a

....her response was that a donut was an acceptable breakfast food.


See, when I hear stuff like this, I always want to know "who makes the food rules?" icon_confused.gif

If I have hot caffeine in a cup in the morning, that's ok.
But if I have cold carbonated caffeine in a glass of ice, people think I'm weird to have that "for breakfast."

If I have pork with cheese on a (mc)muffin, that's ok.
But if I have beef with cheese on a bun, then people think I'm weird to have that 'for breakfast'.

I say swill that cupcake at 7:30 in the morning and enjoy it! icon_lol.gificon_lol.gif





I LOVE cake for breakfast! Give me a cupcake @ 7 a.m. any day of the week.......my kids have always gotten cake on their birthdays for breakfast. Its a rule we don't ever break icon_biggrin.gif

armywife1 Posted 30 Jul 2011 , 5:27pm
Quote:
Originally Posted by jason_kraft

For cupcake stores a typical net profit margin for a successful store is between 10-20%.




Thanks for the insight! I wasn't trying to be nosy in my earlier post, just educated! icon_smile.gif

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