Cupcake Bubble??

The South Bend/Mishawaka market received its first gourmet specialty cupcake shop in late 2013 with Gigi’s cupcakes on Cleveland Rd. Mid 2014 saw the opening of Yummy Cupcakes in downtown South Bend. These local store openings are following a gourmet cupcake craze that started in early 2000.
The Cupcake craze is said to have began in 2000 when in an episode of Sex in the City, characters ate a cupcake from Magnolia’s Bakery’s West Village location. Fan’s and tourist began to flock to the bakery and the craze was born. One of the first to capitalize on the cupcake craze was Crumbs Bake Shop, which opened in 2003 on the upper west side of Manhattan. Crumbs made and sold a variety of pastries, but created the Crumbs Signature size cupcakes. Customers lined up for the $4.50 cupcakes and the bakery sold out daily. Crumbs began an aggressive expansion and had opened hundreds of stores by 2011 and went public in June of 2011.
Other small shops and franchises began to open up. The Yummy Cupcake business started in 2003, opening its first store in 2004 in Burbank California. A relatively small organization, Yummy has 4 California Locations, one in Istanbul, Turkey, recently Bloomfield, MI and now South Bend, IN (interesting location list). Gigi’s Cupcakes began by another entrepreneur in Nashville TN and has expanded to 84 stores in 23 states.
Numerous other cupcake stores cropped up in the past decade and many analysts warned of a cupcake bubble. Sure enough in 2011 after going public, Crumbs sales began to decline. By 2013, Crumbs reported $15.3 million in losses and started closing stores. Even at $4.50 a cupcake, Crumbs would need to sell millions of additional cupcakes just to break even. The rapid expansion by the company and the increased competition are cited as reasons for the business struggles. Crumbs plans to continue to close stores and diversify its menu in order to become profitable, but meanwhile original owners have moved on to start other business ventures.
The idea of consuming a large or gourmet cupcakes is a unique and fun thought. I am more than willing to indulge in such an activity, but how frequently?? Certainly not daily, not weekly and unlikely monthly. When Starbucks first brought the gourmet coffee shop and the $4 coffee to the United States, many said Americans would not spend that amount of money on a coffee that was previously under a dollar. Now Starbucks and the like are a culture and one of the more ubiquitous icons in the country. Neither Gigi’s or Yummy’s websites list the calories or fat content of their confections, and probably with good reason. Even with the gluten free, sugar free and vegan cupcake options how many cupcakes can one expect to eat in a year. For the health of an already obese country, let’s hope there is not a cupcake culture brewing. I love the idea of ordering cupcakes for birthdays and special occasions. No cutting and serving necessary, just set out the box and let guests make their choices. So has the cupcake bubble already burst? It appears it has but the hope is with limited shops in our Michiana market, the uniqueness and profitability of our local stores will remain and these businesses will remain.

Business Insider, June 5, 2014


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