For Cupcake Bakers, Business is Booming - any Recession ?

Where many small businesses are feeling the pinch of the economic downturn, some sweet niches, like cupcakes, are doing phenomenally well. Cupcakes offer tangible proof that good things come in small packages; and more and more entrepreneurs are managing to turn their batter into ‘dough’ by opening cupcake bakeries, even in an economy where most recipes for staying in business are failing to rise.

It’s easy to see why small businesses based on small indulgences are booming and popping up all over the map. The beautiful, bite-sized confections are savored by the stomach and the soul, tapping into the emotional core of the public with every nibble. People are waiting in long lines outside cupcake bakeries across the country to enjoy these guiltless indulgences which offer a reminiscent walk down the memory lane of childhood, while making the present moment so much sweeter — for both consumer and baker alike.

The Washington Post reported on the cupcake bakery trend, quoting Paul Sapienza, vice president for the Retail Bakers of America, who declared of cupcakes, “They are cute. They are an economic treat, which helps out in the recession. They are a little decadent, so you get cake, frosting and sometimes filling all at the same time.” The article also claimed that cupcakes were a fad which were sure to wane in popularity sooner than later — but the craze continues today, even more so than a year ago when the article was written.

In a more accurate and prophetic piece, The New York Times also ran an article on the boom of cupcake businesses and their popularity over a year ago, offering the spot-on statistic that “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.” Cupcakes became trend worthy in the mid 90′s after New York’s Magnolia Bakery was featured on both Sex and the City and Saturday Night Live. Steve Abrams of the wildly popular Magnolia Bakery calls the company, “the godmother of the modern cupcake craze.”

Since then, cupcakes and bakeries have multiplied by the dozens as entrepreneurs continue to jump on the bake-wagon. And the cupcake business continues to become an even more savvy and specialized niche market. Such is the case with bakeries like Babycakes in New York City which offers “all-natural, organic and delicious alternatives free from the common allergens: wheat, gluten, dairy, casein and eggs” for those with “persnickety diets.”

Babycakes is not only getting a piece of the pie by selling cupcakes, they are also cornering a growing market by gearing their treats toward an ever-growing amount of consumers who are on gluten-free and vegan diets. Demand for such alternative-friendly diet made delicacies is high and at $4.25 a pop for a Babycakes cupcake, profits are sure to soar. The founder of Babycakes, Erin McKenna, also capitalizes on her recipes by selling a cookbook sharing her trade secrets and telling readers how to make their own vegan and gluten-free cupcakes and baked goods at home, further driving her brand to the forefront.

The world’s cupcake obsession has even been tapped by television executives hoping to catapult network ratings by airing shows about entrepreneurs who are building their empires atop perfectly poised dollops of frosting. The Food Network has a new prime time show,

Cupcake Wars wherein cupcake bakery owners rival each other to determine who can make the best cupcake based on several criteria. TLC chronicles the lives of two sisters who opened a successful cupcake bakery together on D.C. Cupcakes, and WEtv follows the journey of best friends and business partners who are trying to build a cupcake empire together in The Cupcake Girls. And celebrities are even endorsing the sweet treats: Katie Holmes gives out Sprinkles cupcakes as gifts on a regular basis, and after Oprah received Sprinkles cupcakes from Barbra Streisand as a gift, she purchased enough for her entire studio audience to enjoy.

It has been well documented that sales of chocolate, ice-cream, shoes and lipstick rise when times are tight. In tough economic times, consumers typically cut back spending but allow for a small amount of spending on little items that make them feel good — what trend analysts call ‘small indulgences’. Sweet, rich and relatively inexpensive, cupcakes obviously fit this bill. Cupcakes provide instant gratification and they make ordinary moments seem celebratory. They are enjoyed in the same vein as those ever popular Starbucks lattes we all feel we deserve and want to treat ourselves to even when money is tight. And if cupcake bakeries follow in Starbucks’ footsteps, bakers and entrepreneurs gambling with the trend will certainly be living la dolce vita.