Will Cupcakes Go The Way of Krispy Kreme?

by moderndomestic on September 8, 2008

Cupcake Display

The cupcake display at Hello Cupcake, one of three new DC cupcakes stores to open in the last year.

Last Thursday, the New York Times Cityroom Blog asked, “Will cupcakes be the next Krispy Kreme?”

It’s an intriguing question, especially for those of us who have watched with delight at the cupcake businesses springing up in our neighborhoods, or who have dreams of starting a cupcake businesses ourselves (or already have one).

Here in DC, we’ve definitely seen a cupcake boom in the last year. The DC area had two cupcake establishments open in the last month—Hello Cupcake in Dupont Circle, and Lavender Moon Cupcake in Alexandria. Plus, Georgetown Cupcake just opened back in February. Only time will tell if DC has the market to support the burgeoning cupcake businesses, especially if the public loses interest in the cupcakes as their sweet, sinful treat of choice.

However, I think there’s a big flaw in the Times’ comparison between the Krispy Kreme craze and the cupcake craze. Krispy Kreme is a single, nation-wide business and brand. The business suffered because it expanded too rapidly and went from being an exclusive, sought-after commodity, to an ubiquitous item you could pick up in any grocery store. Because Krispy Kreme’s management made poor strategic decisions, the donut craze faltered as a whole

But the cupcake craze isn’t fueled by any one brand or business—the stores in DC are small, independent bakeries that don’t look like they’ll be going national anytime soon. In DC the closest thing we have in to Krispy Kreme is CakeLove, which now has seven locations in the area — not exactly a national business. And CakeLove has built its brand on a lot more than just their cupcakes (I mean, just look at their name). If the cupcake portion of their business diminished, they’d still have their cakes, cafe, and other baked goods to shore them up.

Even the cupcake stores that the article mentions (the Magnolia Bakery, Cupcake Café) are all boutique businesses. If one of those stores fails because of mismanagement, it doesn’t necessarily mean that all the other cupcake businesses are going to fail. The Times only mentions one store that is rapidly expanding — Crumbs, which plans to expand to 40 stores in the next year and 150 in the next five years. And Crumbs doesn’t just sell cupcakes—as you can see on their Web site, they bill themselves as a “bake shop,” even if cupcakes are a featured product.

In my mind, this bodes well for the cupcake business, especially those businesses that sell more than just cupcakes and, theoretically, could pull through a cupcake decline on the strength of their other products.

Also, perhaps this is wishful thinking, but the renewed interest in local businesses and locally produced food could mean that these small, boutique cupcake bakeries will have a better shot at survival. In this new consumer paradigm where “small is good,” local business that become coveted “local treasures” could have a better shot than big, ubiquitous chain stores.

Well, maybe wonktheplank would disagree with me there, but I have to keep the faith that a new bakery day is dawning.

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