Boom to Bust: Is the Gourmet-Cupcake Market Collapsing?

Bad news, gourmet-cupcake lovers: the market for giant frosting-slathered, cup-shaped sweet treats may be crashing

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Bad news, gourmet-cupcake lovers: the market for giant, frosting-slathered, paper-enveloped sweet treats may be crashing.

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It’s hard to know how busted said market really is, but the Wall Street Journal has a nicely detailed investigative piece that zeroes in on Crumbs Bake Shop, a publicly traded New York–based purveyor of boutique confectionery (over 60 stores at last count) founded in 2003, which stock price has plummeted since mid-2011 — from over $13 a share to just $1.70 at close on Tuesday. Crumbs is one of many cupcake vendors around the country that’ve opened in the past decade with a focus on calorie-loaded pastries and premium prices to match. And yet the chain is currently experiencing significant downward motion: 2013 sales projections of $73 million have been slashed to roughly $57 million, a downturn that Crumbs blames in part on Hurricane Sandy.

But speaking to various analysts, the Journal found plenty of pessimism to go around: as Darren Tristano, executive vice president of food-industry consulting firm Technomic put it, the cupcake craze was just a short-term trend. “We’re starting to see a real saturation … Demand is flat. And quite frankly, people can bake cupcakes.”

Of course those within the industry, like Yogen Fruz co-founder Michael Serruya, take the opposing view: Serruya just did a $10 million financing deal with Crumbs and says the gourmet-cupcake category is here to stay. “We wouldn’t have committed our money to this deal if we believed otherwise,” he told the Journal.

Then there’s Magnolia Bakery, arguably the most famous gourmet cupcakery around, featured in HBO’s Sex and the City and the film The Devil Wears Prada. According to the Journal, its sales are actually up so far over 2012 — though it’s hard to say what that means, exactly, since only half of the store’s revenue is cupcake-specific.

Fear not, gourmet cupcake–philes: if the market really is plunging and you’re not bake-phobic, scores of scrumptious cupcake recipes are just an interwebs’ search away.

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9 comments
karynpayne
karynpayne

I completely disagree. Post-GFC, I have watched as the western world forgoes high-end goods, and relishes in more simple pleasures. Like baking. Certainly cupcakes. Still ever-popular in all the circles I move in. WHy make such sweeping staements based on the experience of the elite? Regular folk just cant get enough. xx

JoellGallardo
JoellGallardo

Don't forget about Georgetown Cupcake in DC. They have opened 3 new stores in the past year. The queue to get in their DC store is about 3 blocks long every day.

GailAnderson
GailAnderson

Honestly, I thought that the cupcake fad ended in 2008, when the economy tanked.  So much entertainment features women with unsuccessful cupcake businesses.  Like the movie "Bridesmaids" and the TV show "Two Broke Girls".

SukeMadiq
SukeMadiq

I predicted this was just a fad, so did many people.

Will the cheeseburger craze fall next?   Well probably a little but not much, a good burger will always be popular.


Wingardium_Leviosa_
Wingardium_Leviosa_

Buying Time magazines in support and this is what I get? What about the trillion dollar student debt bubble. This author is ridiculous. 

AdamRussell
AdamRussell

Ive always thought cupcakes are for kids - and not including "kids at heart".  Its disgusting.

mical
mical

Michael Sirruya, you're an idiot. It's a fad - just like every other fad that comes and goes. Maybe I can find some old Krispy Kreme to sell you.

kmahlonlives
kmahlonlives

Cupcakes will always be a necessity, but that is GOOD cupcakes... Crumbs is failing because their product sucks!