7 Reasons Why You Should Not Open A Cupcake Bakery

September 20, 2013

While I was perusing the Internet the other morning I came across a successful cupcake bakery’s website with a promotion for their 2 hour $200 class that teaches people how they can open their very own cupcake bakery. Great deal! Right? I applaud this entrepreneur’s idea of branching out for herself and seeking ways to extend her brand and increase her income, but I think (and this is just my opinion here) that she’s doing it in a socially irresponsible way. I’m all about entrepreneurship and I’m all about helping people learn how to start their own things and succeed at them but let’s be realistic: if you wanted to open a cupcake bakery, you should’ve done so 5 years ago. So while she’s teaching you how to open your own cupcake bakery I’m going to teach you for free why you should not.
  1. The market is saturated. Scratch that. The market is over-saturated. There are 7 cupcake bakeries in my county of 750,000 people. Add to that the dozen-plus other bakeries selling cupcakes and the mastermind of Wegmans with their new cupcake-bakery-inside-a-grocery-store model and you have more cupcakes than the general public can/should eat. You want to open a new cupcake bakery in this market? You better do something real different to stand out. Cupcake pizza, anyone?
  2. You can’t charge $3+ for a cupcake anymore. With a saturated market comes more competition and with more competition comes competitive prices. Unless your cupcakes are infused with gold, your customers may stray to where the prices are lower, ie. Wegmans.
  3. Rent+payroll+equipment+ingredients+unforeseen costs = sell a lot of cupcakes. My rent was a great bargain at $600 (but do not expect you’ll find this kind of a deal). When I was looking for a bigger location the rents were anywhere from $1000-$4500 a month. Payroll for three employees averaged about $1500 a week. So if I profited $2 off of every sale of a $3 cupcake I would have to sell at least 825 cupcakes a week just to cover rent and payroll expenses. I’m really oversimplifying this but the point is that if you’re selling just cupcakes (as I was) you need to sell a lot of freaking cupcakes.
  4. Rising ingredient and labor costs. If you live in NYS please, please do not open a cupcake bakery. With the hike in minimum wage and the hike in business taxes you’ll be tearing your hair out every Friday and every end quarter. In addition to these rising costs, are the rising costs of butter, sugar, and cocoa powder. Between the time I started in the business and the time I left, butter jumped from $1.75/lb to $2.25/lb. That may not seem like a lot but if you have any self-respect, morals, or standards you’ll be making your cupcakes and frosting from scratch and you’ll go through A LOT of butter. Cocoa powder was $4.60 per pound. So when your most popular cupcake is a chocolate cupcake with chocolate frosting you’ll be spending hundreds of dollars a week on cocoa powder alone. And don’t think you can charge more for that popular-costly-to-make-chocolate-cupcake either, because you can’t.
  5. You can’t sell just cupcakes. That “cupcake bakery” owner who’s holding the “how to open a successful cupcake bakery” class fails to remind her students that her “cupcake bakery” is an actual restaurant with actual meals serving actual ALCOHOL. Hold up. So this isn’t a cupcake bakery, is it? When I opened my cupcake bakery I wanted to open a CUPCAKE BAKERY. I had zero desire to cook chicken French or pour glasses of wine (for anyone other than myself). I wanted to sell cupcakes. And sell cupcakes, I did. And it worked for me. But due to rising costs of labor and ingredients and the lowering of the price you can charge per cupcake, it is no longer realistic to be successful at selling just cupcakes.
  6. It’s harder and harder to come up with unique flavors to get excited about. If you’re anything like me, part of the joy in baking cupcakes is getting to be creative. When I first started my cupcake shop, S’mores cupcakes were not yet a thing. Sour Patch cupcakes were unheard of. And my Sangria & Cheese cupcakes blew my customers away. Now though, to devise a completely new cupcake flavor is a feat of magnanimous proportions. If you enjoy baking the same thing over and over again, a cupcake bakery may be for you.
  7. It’s hard to bake the perfect cupcake every time when you’re baking thousands of cupcakes at a time. Are you a perfectionist? Well, get ready to squirm. Unless you choose to go the boxed cake route (as 95% of cupcake bakeries do), you will struggle beyond comprehension with baking perfectly uniform cupcakes. Cupcakes are a hand-made, love-infused, time-consuming creation and when made in the comfort of your own home and delivered freely to friends and family, they’ll eat up and appreciate every misshapen crumb. But when sold for $3 $2 a pop, if not ideal size, shape, and color, they will be returned, complained about, and trashed on sites such as Yelp, Urbanspoon, Wiki, Twitter, Facebook, and so on. Develop some tough skin because after the honeymoon period of your grand opening wears off you’ll come face to face with the harsh truth that cupcakes are a dog-eat-dog business.
Now, with all that said, I’m disclosing the fact that my second cupcake bakery was successful. It was in the black month after month, year after year. In fact, Dollop Gourmet Cupcake Creations never saw the red. I started my bakery when the cupcake trend was just beginning so times were different. When the trend started peaking, I started reinventing and developing new unique concepts such as the create-your-own cupcake shop and the traveling cupcake bar. I stuck with cupcakes but stayed one step ahead of the curve. And when I reached what I foresaw to be my height—my peak with cupcakes; I bowed out and into a world of frosting where I saw untouched opportunities and a way to succeed at creating something that’s never been done before with The Dollop Book of Frosting: Sweet and Savory Icings, Spreads, Meringues, and Ganaches for Dessert and Beyond. By no means am I bashing cupcakes here. I love cupcakes. I always will. I wish worlds of success to every single cupcake bakery out there. Go to them, buy from them, help them grow. Just please, don’t open another.      

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