I am an internet-famous cupcake chef (see: http://imgur.com/fFlC5) and former Czar of Cupcakes at ZeroCater, and I believe the bubble has popped.
You can only charge $4 for a cupcake for so long before the novelty wears off. Maybe now people will stop telling me to quit my job and make cupcakes full-time after they try my chocolate cupcakes w/ sriracha caramel frosting.
And, if you're looking to get in on the next fad sweet trend, donuts are the new cupcakes.
A client of mine manufactures frozen yogurt machines. They're making money hand-over-fist right now with the explosion of these new DIY frozen yogurt shops. Mostly because these shops purchase a multiple of machines as opposed to a Dairy Queen that gets by with one.
But the client is convinced that this expansion will end soon. My town alone has 5 or 6 of them (with 2 more slated to open this year) and there's just no way even a town of my size (pop. 50,000) can sustain it.
Frogurt's got that bubble feeling, but unlike cupcakes, it actually "crossed the chasm" into the flyover cities where most Americans live.
I definitely see cupcake shops at chi-chi spots in NYC, LA and SF but I've never seen one in a city with < 1M population or in a rural or posturban area.
You might be surprised. Lets say you have to haul in $1K/day to pay labor and rent and just minimally keep open. Sounds like a miserable way to earn a kilobuck, but if you get $5/customer and there's 365 days per year you need:
1000 / 5 * 365 = 74 thousand customer visits per year. So roughly 350K citizens / about 10 shops = 35 thousand customers per shop. That means every citizen needs to visit a mere twice per year. My guess is its more like 1 in 20 are hardcore carb/sugar addicts who visit every week and pig out.
Now a kilobuck a day isn't going to earn you a private island retirement. That's for a hole in the wall in a cruddy area not a giant palace right off the interstate and barely keeping in business and paying the bills. But it is theoretically survivable.
WRT the fad itself disappearing, most small businesses collapse and are replaced by other small businesses so in the long run they'll all eventually disappear, to be replaced with the next new fad at about the same financial and survival stats.
Its been interesting watching financial changes in my town since the housing bubble popped, before the pop the purpose of a small business was to separate a sucker from his home equity loan money, so the landlords didn't care about infrastructure or parking, etc, but suddenly now that the amateurs are gone from the market, once again CRE actually needs to appeal to be rented, parking is not an option anymore, etc.
There's one in Pullman, WA. 30K, surrounded by fifty miles of wheat farms (oh, and has a university). It's probably spillover from the Seattle cultural thing, but hey, I appreciate it.
Pittsburgh has never seen a cupcake chain, but several locally-owned shops have opened in the last five to ten years. There has been some contraction in that market, though--I believe several of the businesses have been shuttered in the last year or so.
The remaining shop (which has several shops in the city, still) will likely survive, but they've also pivoted a bit by selling other things, too.
There's an unbelievably popular froyo franchise in Northern VA called Sweet Frog[1] that markets effectively enough to stand out among seemingly a zillion competitors. They have a religious angle (Frog standing for "Fully Rely on God"), frog mascots that make local community appearances, merchandising that young kids actively wear, and are cheaper per ounce than competitors while offering unlimited toppings.
I was always skeptical of cupcakes because they were (1) annoyingly expensive and (2) blatantly unhealthy, but SF seems to have addressed both of those concerns.
I've seen many a kid go nuts on the self-serve yogurt machine and topping buffet, turning a small cup of a somewhat healthy dessert into a $7 pile of M&Ms, gummy bears, and other calorie-laden toppings. There's a reason they charge by weight.
I hate walking into what look like bakeries and they don't have bread...or heck sometimes even no simpler option like corn or bran muffins. ;/ Half the time now I walk in and there's nothing but cupcakes and other sweets.
It's amazing that you can walk through Boston, pass dozens of cupcake and frozen yogurt businesses in high rent areas, but finding a baguette from a local merchant is near impossible. It must not be profitable or the demand just isn't there.
But a baguette is just a signal to the viewer that the holder has been food shopping. No one actually eats baguettes; they're just visual shorthand -- a stand-in for food.
The cupcake bubble is all too real. Ask anyone who lived in Manhattan during the 2000s as it finalized its transformation from "Escape from New York" to the NYU/Sex in The City cupcake fantasyland of today. The guys who used to have the cheap bagel and coffee trucks now sell cupcakes instead.
I think if you wanted to stay in the same realm as cupcakes/desserts, as far as the "new bubble" goes, it would probably be "Cake Pops". Those are becoming huge now, and only getting bigger. Heck, even Starbucks now carries Cake Pops.
Here is just a general link of what Cake Pops are, if you are not familiar with them: http://www.bakerella.com/pops-bites/cake-pops/ - Basically, just a cupcake/cake on a stick that can have lots of designs around it.
The lesson here would seem to be not to hone in too much on a product that is trend-sensitive. If you look at Starbucks, which started with good coffee, then expanded into frappuccinos, smoothies, baked goods, breakfast, cds, mugs, etc, or McDonalds which went from burgers to everything but tacos and pizza, those are clever business moves.
Crumbs can probably sell cake pops and gourmet donuts and every new trend that comes along and be fine if they play it right.
definitely has been picking up steam lately and will explode soon enough. It's a lot closer to cupcakes as well ("baked" goods) and likely the novelty of cupcakes is easily transferred to donuts
How much growth is really left in the $5 cupcake market in a country where wages are stagnating? The conventional wisdom is that you have to move up-market in order to make any money, but you're targeting a shrinking customer base...
Starbucks has been doing well selling $5 coffee. I don't think the cupcake market will ever be that size, but there is plenty of room for companies like https://www.heycupcake.com/.
"spendable cash" is dramatically declining not just stagnating. But when you can't afford $50 anymore to take your date to the movies or a $100 bar tab for an evening, suddenly a "coffee and a cupcake" $10 date starts sounding pretty good. Think replacing more expensive options, not adding a new expense. The $5 customer base is rapidly expanding from the formerly $50 customer base, not shrinking.
The faddishness of it is annoying. We're allowed 10 new cupcake retailers per year and nothing else opens. Why can't my son, who's medically diagnosed as gluten intolerant, have a nice gourmet beef jerky bar or gourmet fried egg restaurant or something, anything other than endless cupcake stores?
the small business class in my local area seems intensely conformist not rebels. So if one of them opens a cupcake shop they all have to open cupcake shops. Weird.
We're also undergoing a gym bubble where we've recently added several "curves" "24 hr fitness", several golds gyms, and plenty of non chain gyms. "Four of my entrepreneur friends just opened a gym, I better open one too to keep up!".
Dunno, the trendy one in Beverly Hills still has lines down the street on a weekday afternoon, just as it did the last couple of years. (At least from 6 months ago, last time I was there.)
I've been hoping it was just getting started. I expected someone here to create an app that makes it super easy to find good and cheap food from the nearest food truck.
Food trucks don't really seem like a bubble to me-- they're more of an end-run around restrictive zoning that makes it hard to start a restaurant in a building.
Food trucks are here to stay. In NYC, at least, it's the cheapest, fastest, and easiest way to get lunch. There's a true structural advantage (much much lower fixed overhead)
The advantage of food trucks is that they are more of a real-estate trend rather than a specific food type or cuisine. Therefore, the limit is more capped by the overall demand for fast food / street food, rather than any "trend".
Food trucks are here to stay, but they're no longer the cool new thing so most of the buzz has died down. The trucks that are still around now will probably still be here around for the next few years.
Here in Long Beach, CA they lasted about a year. As things stand, the website of the most popular food truck group is 8 months out of date, which leads me to believe that they (finally) went out of business.
The good news is "Food Truck Tuesday" on a road near where I work has about a dozen trucks and thats been stable for years. Sales are intensely weather dependent, or maybe rephrased hungry people are much more weather sensitive than walking exerciser-type people like me. If the weather's awful sometimes it'll just be me doing my daily mile and the trucks out there and no one else.
The bad news is thanks to the food network, five of the ten trucks are now korean bbq (which does admittedly taste awesome) and all of them think $10 to $15 for a small amount of food is a fair price because thats what they charged on the great food truck race while in NYC so... When I walk over and splurge $15 for a little entree I always feel weird getting there by walking past perfectly good brick and mortar restaurants where I'd get more food for like $8 worst case.
You can only charge $4 for a cupcake for so long before the novelty wears off. Maybe now people will stop telling me to quit my job and make cupcakes full-time after they try my chocolate cupcakes w/ sriracha caramel frosting.
And, if you're looking to get in on the next fad sweet trend, donuts are the new cupcakes.