The Cupcake Shake Out

by Emily Jasper on February 22, 2011

Crumbs cupcakes (I had a Smores one)

I think about cupcakes…a lot. I never thought I’d be one of those consumers who would jump on the cupcake bandwagon, but you know what? I’ve called shotgun! When there was the first whisperings of cupcakes being a new dessert craze, I was confused: weren’t cupcakes already available in your local grocer’s bakery section? They even decorated them based on the seasons…

Why have specialty cupcakes?

Well, I didn’t know what I was missing. Last year, I made a visit to NYC to see Sam Karol and Ellen McGirt. Part of my visit included a tour of cupcake bakeries in the Big Apple. I discovered Crumbs and Magnolia, cute little custom cupcake “to go” boxes, and more varieties than most bakeries list for wedding cake tastings. When cupcakes got their own TV shows, we knew that this trend wasn’t going to go away quickly.

Is that a good thing or a bad thing?

When it comes to business, especially dealing with a mature market, you’re really getting down to differentiators that fall into the convenience, cost, and quality categories. We all know that you can get a box of cake mix and have a whole dozen cupcakes for just a few dollars. But if you’re going to shell out $3-6 for a single cupcake, you hope it’s pretty damn good in the quality department. That means the bakery is super convenient when you need it, might have totally wild flavors, or the taste is better than any secret family recipe you’ve got. So buying a cupcake in the skyway in Minneapolis at Cocoa & Fig makes sense because you might need a snack in between meetings. If you only need to walk to get to the nearest cupcake bakery, you can get quality and convenience.

What happens when you can’t walk there?

You might be able to drive (I dragged my mother across town to Whipt Cream in St. Louis), but sometimes you could still be too far away. I know for me, convenience is a big deal. I crave something a little special for my cupcakes, but I might have to settle just because I don’t have access to a Crumbs down the block.  I don’t even have my own baking pans or oven, so I’d probably pay $10 for a decent cupcake just because I can’t make them myself.

When you take away one of the elements in business that is the differentiator, do the others mean more? Do they become sacrificed? If I order cupcakes to be shipped to me, is the quality drastically reduced? You may think I’m spending too much mental energy on the cupcake part of the equation, but this applies in any business: if you go virtual do you sacrifice customer intimacy? If you hire environmentally sustainable suppliers, will your customers be willing to pay more? If you try something totally new, are you alienating your loyal brand ambassadors?

In order for this trend in cupcakes to keep going, the little guys will need to keep pushing to survive the “shake out,” especially if the big ones can deliver on convenience, cost, and quality. If you want to be the leader in your own industry, how are you going to differentiate yourself?