The Rise And Fall Of The Gourmet Cupcake (2024)

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The craze first began in 2000, when Miranda and Carrie munched on Magnolia's Cupcakes on an episode of Sex and the City.

People quickly jumped on fashion trends the show featured.

This time, they jumped on the culinary trend, too.

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Tourists started flocking to Magnolia Bakery's West Village location. And then a Sex and the City tour bus made the location a destination on its NYC tour.

Emma Forrest wrote an article detailing how the cupcake craze at Magnolia ruined her neighborhood, as tourists began flocking their in droves.

Even Magnolia couldn't keep up with the demandand was taken off the tour in 2010.It was replaced with Billy's Bakery.

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After that, cupcake shops started popping up around the country. Sprinkles Cupcakes, founded in 2003, was one of the first.

Its cupcakes went for $3.50 and it bills itself as being the instigator of the cupcake craze.

Its founder, Candace Nelson, later became a judge on Food Network'sCupcake Wars.

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Georgetown Cupcake in Washington, D.C., opened in 2008, and Cupcake Nouveau in Miami also became well-known names.

Georgetown baked its way to a TLC show, DC Cupcakes,and recently opened its first New York City location.

Cupcake Nouveau was also featured on TLC onCupcake Wars.

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But when Crumbs came around, it blew past the competition. The store was founded in 2003 in New York and grew to 34 locations before going public.

Mia and Jason Bauer opened Crumbs Bakery on New York City's Upper West Side in 2003.

Its cupcakes sold for about $4.50 and the company had locations in six states before its IPO.

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Now, the company has 67 locations in 10 states from the West Coast to the East Coast.

There are 19 locations in Manhattan alone.

Across the country, at least five more shops are set to open soon, according to the company's website.

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Things were looking great when Crumbs went public in June 2011 —but they quickly turned sour.

After Crumbs missed earnings, the stock plunged from$13 down to $3.75 by September 2011.

By November, President and CEOJason Bauer had stepped down.

Crumbs stock would stagnate for the next two years, until things got even worse in August 2012.

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Crumbs announced in August that its sales for the year would be down 22% from earlier projections.

The company has pinned part of the problem on sales loss in its East Coast stores after Hurricane Sandy.The company estimated the superstorm caused at least $700,000 in losses from its stores that had to close, according to The Wall Street Journal.

This came a week after Crumbs said it needed to raise $10 million in financing.Julian Geiger, Crumbs CEO, said the funds were needed to fuel the company's growth into suburban malls, according toBakingBusiness.com.The co-owner of Canadian frozen yogurt chain Yogen Fruzstepped up to invest.

Consequently, the stock fell even more to $1.49, down 89% from the all-time high.

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Some people say that cupcakes don't taste as good since they've gotten so big.

One writer in the Atlantic Wire voiced her hatred of big cupcake brands.

In her opinion, in most cupcakes today, "the sugar tasted off, now, somehow, the frosting too cloying, the cake part of the cupcake so dry it stuck to the roof of our mouth."

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Plus, people like to buy "local" cupcakes, which might be keeping them away from Crumbs.

With locations on so many street corners, the appeal of Crumbs could be wearing off.

“People like to buy local now and support the small businesses,” the co-founder of Georgetown Cupcakes told CNBC.

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Now, some analysts are saying that Crumbs' stock plunge is signaling the burnout of the gourmet cupcake fad.

With 67 Crumbs locations and many other brands, the market is becoming over-saturated.

One told the Wall Street Journal that "the novelty has worn off."

One analyst noted that people can bake cupcakes themselves and don't need to go to a store every time they want one of the treats.

"Demand is flat,"he told WSJ.

And while there's less data on private cupcake vendors, anecdotal suggests a similar trend.A Jersey City bakery told the Journal that her store brings in half the weekend sales as it did last year.

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The cupcake industry is still expected to grow. But the rate has slowed from recent years.

The cake decoration store industry is still expected to see 3.7% annual growth in the next five years, according to research firm IBISWorld.

But that growth number used to be 4.9%.

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