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What a heartbreak!!!

post #1 of 57
12/13/11 at 11:52am
Thread Starter 
We are a very new business struggling to survive. Mostly because (a) we are on a shoe string budget and (b) we bake from scratch using high quality fresh ingredients which drives up our prices.

I really feel in my heart that people DO value good fresh products, yet every time I turn around, we get a kick in the stomach . .

We are competing against bakeries that sell box mix, canned frosting, items that can run circles around us in pricing. I am beginning to believe I was wrong. America can NOT taste the difference. They like the cheap stuff!!

Walked into a little cupcake-ery in NYC. They have several locations and are selling these little quarter size cupcakes for $1.00 each. We bought a few while visiting NYC as we make it a habit to always taste other bakeries items and compare.

It was very obvious this was a box mix. They were dry and chemical tasting. She is probably getting at least a hundred mini cupcakes (they are very small and flat) out of one box of cake mix that cost $0.89. So she is making a huge profit. Noting that rent in NYC is outlandish . . however, her business appears to be doing well. Yelp has her with great reviews. People love it.

I just don't get it. It makes me sad that america really loves this chemically induced box mix they could easily make at home in 10 minutes. We, are near closing our doors . . .because we just can't compete with this . . . . and I am heart broken.
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The King of Pops
TC Pops, A Division of Teddy Cakes, LLC

http://tcpops.com
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post #2 of 57
12/13/11 at 12:08pm
For many customers the value-add is convenience and decorating skill as opposed to taste, and many mainstream customers will actually prefer the taste of a recipe based on box mix since that's what they grew up with.

As part of your business plan you should be identifying customers who are willing to pay a premium for what you offer. If you are a small scale baker and try to compete on price you probably won't make it, you need to highlight your competitive advantages to the right audience. In some cases you may find that there is not enough of a target market to support your business, ideally this would come up in the plan before you launch the business.

And re your comment about making a huge profit off box mix cakes -- the vast majority of the cost will be in labor and overhead (especially in NYC) as opposed to ingredients, so it's difficult to judge the net profit of a competitor by looking solely at what their ingredients cost.
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post #3 of 57
12/13/11 at 12:36pm
I have to agree that most Americans have never even tasted scratch cake or care a wit about premium ingredients.
When I first started I said things like "cake like your mom used to make." And I got blank stares. Thenn one bride said, "Hell my mom worked in an office all day. She never baked from scratch."

And the light came on.
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Answers to the most often asked questions re: SPS. SPS instructions are on Page 15 of the Sticky at the top of the Cake Decorating Forum. Supplies can be ordered from Oasis Supply, Global or BakeryCrafts.
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post #4 of 57
12/13/11 at 12:48pm
It's all about your customers. You are providing what your customers want. I bake both scratch and doctored mix based on flavors because those are the ones everyone likes as is. Using high end ingredients I think is honorable but if the customers can't taste the difference it's a huge expense. I look at scratch and high end bakeries as more patisseries. European Buttercreams (I want to get into these), ganache etc. I use some of these items as frostings but I don't stress so much about if I'm using the most expensive butter. That's just me though. I love that other bakers do artisan baking, it's just not for my clients.
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Visit me at www.keeponcaking.com for tutorials and other cake stuff.
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post #5 of 57
12/13/11 at 10:58pm
I concur with sillywabbitz and Jason. You must direct your marketing to your target market. I have no problem selling items at triple the price of other bakeries because I reach the correct income level for my product and appeal to the people who want the best ingredients. If I didn't know how to reach that market, I would fail. You cannot supply an upscale product and wait for the masses to come through your door. The masses, or mainstream are not your customer. You not only must know how to reach them, your entire branding plan must cater to the upper income market for a total package. That is what they want.

As Jason stated, this is why business plans with demographic data and the corresponding marketing plan must be in place.

My bakery is already successful and I am planning a satellite retail store. This plan has been in the process for about four months and I will not have all of my research done for about six more months. It doesn't have to take this long, I'm just in no hurry. The details should be so specific that you should know your utilities based on the construction of the space. There should be few surprises if the plan is complete.

At this point, a cost analysis based plan with a comprehensive marketing plan should be completed asap. If the numbers don't work or you can't reach your market, then the business may not be viable.
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post #6 of 57
12/13/11 at 11:21pm
Come across The Pond to England. If I made my cakes from box mixes my customers would hang, draw and quarter me! Every cake I make is from scratch, regardless of the flavour or recipe required.

CP xxxx
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Live each day as if it's your last because one day you'll be right!
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post #7 of 57
12/13/11 at 11:50pm
I bake from scratch & people love it, but I will say that there are plenty of people who care more about how the cake looks then how it tastes.
I had someone call me for a cake for a week that I would be away, she insisted that she just wants it for the look and ordered it anyway even though I told her I could not promise anything bc she would pick it up wednesday morning for a party on sunday afternoon. She later told me that it was as fresh as can be and that they ate the whole cake (it was covered in ganache and fondant), of course I was thrilled but the point is that she didn't care about eating the cake when I told her I wouldn't be here; she just wanted a beautiful cake to put in the middle of the table.
Personally, I don't understand that bc I know that if I were to go to a restaurant and order a meal I would for sure want it to taste good and not let "oh it's so pretty" make me disregard how it tastes, if you know what I mean.
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post #8 of 57
12/13/11 at 11:54pm
Quote:
Originally Posted by leah_s

I have to agree that most Americans have never even tasted scratch cake or care a wit about premium ingredients.
When I first started I said things like "cake like your mom used to make." And I got blank stares. Thenn one bride said, "Hell my mom worked in an office all day. She never baked from scratch."

And the light came on.



It's funny that the reversed is true here ha ha.. Where I live, if I say "cake like your mom used to make" (provided their mothers had baked cakes before) everyone would automatically associate that with scratch cakes.
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post #9 of 57
12/14/11 at 2:53am
Quote:
Originally Posted by ChilliPepper

Come across The Pond to England. If I made my cakes from box mixes my customers would hang, draw and quarter me! Every cake I make is from scratch, regardless of the flavour or recipe required.

CP xxxx



So true lol, box mixes at my end......even little kids will spit it out.
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Judge the character of a man by how he treats those who can do nothing for him.
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post #10 of 57
12/14/11 at 4:59am
I told someone my Chocolate cake was from scratch and she asked me "what does that mean?" I said I add eggs, flour, sugar, salt, soda, etc. They were so amazed that I could do that. They said I thought cakes came from a box!
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They may not remember the words you said but they will remember how you made them feel.
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post #11 of 57
12/14/11 at 6:14am
There are 4 cupcake shops in our area. The one that bakes from scratch ALWAYS is sold out and they are not even in a good location. And they are around the corner from one in an excellent location. Yes, people can tell the difference. You may just have to get a little more word out there.
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post #12 of 57
12/14/11 at 8:09am
Quote:
Originally Posted by QTCakes1

There are 4 cupcake shops in our area. The one that bakes from scratch ALWAYS is sold out and they are not even in a good location


Constantly being sold out of product may not necessarily indicate that a business is successful.
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Recent Articles: The Magic Pricing Formula • Copyright Law
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Recent Articles: The Magic Pricing Formula • Copyright Law
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post #13 of 57
12/14/11 at 8:16am
Quote:
Originally Posted by jason_kraft

Quote:
Originally Posted by QTCakes1

There are 4 cupcake shops in our area. The one that bakes from scratch ALWAYS is sold out and they are not even in a good location


Constantly being sold out of product may not necessarily indicate that a business is successful.



If that doesn't indicate a successful business then what does? or rather, what are they doing? not baking enough to constantly make it seem as though they are busy?
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post #14 of 57
12/14/11 at 8:18am
Quote:
Originally Posted by jason_kraft

Quote:
Originally Posted by QTCakes1

There are 4 cupcake shops in our area. The one that bakes from scratch ALWAYS is sold out and they are not even in a good location


Constantly being sold out of product may not necessarily indicate that a business is successful.



They happen to be very successful. I know the owner. I wouldn't have said it otherwise. One place has a ton of product that they have to discount to move it at the end of the day and still end up tossing it in the trah. So I guess I should see that as a success...
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post #15 of 57
12/14/11 at 8:28am
Quote:
Originally Posted by Claire138

If that doesn't indicate a successful business then what does? or rather, what are they doing? not baking enough to constantly make it seem as though they are busy?


Off the top of my head, one possibility could be that the products are priced too low. The best indicator of a business's success is profit, not revenue.

Of course sometimes selling out of product does indicate a successful business, my point was that you can't use that single piece of data to reach a conclusion as to whether or not a business will be viable.
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An experimental blog with new content every Tuesday!

Recent Articles: The Magic Pricing Formula • Copyright Law
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Recent Articles: The Magic Pricing Formula • Copyright Law
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