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How do cupcake shops work?

post #1 of 18
Thread Starter 

I apologize if this is a stupid question, but, can someone explain how cupcake shops work? After watching cupcake shows on tv, I've wondered about opening one myself, but I don't see how they make enough money to stay open. We used to have three around here (that I know of), but I think all of them have closed except one. Do they generally sell more than cupcakes? A lot of them say "baked fresh daily", do they really bake multiple different flavors of cupcakes everyday? What do they do with the leftovers?

post #2 of 18

There is a shop here that's new, and they are baking the night before, so much for baked daily!

I wonder how they survive too, must be cause the prices they charge are crazy!

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post #3 of 18

we have abour 4 gigi's cupcakes here --franchises based out of nashville--but locally owned plus some other shops that do well but also do lunch or yogurt or something in addition--gigi's is the only just cupcakes 

 

and she does have great locations on very busy high visibility main drag streets--good easy parking

 

yes they do bake daily*--i wonder about the money part too ;) but she's got four of 'em!

 

i'm sure a few very few cupcakes 'roll over' from day to day but not many--they watch it closely--they plan to sell out daily--it's a balancing act there so that they don't waste much if any

 

*in fact i was interviewing for a job at a different cupcake place--this owner told me that he was told by a former gigi's employee that gigi's did freeze their stuff so he told his customers this! that his were better blablabla--so one day he's giving his schpeil and lo and behold he's schpieling to the owner of gigi's--hahahaha and the owner of gigi's straightened him out on the 'baked fresh ' part -- busted!

 

isn't that rich and i mean if i'da done that i would not have related it to anyone! duh but anyhow--it happened--

if you had your own tv show what would be your favorite commercial/sponsor

i think i'd like ghirardelli and hershey for starters...

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if you had your own tv show what would be your favorite commercial/sponsor

i think i'd like ghirardelli and hershey for starters...

Reply
post #4 of 18
Shops that sell only cupcakes to retail customers usually don't work for long.
post #5 of 18

You might want to read the first book by the sisters behind Georgetown Cupcakes, I'm not sure of the accuracy of their story but they do talk about how they started up in there, deciding when and how much to bake etc. 

 

I know the owner of a delivery only cupcake business here in Chicago and she does bake daily (well her staff does), but she knows exactly how many she will need each day because she requires 24 hours notice. She is doing a massive amount of business but still works out of a co-op kitchen, I guess it's still not enough to justify getting her own premises. She has a set price that includes delivery and you can only order by the dozen. 

 

I guess it takes trial and error to get your product mix right to the point where you're not wasting loads or running out of popular flavors. 

 

Gigis has literally hundreds of locations. They mention that they have low food costs in their franchise material so I can only assume they are using mixes, and possibly pre-made toppings and fillings in order to maintain uniformity across the brand and keep costs low. 

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post #6 of 18

it is a surprising thing to see a place exist just selling cupcakes--i didn't think they would last

 

kikiandkyle--they must have their own mixes!

 

because their product is uniform from day to day and from store to store (well i've purchased from two)

 

their kentucky bourbon pie was my birthday cake one year ;)  very very good!

 

i also love the german choco cupcake from whole foods ;)

if you had your own tv show what would be your favorite commercial/sponsor

i think i'd like ghirardelli and hershey for starters...

Reply

if you had your own tv show what would be your favorite commercial/sponsor

i think i'd like ghirardelli and hershey for starters...

Reply
post #7 of 18

We don't have a store yet but we do retail days once a month. And we do more than just cupcakes. We've had two cupcake places in my town, one of which started as just cupcakes and then started adding more things about two months before they ended up closing. We do cupcakes, decorated sugar cookies, scratch made marshmallows, and custom cakes. Last Saturday was our retail day and we ended up selling out of cupcakes and cookies. We made about 180 cupcakes, about 50 cookies. Some people had pre-ordered and had some custom flavors. When we started our business plan, we knew that we couldn't just sell cupcakes. I think cupcake places, like Georgetown Cupcakes, have been around long enough that they have a good customer base. If someone plans on opening and just selling cupcakes, I don't think they would do well now. 

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post #8 of 18
Quote:
Originally Posted by kikiandkyle View Post

Gigis has literally hundreds of locations. They mention that they have low food costs in their franchise material so I can only assume they are using mixes, and possibly pre-made toppings and fillings in order to maintain uniformity across the brand and keep costs low. 

 

 

know what else though they don't have a lot of filled cupcakes do they
 
i mean most of their cupcakes are just 'plain' but very tasty cupcakes--with a boatload of icing on top
 
most of their cupcakes are just iced not filled--they wouldn't last long on cupcake wars huh
 
has anyone ever seen them on there on cupcake wars?

if you had your own tv show what would be your favorite commercial/sponsor

i think i'd like ghirardelli and hershey for starters...

Reply

if you had your own tv show what would be your favorite commercial/sponsor

i think i'd like ghirardelli and hershey for starters...

Reply
post #9 of 18
Quote:
Originally Posted by kikiandkyle View Post

You might want to read the first book by the sisters behind Georgetown Cupcakes, I'm not sure of the accuracy of their story but they do talk about how they started up in there, deciding when and how much to bake etc. 

 

I know the owner of a delivery only cupcake business here in Chicago and she does bake daily (well her staff does), but she knows exactly how many she will need each day because she requires 24 hours notice. She is doing a massive amount of business but still works out of a co-op kitchen, I guess it's still not enough to justify getting her own premises. She has a set price that includes delivery and you can only order by the dozen. 

 

I guess it takes trial and error to get your product mix right to the point where you're not wasting loads or running out of popular flavors. 

 

Gigis has literally hundreds of locations. They mention that they have low food costs in their franchise material so I can only assume they are using mixes, and possibly pre-made toppings and fillings in order to maintain uniformity across the brand and keep costs low. 


The majority of my cash flow comes form cupcakes, and this is similar to how I do it.

I have a commercial kitchen at home, no store front. I require 48 hours notice, min order is a dozen large, 2 dozen mini. I bake everything fresh that morning. I have set delivery and pick up times.

I do some wholesale though, I don't know how on Earth a cupcake only place could survive without doing that. Especially around here, to rent a reasonably placed storefront, that would have needed some major renovations, I would have had to sell over 900 cupcakes just to cover rent. That doesn't include the cost of ones that don't get sold and chucked.

post #10 of 18

i have the largest profit margin on cupcakes, so i suppose if I were to sell enough of them, i could pay the mortgage. my only concern with cupcakes only is, what do you do when the trend fades? 

post #11 of 18
Quote:
Originally Posted by scrumdiddlycakes View Post


The majority of my cash flow comes form cupcakes, and this is similar to how I do it.

I have a commercial kitchen at home, no store front. I require 48 hours notice, min order is a dozen large, 2 dozen mini. I bake everything fresh that morning. I have set delivery and pick up times.

I do some wholesale though, I don't know how on Earth a cupcake only place could survive without doing that. Especially around here, to rent a reasonably placed storefront, that would have needed some major renovations, I would have had to sell over 900 cupcakes just to cover rent. That doesn't include the cost of ones that don't get sold and chucked.

 

 

and gigi's has several employees in each location--that's big bucks too--they are not super high dollar wages but they are generous with the raises--fairly average to low turnover of high school types some long term managerial types--it looks like a very nice operation--the ones here

 

but that's a boat load of cupcake sales to keep all that afloat--the stores are not huge at all but in the high rent districts

 

and they're about three bucks each and they're packaging cost more than the cupcakes probably

 

-and i still can't get over that most of them are not filled--for that price

if you had your own tv show what would be your favorite commercial/sponsor

i think i'd like ghirardelli and hershey for starters...

Reply

if you had your own tv show what would be your favorite commercial/sponsor

i think i'd like ghirardelli and hershey for starters...

Reply
post #12 of 18

I worked at a cupcake shop in my area to check out that kind of business (I was thinking about opening one). The place I worked at didn't fill cupcakes they only frosted them, basic price was 2.75 each and premium ones were 3.25. They kept their menu ridiculously simple because she only had a handful of recipes. She got really creative with their names to make them sound like different flavors (when they weren't). Like if we used a cream cheese frosting on top she'd call it a "cheesecake" cupcake. They were really horrible tasting imo with way too much frosting to cake ratio too.

 

Anyway on sleeper days with 4 employees we'd do $1,000. per day (well the owner was one of the employees and she didn't pay herself). She did sell decorated cake but had a $300. min, order for ANY cake....so we didn't sell very many.

 

When you bake fresh each day, you just make small batches all day so you don't have left overs. You'll have a few, we'd use them to fill the cases before the fresh ones were baked. Small batches creates high labor costs, so it's not so smart.

 

One of the worst parts was the packaging. It was a full time job just folding all those boxes, yuck! No one wanted to do that job, it became the worst job among the staff. The owner would ***** non stop about people wanting a box for 1 cupcake.

post #13 of 18
Quote:
Originally Posted by Momof5kiddos View Post

There is a shop here that's new, and they are baking the night before, so much for baked daily!

I wonder how they survive too, must be cause the prices they charge are crazy!

Strictly speaking if they bake once per day (even at night) it is 'daily' but clearly most people would expect that to be in the morning! They also don't say that every cupcake is baked the day you buy it so even if they did bake in the morning some could be yesterday's and it would still be accurate that they "bake daily" (just not the cupcake you bought).

You'd never guess I spend much of my work day reviewing documents from contractors with "clever wording" would you?!

post #14 of 18

The long lasting cupcake shops are also in areas where people have no issue paying $3.50 for four bites of cake, here in Chicago there are several downtown, but they sell to the office crowd buying several dozen for an impromptu function, or salespeople taking them on client visits. They are the new donuts in that respect. Only Magnolia stays open on the weekend, and that is for tourists! 

 

You have to be in a market where someone walks in to get one for themselves, and decides to drop the $35 extra for a dozen just on a whim, rather than a market where someone saves all week to buy one for themselves and only dreams of ever having a dozen. 

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post #15 of 18
Quote:
Originally Posted by Jennifer353 View Post

Strictly speaking if they bake once per day (even at night) it is 'daily' but clearly most people would expect that to be in the morning! They also don't say that every cupcake is baked the day you buy it so even if they did bake in the morning some could be yesterday's and it would still be accurate that they "bake daily" (just not the cupcake you bought).

You'd never guess I spend much of my work day reviewing documents from contractors with "clever wording" would you?!

 

I am ok with that, but i guess what i was thinking is if they bake days in advance and freeze, then technically it is not 'fresh daily' :)

 

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