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The best article I've read on Cupcake Business'

post #1 of 5
Thread Starter 

Just wanted to share an article I found interesting about ways to be successful selling cupcakes. http://www.nytimes.com/2009/11/26/business/smallbusiness/26cupcake.html?pagewanted=all&_r=0

 

One thing that really stood out to me was about pricing.

"For each cupcake she sells, Ms. Lovely figures she spends 60 cents on ingredients, 57 cents on mortgage payments and utilities, 48 cents on labor, 18 cents on packaging and merchant fees, 16 cents on loan repayment, 24 cents for marketing, 18 cents for miscellaneous expenses and 4 cents for insurance. That totals $2.45, leaving a potential profit of 55 cents on each $3 cupcake."

 

I was thinking about how many threads I've seen where people want to know how much they should sell their cupcakes for......that quote sure does help. Considering it was written in 2009, I'd guess that costs have only gone up and sales have probably gone down in the Cupcake Market.

 

I understand a lot of people think they don't have marketing costs or loan repayments, etc... but if a person was to make a serious business making cupcakes they probably will at some point have all those expenses too.

 

enjoy

post #2 of 5

Thanks.  That was a fun and informative read. 

 

 

post #3 of 5
That's awesome that it breaks down her costs.

Here in SC we have a place called Cupcake and they have either three shops (I think) and are still going strong! But every other cupcake place is short lived. Dunno what they are doing differently but something is right!
post #4 of 5
Thread Starter 

I went to a job interview at a cupcake place in my area while back. The wife wasn't there and I got "interviewed" by the husband......who really told me too much about the business. At one point they had people lined around the block but than the traffic died. (I think because they aren't great and are expensive). So anyway in an attempt to save themselves from loosing everything they invested into the business they figure the only thing they can do is franchise.

 

So that's why they were hiring, to open another location in preparation to start franchising. The guy when through his list of all the things the franchise has to buy (from them) as part of the licensing agreement. THAT was their hail-mary attempt to salvage their investment (refinancing their home).

 

Not everything that looks profitable really is.

 

I did at one point work at a cc shop that had two locations. That was just a risk the owner took trying to get their brand out. It didn't work, they've closed one of the locations and the other seems to be dyeing too.

post #5 of 5
That's a very good point stitches! I do know that the first location is on a college campus and the second is downtown Charleston, so they get a ton of foot traffic! The other places that have since closed were not in foot traffic areas, that probably is a huge thing for the shop that is doing well!
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