This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Are Cupcakes Still a Sweet Spot for Business?




By Katie Little, Special to CNBC

NEW YORK ( CNBC) -A handful of big-name players within the cupcake industry are betting that America's cupcake obsession will continue as they embark upon ambitious expansion plans.

Recent data backs up this confectionery gamble -- but with a caveat. Growth within the cake decoration stores industry is expected to slow to 3.7 percent annually over the next five years, according to an October 2011 report from research firm IBISWorld. This forecast represents a dip from the 4.9 percent growth that the industry was predicted to have enjoyed during the past five years.

"The market is becoming more and more saturated as cupcake stores open, but ones like Crumbs (CRMB) or Sprinkles that have a more recognizable brand can succeed," said Mary Nanfelt, the report's author.

More from CNBC
14-Year-Old Buys Distressed Florida Home For $12,000
Sprint Bankruptcy Risks Are Rising: Bernstein
Kiddie Couture: Designers Cash In On Childrenswear Boom

Several high-profile cupcake brands are in the midst of expansions from Boston to Beirut.

Magnolia Bakery -- one of the most recognizable cupcake shops, made famous by the hit TV show "Sex and the City" -- aims to add 200 stores within the next five years, said Bobbie Lloyd, the company's operating partner and president.

One franchise location opened in February 2010 in Dubai while another is currently under construction in Doha, Qatar -- thousands of miles from the company's original New York City location.

"We're working on agreements in other places such as Russia, Japan, Morocco, Turkey and China, so that's the world-domination factor, which is always our internal cupcake joke," Lloyd said.

The cupcake's reputation as a small luxury at an affordable price has fueled growth within the bakery industry.

"I think that when times are tough, people can still afford $2.75 for a cupcake," said Katherine Kallinis, one half of the sister duo who founded Georgetown Cupcake in 2008. "It's a luxury that everyone can afford -- it's not going to break the bank."

Kallinis and her sister Sophie LaMontagne are the stars of TLC's "DC Cupcakes," which is currently in its third season. In February, they opened the company's third location, in New York City's SoHo neighborhood. Another location is set to open in Boston in May.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,805.41 +127.51 0.76%
S&P 500 1,964.58 +13.76 0.71%
NASDAQ 4,483.7150 +30.9230 0.69%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs