Check out this interesting article by Clare O'Connor on Forbes.com
Here’s a question for the ages, or at least for the next 36 months until a new eating fad emerges: If Carrie Bradshaw were still tottering around New York in 2013, where would the Sex And The Cityprotagonist meet her girlfriends for a nosh and some gossip?
“Carrie would be eating tacos — mini, gourmet tacos,” said Faith Popcorn, a futurist and marketing consultant. “Not Taco Bell. More upscale.”
Analyst Brian Sozzi, CEO of Belus Capital Advisors,concurred. “I feel as though she would be hitting up these cool food trucks that are popping up all over the place,” he said, adding that Bradshaw might tuck into a salad bowl at socially responsible Mexican chain Chipotle as a treat.
“It’s the anti giant cupcake,” he said.
The cupcakes Sozzi refers to are those made famous by Bradshaw and her Manolo-clad gal pals back in 2000, when the gang first stopped by the West Village branch of Magnolia Bakery to snack on Red Velvets.
Since then, countless cupcake stores have cropped up to fuel the craze, from home-baked mom and pop outfits to public companies like Crumbs Bake Shop CRMB +8.01%, which trades on NASDAQ and boasts 67 locations.
Then there are regional specialists with loyal followings, like Georgetown Cupcake in D.C., Sprinkles in California and Crave in Oregon. None of these businesses, Crumbs included, existed a decade ago.
This speedy proliferation is part of the reason why the cupcake bubble has now burst. On Wednesday, the Wall Street Journal did a deep dive into the industry, charting the rise and, it now seems, fall of Crumbs in particular. From its $13 peak in 2011, Crumbs’ stock has now sunk to $1.27.
Analysts and experts wonder if “gourmet-cupcake burnout”, as the Journal calls it, is really to blame.
“I never understood the cupcake thing to begin with,” said Nick Setyan, a restaurant analyst at Wedbush Securities who incidentally downgraded donut chain Krispy Kreme’s stock on Thursday, the day after the Journal story came out.
“With Crumbs, their expansion strategy was too quick, disorganized and franchise-heavy.”
For Setyan, the gourmet cupcake’s downfall is its price: upwards of $3.50 at Crumbs, Magnolia and many of their regional counterparts. “The big issue: people can bake cupcakes at home,” he said.
He also denied any link between the Crumbs exposé and Krispy Kreme’s downgrade, and predicted the donut industry will grow exponentially even as cupcake shops close their doors.
“Dunkin Donuts and Krispy Kreme have a tremendous opportunity,” Setyan said. “There’s such an untapped market on the west coast. They can still roll up mom and pop stores there. And they’ve been able to position themselves as everyday, breakfast items. A cupcake can cost $4. You can still get a donut for 40 cents, and a cup of coffee.”
Futurist and marketer Faith Popcorn doesn’t see price as part of Crumbs’ problem, nor the ease of baking cupcakes (“Eighty per cent of women work,” she said. “Do you know any women who have time to bake?”). She cited market over-saturation, but also the contents of the average gourmet cupcake.
“Have you seen how over the top these things are?” She said. “They’re calorie bombs — 500 calories apiece.” She said health concerns, including diabetes and obesity, are trumping the desire for a semi-regular indulgence like a cupcake for many consumers.
Carrie Bradshaw would no doubt be watching her weight in 2013. She’d probably have given up gluten. She may even have taken up juicing.
On Wednesday, the same day the Journal released its story on the death of the cupcake, the New York Times published a trend piece on the rise of cold-pressed juice, an industry growing in much the same way as Crumbs and co. did five years ago.
Faith Popcorn sees the person currently spending $75 on six bottles of BluePrint’s green kale juice as the exact same shopper who followed the Sex And The City girls into Magnolia Bakery a few years back, and not just because young women are trend junkies.
“It’s kind of their repentance,” she said, adding that she doesn’t really believe all these new juicing enthusiasts are as attached to their blenders as they claim.
“It’s kind of their repentance,” she said, adding that she doesn’t really believe all these new juicing enthusiasts are as attached to their blenders as they claim.
“There’s this aura of health in juice,” she said. “People aren’t really juicing or detoxing. They’re just buying juice. It’s like hanging your clothes on a treadmill.”
She thinks the pricey juice bar may be here to stay, at least in urban centers, but that the next indulgent replacement for the cupcake is around the corner. She predicts gourmet grilled cheese and grown-up peanut butter and jelly sandwiches as the next middle-class fixation. Both, like cupcakes, are tied to feelings of nostalgia, whether real or otherwise.
Analyst Brian Sozzi was careful not to predict the next big food trend, but he doesn’t think the bursting of the Crumbs bubble will dissuade entrepreneurs from setting up storefronts to take advantage of the cupcake’s winning qualities: high margins and a low barrier of entry to market.
“People have seen that they could charge Starbucks SBUX +0.95% type prices and make even more of a profit margin given ingredient cost deflation — and sit home to make the product, and market it on social media,” Sozzi said. “To them, this is win-win.”
Walk down Bleecker Street, Carrie Bradshaw’s old stomping ground, and you’ll see the cupcake’s successors: macaron shops aplenty, gourmet popcorn boutiques and a goat-milk ice cream parlor. And, of course, a fancy taco place. Says Faith Popcorn: “That’s next.”
