McHENRY – Local bakers remain sweet on cupcakes, despite the crumbling stock price of one of the industry’s major players and gloomy forecasts about the future for the gourmet treat.
Cupcake makers around the country took notice last week when the Wall Street Journal published an article with the headline “Forget Gold, the Gourmet-Cupcake Market Is Crashing.” The report focused on the sinking stock price of Crumbs Bake Shop Inc., a New York-based chain with 67 locations in the United States. The company’s stock traded slightly above $1 this week after hitting a peak above $13 in 2011.
The market for high-end cupcakes has become saturated and the fad appears to waning, according to some industry analysts.
“We’ve seen very rapid growth in this category, but the sustainability of trends like this tend to diminish as other trends take shape,” said Darren Tristano, executive vice president at Technomic Inc., a Chicago consulting and research firm serving the food industry. “Demand for over-the-top cupcakes has flattened and started to shift downward.”
Though new bakeries continue to open in the region, Tristano said, “they are coming late to the game.” Increasing supply in a market where demand is stable, or declining, could led to price wars or possibly store closures, he said.
Meanwhile, local bakers are branching out into new areas, such as breakfast, to keep customers coming in for more.
In McHenry County, several bakeries focused on cupcakes have popped up in the last decade.
Kiera Confections in McHenry sells cupcakes for $2.25 to $2.50 each with offerings such as Berry Bubbly, a strawberry cupcake with strawberries, champagne buttercream frosting and sugar bubbles. Owner Kim Loewe said talk of a cupcake crash may be premature.
“I don’t see cupcakes losing popularity,” she said. “If anything, they are becoming more popular, especially with weddings.”
About 80 percent of her sales are from cupcakes, though she also sells cookies, cakes and other desserts.
Loewe recently started offering lunch items and plans to add a breakfast menu to attract more patrons and keep them coming back. She views lunch and breakfast service as “bait” to sell more cupcakes.
Independent bakers such as Loewe face increasing competition from other bakeries as well as chains and grocery stores.
Sugar Buzz Cupcakes and Coffee, which opened in McHenry in 2012, recently served a creation called the Lumberjack, which featured a buttermilk cupcake filled with pieces of candied bacon, maple buttercream frosting, and bacon garnish.
Owners Mike and Anisa Cichon hope to turn a profit this year after staying afloat in 2012. They’re offering new products, such as salads, sandwiches and soups “to get more people in the door,” Anisa Cichon said.
The Cichons haven’t seen signs of cupcake burnout. On recent weekends they’ve seen groups of people stopping by for cupcake tastings, and Sugar Buzz’s creations are ordered by the dozen for a variety of events, from birthday parties to weddings.
Sales at SweetPea Cakes in Crystal Lake are up about 30 percent this year over last year, said owner Carrie Curie. About 70 percent of SweetPea’s business comes from cupcake sales, depending on the season.
“I don’t think it’s a fad,” Curie said. “By the cup or by the slice, people are still going to eat cake.”
Curie charges $2.75 to $3.25 per cupcake, including a boozy watermelon lime margarita cupcake for adults. Curie said she isn’t worried about competition because she makes all of her products from scratch, a labor-intensive feat that grocery stores and other retailers can’t easily match.
As much of the food industry has turned toward healthy eating, the cupcake industry remains unabashedly decadent. Tristano said that could be a liability as dessert trends more toward lower-calorie options such as frozen yogurt.
SweetPea Cakes offered a healthy option – a creation featuring orange and cranberry – but it didn’t sell.
“Nobody wanted it,” Curie said. “They aren’t coming here for that. They are coming to indulge.”