Red Velvet Revolution: The Rise of the Cupcake Entrepreneur

Got a sweet tooth? You’re in luck. These days, cupcakes are playing a starring role at pastry shops across the country – from teen-owned business City Cupcakes, to Zoe's Place, a nonprofit organization that provides services and support to teen mothers or mothers to be. Oh, and don’t forget the excitement of The Food Network’s "Cupcake Wars", delicious and dripping with drama. These sweet treats have become more than just a passing fad.Read More

by Lew Goettner

For Lauren Ball, cupcakes bring to mind childhood memories of trips to the bakery and birthday parties topped off with frosted treats big enough to pack a punch for any sweet tooth — but small enough that she didn’t have to share with anyone else.

But the 17-year-old from Escondido, Calif., also knows that cupcakes represent a lot of hard work. A year ago, Ball and friend Sawyer Epp, also 17, started their own business baking and selling cupcakes for special orders and at local farmers markets. Thousands of chocolate, vanilla and red velvet cakes later, Ball advises any aspiring baker to “take the amount of work you think it’s going to be and double that — or triple that.”

When they started out, it took the teens about seven hours to make 100 cupcakes. With experience and the discovery of some time-saving tricks (such as measuring out the ingredients at home before heading to their rented baking space) they could churn out 300 or 400 cakes in about four hours. Ball and Epp had to get all the permits and licenses required of food vendors in their area. They tested different brands of cocoa and vanilla to determine which brands made the cupcakes taste best. “That’s what it really takes to be successful,” says Ball. “Anything worth doing is going to be hard.”

Colors, Competition and a Cause

These days, cupcakes are playing a starring role at pastry shops across the country, and Ball and Epp’s City Cupcakes is just one of the businesses feeding the craze. Cupcakeries run the gamut from stores offering treats in classic flavors, like chocolate and vanilla, to those peddling more exotic tastes, including margarita and sweet potato (both of which have been on the menu at SAS Cupcakes, which has locations in Delaware and North Carolina.) Bakers are selling their cupcakes via blogs, Facebook and Twitter, and from traveling food trucks.

Some entrepreneurs are combining cupcakes with a cause. At City Girl Cupcake in Providence, R.I., any profits that don’t go back into the business are donated to local and national charities. Extra cupcakes — all of which are organic, nut-free and baked with locally sourced ingredients — are donated to the local Ronald McDonald House. Founders Catherine Corrente, 16, and Isabella Veader, 15, go to a school where community service is emphasized “and we both wanted to bring that into what we did when we sold,” Corrente says. “We’re both extremely fortunate, so we wanted to give back.”

In Teaneck, N.J., all of the profits from the cookies and cupcakes sold at Zoe’s Cupcake Cafe go to Zoe’s Place, a nonprofit organization that provides services and support to teen mothers or mothers to be. Clients of Zoe’s Place also work at the cafe, operating the cash registers and helping a professional pastry chef with the baking. “I think the colors are what attract everybody — all the different frosting colors and sprinkles and decorations,” says Christian Mims, 17, who works at Zoe’s. “Then you taste one and you want to keep going back.”

Cupcakes are even at the center of their own show on the Food Network. To win Cupcake Wars, bakers battle a ticking time clock to earn top scores from a panel of judges for taste, style and presentation. “I’d rather have dessert than dinner,” says Jasmine Frank, who competed for a chance to cater a vintage fashion event on an episode that aired last summer. The 19-year-old Woodland Hills, Calif., resident bakes cakes, cupcakes, cookies and cheesecakes to order through her online business, Jazzy Cakes. “When I started looking at culinary schools, people thought I was crazy. I had a 4.0 my whole high school career and people asked, ‘Why aren’t you getting a full ride to a university?’ but somehow I had a vision … that this was what I was meant to do.”

Made With Love — and Business Savvy

Many foodies trace the cupcake trend to a 2000 episode of Sex and the City where Carrie and Co. made a pilgrimage to Magnolia Bakery in New York City. Since then, however, the sweet treats have become more than just a passing fad, says Rick Bittner, executive director of the Retail Bakers of America in McLean, Va. When Bittner owned a bakery 15 years ago, he sold many full-sized cakes but very few cupcakes. Since then, however, consumers’ interest has shifted toward smaller, more inexpensive treats that can be eaten on the go. “[Cupcakes] are a trend, but there are trends that become staples,” he says.

With so many cupcake businesses popping up in both large cities and small towns, aspiring entrepreneurs need to carefully research potential markets, rely on mentors for both business and baking tips, and get creative when it comes to marketing and advertising, Bittner suggests. “The people who are successful create something more than just a product in a display case. Going to their stores becomes an experience.”

Related Links

Conversation Starters

We hear this so often: “Anything worth doing is going to be hard.” What does that expression really mean? What does it say about ambition and work ethic?

In thinking about this article through an Economics lens, consider the following questions: (1) What are the scarce resources involved in running a cupcake store? (2) How does scarcity affect customers? (3) How does it affect the store owner?

30 comments on “Red Velvet Revolution: The Rise of the Cupcake Entrepreneur

  1. (1) What are the scarce resources involved in running a cupcake store?
    – Seasonal flavor
    – Different season may have different menu
    – Supplies
    – The amount of workers making cupcakes
    – The amount of food to make enough cupcake
    – Money
    – Having enough money to buy enough supplies or hire enough workers
    – Best before date
    – Cupcake can only stay about two to three days which most customers would like fresh food

    (2) How does scarcity affect customers?
    – Customers may get cakes that are made days before where it is unhealthy
    – Customers can chose to buy cupcakes in other shops as there are a lot of substitutions
    – Customers would not be able to buy cupcake if it is sold out as they are limited in the amount of cupcakes that can be made within a day

    (3) How does it affect the store owner?
    – Store owners would have to think of new types of cupcake every season
    – Need enough capital to start the business and working capital to operates the business
    – May have low reputation as they are an entrepreneur that just started making cupcakes
    – Need to be able to keep fresh food and grow reputation

  2. What are the scarce resources involved in running a cupcake store?
    -seasonal flavor
    -supplies
    -workers
    How does scarcity affect customers?
    -customers might get old cupcake
    -might get weirdly shaped cupcakes
    How does it affect the store owner?
    -less customers
    -less money

  3. What are Scarce Resources Involved in Running A Cupcake Store?
    – Ingredients bought from stores
    – Packaging
    – Decorations
    – Investment money
    – Workers
    – Advertising cost
    – Best before date

    How Does Scarcity Affect Customers?
    -The shop might run out of stock for the cupcake customers want
    – The cupcakes may be made from low quality ingredients if the investment money isn’t much
    – Customers might get a spoiled cupcake (out of date)
    – The cupcakes may not be as aesthetically pleasing if the decorations are bland

    How Does Scarcity Affect the Store Owner?
    – If the cupcakes aren’t aesthetically pleasing then the customer might not advertise it for the store which means the store will be less popular
    – If the cupcakes don’t taste good then they won’t make as much money
    – If the cupcakes are out of date and the customers report it then they could get sued

  4. What are the scarce resources involved in running a cupcake store?
    – seasonal flavor
    – supplies
    – amount of workers
    – best before date
    – advertising cost

    How does scarcity affect customers?
    – Customers get a spoiled/out of date cupcake
    – customers wouldn’t be able to buy a cupcake if the store is limited in the amount of cupcakes that can be made

    How does it affect the store owner?
    – Need capital to start and maintain the business
    – If the cupcakes don’t taste good, the store will be unpopular amongst customers

  5. What are the scarce resources involved in running a cupcake store?
    – Foods and Flavors avalible
    – Money/ Budget
    – Time Crunch
    – Shortage of employees
    – How long a cupcake can sit on a shelf before going bad
    – Amount of packaging and decorations left

    How does scarcity affect customers?
    – Customers may choose to support other shops
    – Customers may not be able to purchase a cupcake of their choice if it is limited and sold out for the day
    – Cupcakes may not taste the best if the quality of the ingredients are poor

    How does it affect the store owner?
    – May not be able to produce enough income to keep the shop open
    – Scarcity of resources can cause price inflation of other products, which can be too expensive
    – The shop may not be able to have enough fresh products
    – The business may not be able to expand and grow their name

  6. what are the scarce resources involved in running a cupcake store?
    1,food
    2,flavor
    3employees
    4,packaging
    5decorations
    how does scarcity affect customers?
    1,the price of the object will be hihger ,then the cost of buying will be hihg
    2,the unlimited want of customer may not be satisfied in one day
    how doesit affectthe store owner?
    1,there would be not enough profit the owner can get to growth or survival
    2,the price will be higher than others

  7. what are the scarce resources involved in running a cupcake store?
    1) packaging

    How does it affect the store owner?
    They would have a harder time making as much profit
    2) employees
    3) food
    4) flavor

    how does scarcity affect customers?
    The original price of the item will be more expensive so it will make it more expensive for the customers when they are buying it.

    • Sorry the order got mixed up, down below is it corrected

      what are the scarce resources involved in running a cupcake store?
      1) packaging
      2) employees
      3) food
      4) flavor

      How does it affect the store owner?
      They would have a harder time making as much profit

      how does scarcity affect customers?
      The original price of the item will be more expensive so it will make it more expensive for the customers when they are buying it.

  8. What are the scares resources involved in running a cupcake store?
    1) employees
    2) food
    3) decorations

    How does it affect the store owner?
    the owner may have a hard time gaining profit which could cause the store to shut down

    How does scarcity affect customers?
    The price of the items will be more expensive may have a hard time affording it.

  9. Scarce Resources:
    -food
    -packaging
    -employees
    -decorations
    Effect on store owner:
    -making profit would be more difficult
    Effect on customers:
    -the price of food would be more expensive and therefore harder to afford

  10. What are the scarce resources involved in running a cupcake store?
    Food/flavors
    Employees
    packaging
    How does scarcity affect customers?
    Since the items become more scarce this causes a rise in price making it harder for customers to afford.
    How does it affect the store owner?
    The store owner will either have to keep prices low a minimize profit margins or lose customers while raising prices.

  11. The scarce resources involved in running a cupcake shop are:
    Flavors
    employees
    decorations
    How do Scarcity affects customers?
    the food would be more expensive leading to a declining number of clients
    How does scarcity impacts the store owner?
    making money would become harder

  12. What are the scarce resources involved in running a cupcake store?
    – Ingredients
    -Packaging
    -Employees
    -Embelishments

    How does scarcity affect customers?
    – Customers may get old and stale cupcakes
    – Customers receive lower quality cupcake
    – Customers receive less aesthetic cupcakes

    How does it affect the store owner?
    – Customers may be dissatisfied with the quality of cupcakes, affecting business
    – The owner may have to compromise on ingredients

  13. 1) The scarce resources are employees, food, decorations, and packaging material.
    2) Customers will only be able to by a certain quantity of cupcakes, and their flavor options will be limited. The cupcakes they purchase may also be unhealthy.
    3) The producer will only be able to produce a limited amount of cupcakes in a limited variety of flavors due to their lack of reputation and scarcity of materials.

  14. Scare resources
    – employees
    -time
    -budget

    Affect – it is more difficult to make customers fresh and cheap cupcakes

    Store owner affect –
    Profiting is more difficult

  15. 1. What are the scarce resources involved in running a cupcake store?
    -workers
    -time
    -money
    -supply (seasonal flavors)
    2. How does scarcity affect customers?
    -multiple options
    -lower quality cupcake over a prettier one
    3. How does it affect the store owner?
    -keep up with seasonal flavors
    – limited on amount they can produce

  16. 1. What are the scarce resources involved involved in running a cupcake store?
    – Time
    – workers
    – ingredients
    – supply
    2. How does scarcity affect customers?
    – The cupcake could be more expensive for the customer.
    – quality/ quantity.
    3. How does this affect the store owner ?
    – limited amount of cupcakes they can produce.
    – scarcity can cause price inflation.

  17. What are the scarce resources involved in running a cupcake store?
    1. Labour – number of employees employed + hours they can work
    2. Land – location of shop – price of land
    3. Capital – money to pay for; ingredients, staff, utilities and rent
    4. Technology – with machinery time spent making cupcakes is decreased

    How does scarcity affect customers?
    1. If a good becomes scare this means a shift inwards of supply S1 to S2 (decreased supply) -> lower supply (S2) + constant demand (D1) = raise in price (P1 to P2) -> increase of price decreases consumer surplus -> in turn decreasing consumer welfare.

    How does it affect the store owner?
    1. with changes from S1 to S2 and consumer surplus and consumer welfare decreasing the producer welfare and producer surplus will increase leading to greater inequality.

  18. The scarce resources involved in running a cupcake store are:
    1. Labour – number of employees employed + hours they can work
    2. Land – location of shop – price of land
    3. Capital – money to pay for; ingredients, staff, utilities and rent
    4. Technology – with machinery time spent making cupcakes is decreased

    What is scarcity’s affect on customers?
    1. If a good becomes scare this means a shift inwards of supply S1 to S2 (decreased supply) -> lower supply (S2) + constant demand (D1) = raise in price (P1 to P2) -> increase of price decreases consumer surplus -> in turn decreasing consumer welfare.

    How does Scarcity affect the store owner?
    1. with changes from S1 to S2 and consumer surplus and consumer welfare decreasing the producer welfare and producer surplus will increase leading to greater inequality.
    2. Furthermore, scarcity will increase the cost of production for each unit -> increased costs on the producer

  19. What are the scarce resources involved in running a cupcake store?
    • Time
    • Supply, ingredients
    • Workers
    • Place to prepare
    • Capital money
    • Design ideas
    How does scarcity affect customers?
    • Price could be higher
    • Quality of cupcake could be lower
    How does it affect the store owner?
    • Owner ended up producing less cupcake
    • Earning/making less money

  20. What are the scarce resources involved in running a cupcake store?
    • Time
    • Supply, ingredients
    • Workers
    • Place to prepare
    • Capital money
    • Design ideas
    How does scarcity affect customers?
    • Price could be higher
    • Quality of cupcake could be lower
    How does it affect the store owner?
    • Owner ended up producing less cupcake
    • Earning/making less money

  21. Cupcake ingredients, a space to sell the cupcakes, employees, flavor, packaging, decorations, the price of ingredients.
    The size of the product and the price of the product
    The price, profit, and the want of the product. The growth of the cupcake store

  22. What are the scarce resources involved in running a cupcake store?
    – ingredients
    – Time/commitment and hard work
    – resources
    – supplies
    – employees
    – kitchen to bake/ work
    How does scarcity affect customers?
    quality of the cupcake is over charged
    price could be to high
    How this affects the store owner:
    – Losing money
    not selling as much cupcakes

  23. What are the Scarce resources involved in running a cupcake store?
    – Supplies
    – Time to bake
    – Ingredients
    – Location
    – Price of product
    – Design and advertisement of Cupcake
    How does this Scarcity affect customers?
    – Price is higher than it should be given the quality of the cupcake
    – Difficulty in making cupcakes cheap but also fresh and appealing

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