How a New York bakery sold $23.5 million worth of cupcakes last year

Cupcakes bring back memories of home baking dropped off for my kids’ fundraising bake sales at Willows Elementary School. I decorated with cream cheese icing and sparkly sprinkles guaranteed to catch a school kid’s eye – nothing fancy, but fun to eat – and who doesn’t love a cupcake? But cupcakes have really grown up lately.  

Consider those baked by the largest cupcake company in the world. It’s called Crumbs, owned by Jason and Mia Bauer of New York City, who report that their 7-year old company racked up $23.5 million in revenue last year. And that’s just selling cupcakes!

Donna Fenn, author of the book Upstarts! How Gen Y Entrepreneurs are Rocking the World of Business, recently interviewed Jason Bauer for BNet. He offered these three secrets for the success of Crumbs:

1.  Listen to your customers. When the Bauers opened their first bakery, on the Upper West Side in Manhattan, the line was out the door on the first day. Bauer said:

“We carried 150 items. And we started with two to three varieties of cupcakes. They included Mia’s signature coconut cupcake, which she had first made in the second grade. No matter how many other items were in the bakery, we noticed that customers were clearly cupcake-crazed, since the cupcakes would sell out every day.  So Mia experimented with more varieties until our shop carried twelve different kinds of cupcakes with various fillings and toppings. A few months into the operation, we decided to convert the bakery case into all cupcakes. Mia went on a rampage, and we started to be known as a cupcake place. That wasn’t in the original plan, but a willingness to respond to market demands helped drive this initial success.”

2.  Take calculated risks.  Six months after their launch, the Bauers opened a second bakery across town on the Upper East Side, and experienced similar success. In 2004, they took a leap of faith and opened a third store in highly commercial mid-town Manhattan. The two original stores were in residential neighborhoods, where families with children could be counted upon for repeat business. But, as it turns out, the cupcake craze was widespread. Bauer explained:

“Our business exploded. We had lines out the door every day. We thought that moms with strollers were our customers; we didn’t know that suits and ties were our customers, too.”

Crumbs landed a significant amount of catering work from companies who figured that boring meetings could be made a lot more palatable with, say, a big box of red velvet cupcakes.  When the recession hit, the corporate catering work dried up a bit, but Bauer says that foot traffic increased because “everyone can afford a $3-$4 cupcake.”

3.  Get the right people on the bus. For the Bauers, that started with each other.  They were dating when they decided to start a business together in 2003, and recalls Bauer, “people thought we were crazy, but we knew we worked well together.”  One marriage license, 35 stores, and two kids later, it looks like they were spot on. The Bauers are also big believers in home grown talent. “A lot of people on our corporate staff started as counter help,” says Bauer.  Ditto for store managers. Training existing employees to be managers and leaders ultimately saves time and money, and sends new employees the message that the company is invested in their success. Crumbs now has over 400 employees, half of whom are full time, and 35 stores in four states, with stores in Chicago and Washington, DC opening soon.

For his part, Bauer thinks that Crumbs’s success is pretty simple.

“It’s all about the cupcakes.”

Read the BNet interview or visit the Crumbs website – which also does a booming business in online orders.

Want to try your hand at baking cupcakes? Here are some amazingly healthy recipes courtesy of National Public Radio.

5 thoughts on “How a New York bakery sold $23.5 million worth of cupcakes last year

  1. Thanks for this. I have wondered what the heck is up with all these cupcake shops suddenly opening on every corner!? Who knew that the simple cupcake could be elevated to deserve its own retail outlets?

    There’s a new one near my office that is packed all day long. And it also seems to be a destination for mothers and their little ones. I sure wish I’d had a cupcake shop like that when my sons were tiny and I was going stir-crazy at home with them as a stay-at-home Mom. Back then, it was a great big deal bringing children in baby carriages into any regular restaurant, so it’s interesting to me how these parents are now welcomed into charming little cupcake shops. The children play with each other while their mothers enjoy their coffee and treats. All in all, the family-friendly atmosphere is pleasant and full of life, good music, and these young parents don’t have to meet in McDonald’s or other fast-food kid places for a quality break with other adults.

    I was tempted to try one of NPR’s healthy cupcake recipes today, but then I suddenly thought NO WAY! A cupcake should be what it is: an occasional decadent sweet treat piled high with luscious (real) frosting!

    Thanks very much – I discovered your website thru a friend who subscribes, and I just spent a fascinating hour completely lost on your site here. So much to think about.

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  3. The owner of this company says: “everyone can afford a $3-$4 cupcake.” Really? I have three kids and that’s $12 (not counting my own cupcake, which I couldn’t afford by the time I pay for their treats!) I put the marketing success of cupcakes into the same category as buying take-out coffee on the way to work – costs pennies to make it at home and bring your own travel mug with you on the train, but consumers happily fork over $3-4 at Starbucks instead every morning. I just don’t get it.

    • I’m with you, Linda. I don’t get it either. I’m thinking our economy must be in WAY better shape than we believe – or else people are looking at $3 here and $3 there (an outrageously inflated price for that blob of flour and sugar!) as just a little ‘treat’ to take their minds off the poor economy!? I’ve heard the same about movie theaters – did a booming business during the Depression.

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