During one of the worst recessions in U.S. history, a little sugary confection – the great American cupcake – is proving to be an unexpected fast food market opportunity for many entrepreneurs.
One city where the cupcake sector is booming at a rate faster than your average coffee shop is Washington, D.C., where an investigatory article by The Washington Post found that at least half a dozen cup cake eateries – or “cupcakeries” – have opened in the past 20 months, with more on the way. (“Cupcakeries Emerge as Washington’s Sweet Spot in a Downturn“).
The Secret of “Cupcakery” Success?
Everyone can understand the appeal of the cupcake, but why the sudden spurt in “cupcakeries”?
Some see correlation in the popularity of the little confection with the current recession. Interviewed by The Post, Paul Sapienza, vice president for the Retail Bakers of America, offers his own assessment of the confection’s popularity: “They are cute. They are an economic treat, which helps out in the recession. They are a little decadent, so you get cake, frosting and sometimes filling all at the same time.”
While others doubt the trend will last. One fan of the Washington, D.C. cupcake group on Facebook told The Post: “For me, it’s a personal-size treat. You don’t have to share it with anybody. It’s a guilt-free, happy treat that takes you back to your childhood,” Jones said. “Do I think it’s a stable business? No. I wouldn’t invest in a cupcake store.”
The “Cupcakery” Opportunity
But regardless of opinion-based forecasts, “cupcakeries” are certainly a sweet option for entrepreneurs. Not only can you benefit from walk-in sales, but adding a pre-ordered catering option to the business mix can also be lucrative. For example, Georgetown Cupcake – cited in The Post’s article – sells between 3,000 and 5,000 cupcakes a day – of which 30 percent are walk-ins and 70 percent pre-ordered.
Servicing anything from kids parties to workplace soirees and even weddings, cupcakes are a perennial treat and a potential goldmine given the proper planning, marketing and location.
Starting your Own “Cupcakery” or Food Service Business
If you are interested in starting a “cupcakery” or other food service business, you will still need to observe the basic strategies of starting and operating a business – while observing food service business laws!
Here are some useful tips and resources that can help entrepreneurs start, operate and grow their food service businesses:
1. Getting Started
If you are a first-time business owner or entrepreneur, or even if you have some experience under your belt, these 10 Steps to Starting a Business from Business.gov will guide you through the process involved in making key business planning and financial decisions about starting a business.
2. Finding the Right Location
Whether you are in downtown Washington, D.C. or in America’s heartlands, researching and planning your potential location and market base is critical. And while city locations may attract walk-in traffic for your food service business, many suburban locations offer a higher concentration of lucrative “family-oriented” catering business opportunities.
Use freely available market research tools to your benefit. You can check local demographics including employment statistics, consumer statistics, and more using these guides from the government.
You’ll also need to check local zoning laws, even if you want to operate a home-based food production business – many local governments restrict what business can be done from home.
Get more advice and tips from Business.gov on choosing a business location.
Alternatively you may wish to start your business online – read “Starting and Growing an Online Business: An Entrepreneur’s Checklist“.
3. Understand the Regulations That Govern Food Production Businesses
There are a variety of laws and regulations that govern the food production and catering business, here are some resources that can help:
- Start Local – Most laws that govern this sector are enforced at the local level. Check your county’s Public Health Department for more information.
- Operating Your Business From Home – If you do choose to operate out of your home, read “Starting a Home-Based Food Production Business: Making Your Culinary Hobby Your Job” to learn more about the rules and regulations that govern home-based catering or food production businesses
- Using or Marketing Organic Produce – If you produce or distribute any foods labeled as “organic”, then you’ll need to be aware of some of the key government laws for the production, handling and retailing of certified organic food products. Read more about these in “Producing and Selling Organic Food Products – A Five Step Regulatory Primer“.
- Shipping Food Products Across State Boundaries -If you produce a food product that is shipped across state boundaries then the FDA and Department of Agriculture both provide compliance guidelines.
4. Hiring Employees in the Food Service or Production Business
Catering or food service businesses are almost impossible to operate as a one-man-band, so you are going to need to hire employees. Read Ten Steps to Hiring Your First Employee to understand the legal and regulatory side of hiring employees.
If you choose to operate a food service business or restaurant you will need to be aware of the laws that govern the hiring and management of employees in the food service business – Operating a Restaurant within the Law: A 101 in Compliance Part 1 and Part 2.
Marketing your cupcake or other food service business is going to come down to identifying your target market and using the appropriate tools and tactics to reach them. Here are some tips and resources to help small business owners develop a marketing plan to support their goals, including sample marketing plans and online tutorials.
Remember to include community and online marketing channels in your marketing mix – from your company Web site to Facebook and Twitter; local newspaper ads to stories written by local reporters. Use integrated methods to reach your audience wherever they are.