A Renaissance For Cupcakes?

Cupcake stores are popping up across the county. One expert says it's a classic economic bubble — with a sweet topping. Producer Selena Simmons Duffin talks cupcakes with host Guy Raz.

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GUY RAZ, host:

If Evan Ratliff has a weakness for gluten-free pizza, he might want to try:

Ms. BRITTANY FRICK (Executive Pastry Chef, Red Velvet Cupcakery): The vegan, the gluten-free cupcake, and it has crystallized violets on top. So everything's completely natural. We use organic sugar. It's really delicious. I am a huge fan of the frosting.

RAZ: That's Brittany Frick. She is one of the pastry chefs at the Red Velvet Cupcakery. It opened a few months ago about three blocks away from NPR headquarters here in Washington. Now, Red Velvet is one of six - six - cupcake bakeries that have opened up in this city over the past 18 months alone, and there are more to come, and Washington is pretty late to the game.

New York and L.A. have had them for years, but it turns out there's a nationwide cupcake boom underway, with new bakeries opening up from Arizona to Connecticut. Anyway, we were wondering what was causing the cupcake proliferation. So we sent out our producer Selena Simmons Duffin to investigate. And Selena has brought back her scientific, empirical findings, and is with me in the studio.

Selena, you seem a little jumpy there.

SELENA SIMMONS DUFFIN: Yeah, I've consumed so much sugar in the past few days. I think I've eaten about a dozen cupcakes.

RAZ: That's pretty disgusting.

(Soundbite of laughter)

Anyway, what is going on with all these cupcake shops?

DUFFIN: Well, it turns out there's an economic theory behind the cupcake boom. I called up Daniel Gross. He wrote about it in Slate, and he called it a classic economic bubble. So here's what he said.

Mr. DANIEL GROSS (Writer, Slate): Like most trends, it started almost simultaneously in Los Angeles and New York. So this is what typically happens. A chain gets started one place, it proliferates the local area, and then it quickly tries to go national.

DUFFIN: So the start of the bubble was in the big cities, like you might remember a couple years ago, when Sarah Jessica Parker's character in "Sex and the City" got a cupcake at Magnolia Bakery, and then that same shop showed up in a digital short from "Saturday Night Live" with Andy Samberg.

(Soundbite of television program, "Saturday Night Live")

Mr. ANDY SAMBERG (Comedian): (As character) (Rapping) (Unintelligible). I told that I'm crazy for the cupcakes…

DUFFIN: So Dan Gross says the popularity of shops like Magnolia inspired a bunch of other stores, and that's what started the cupcake bubble.

RAZ: Okay. So where in this bubble cycle are we now?

DUFFIN: Well, Warren Buffett has a great way of breaking down the cycle. He says there are three I's: the innovators, the imitators and the idiots.

RAZ: And the icing.

DUFFIN: Ganache in this case, fancy cupcakes. So the places like Magnolia Bakery in New York, and later, Georgetown Cupcakes here in D.C., those are the innovators.

RAZ: They're the first ones to come in.

DUFFIN: Right, the first ones. And they're doing really well right now. Here's Georgetown Cupcake owner Sophie LaMontagne.

Ms. SOPHIE LaMONTAGNE (Owner, Georgetown Cupcake): We really didn't think that we were going to be this busy. Now on Saturdays, we bake, like, 5,000 cupcakes a day, which is more than we ever thought in our wildest dreams.

RAZ: They're baking 5,000 cupcakes a day?

DUFFIN: Five thousand a day. So obviously, this kind of success has inspired some attention, and imitators are starting to move in. And that's the stage we're in now. So what's next is the idiot stage, when companies try to expand way too much, way too quickly. And Dan Gross compared this to what happened with Starbucks.

Mr. GROSS: It encouraged a lot of other coffee companies, you know, the Peet's, the Caribou Coffees of the world, all these other chains and these homegrown ones. They built too many, and they can't all make money. So they're shutting some of them down now. [POST-BROADCAST CORRECTION: Starbucks actually came after Peet's. Peet's was founded in 1966 and Starbucks was founded in 1971.]

RAZ: All right. But there's no giant sort of Starbucks of cupcakes. There's no one, single, national brand.

DUFFIN: No, no, there's not. But it's not the brand so much as it is the concept. You know, in this case it was boutiques that make going out for a fancy cupcake an event.

RAZ: And I mean, the cupcake costs about $4. I mean, it's not cheap.

DUFFIN: No, but people can, you know, say it's an affordable luxury in a recession.

RAZ: All right. So Selena, what happens now? Should I sell my stocks in cupcake companies?

DUFFIN: Not quite yet. You might want to hold onto them a little bit longer. Here's what Dan Gross had to say.

Mr. GROSS: There are many, many places in the U.S. that don't have stand-alone cupcake companies, where people think they can make a go of it. So I don't think we're near the end yet.

RAZ: So there are still cupcake opportunities, right?

DUFFIN: Right. The glory days are not yet done.

RAZ: Well, that's our producer, Selena Simmons Duffin. Thanks for investigating and reporting back to us.

DUFFIN: It was delicious. Thank you.

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Correction Sept. 15, 2009

In the discussion about cupcakes, a reference was made to the coffee shop Peet's being an imitator of Starbucks. Starbucks actually came after Peet's. Peet's was founded in 1966 and Starbucks was founded in 1971.

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