What’s the new entrepreneurial dream? Cupcakes

By Rieva Lesonsky

A few years back when I was editor of a business magazine, we named cupcake-only stores as a hot business to start. When the economy tanked, I worried that all those cupcake-only entrepreneurs I had encouraged would find their businesses coming to a screaming halt.

Apparently I needn’t have worried. Cupcake stores have not only survived, but are thriving to still be one of the hottest types of businesses to start. In fact, The New York Times just took a look at the ongoing phenomenon in this article that dubs cupcakes the new “entrepreneurial fantasy.”

The Times spotlights four primary business models: the true cupcake-only store, the store that sells cupcakes and other food items, the chain and the online-only cupcake store. Cupcakes are also spawning ancillary products, such as cupcake blogs devoted to new flavors and trends, a cupcake book by Martha Stewart that spent nearly 3 months on the New York Times bestseller list, and an upcoming Food Network pilot, “Cupcake Wars.”

Why are cupcakes so hot despite the recession? Comfort foods always do well in bad times, and cupcakes fit a lot of needs. They’re nostalgic “kid food” that takes people back to a simpler time; fun and cheery; an affordable treat; and a “little luxury.”

The Times acknowledges that the reality of launching a cupcake store isn’t easy (no startup is). But the concept continues to attract entrepreneurs seeking a fun business, and the shops have been spreading not just in big cities, but in smaller ones, too. Research firm Mintel says cupcake sales nationwide are projected to increase by 20 percent in the next five years. That’s a whole lot of frosting.