One industry that has grown in the recession is set for a fall. No, not vehicle repossessions or shoe repair. I’m talking about the mid-decade cupcake boom. According to Slate, the industry is due for a bust.
Cupcake bakeries (and even a cupcake truck) have sprung up in the last year. The ascendancy of the cupcake shop due to a number of factors other than inherent deliciousness. Mostly, cupcakes are small, affordable gourmet indulgences, perfect for a spoiled American urban population in the midst of a recession. But is the trend nothing but a nationwide sugar rush?
In America, bubbles form because any good business idea gets funded a dozen times over. That’s the American way. Cupcakes are now showing every sign of going through the bubble cycle. The first-movers get buzz and revenues, gain critical mass, and start to expand rapidly. This inspires less-well-capitalized second- and third-movers, who believe there’s room enough for them, and encourages established firms in a related industry to jump in.
Sounds like any number of bubbles we’ve seen. But maybe it’s just as well. Wonderful as cupcakes are, does anyone need to be paying as much as $3 for one in an urban cupcakery?
The Cupcake Bubble [Slate]