Economic Recession a ‘Cakewalk' for Some

Cupcake Businesses Rolling In the Dough

Bad economy? Piece of cake!

As businesses across the nation continue to struggle in the recession and unemployment remains uncomfortably high, New York City's restaurant and bar industry grew in June, due in no small part to cupcake cafes, some analysts say.

"The restaurant job gains are stunning," said Chief Economist at Eastern Consolidated Barbara Byrne Denham in the company's June report, adding that "One segment of the industry that seems to be adding the most outlets is cupcake cafes.  This could be a fad, or not."

"People still want a cupcake," Pam Nelson, owner of the East Village's Butter Lane bakery told the Wall Street Journal.   “I think it’s kind of an indulgence and the price point is still low. For three dollars people can buy something for themselves instead of spending 100 bucks on a dinner and still feel like they’re treating themselves.”

Some trace New York City's cupcake craze back to Sex and the City. In the show, the characters often grabbed 'designer' cupcakes at Magnolia Bakery on Bleecker Street.

If that's true, a lot of bakeries--as well as the city's economy--might want to thank Carrie Bradshaw and friends.  Butter Lane has more than tripled its staff in the past eighteen months, plans to open a kiosk on the High Line, and will start teaching cupcake-baking classes, Nelson told the Journal.

Cupcakes' low cost makes them an easy commitment for both buyers and sellers.  According to entrepreneur David Arrick, whose company Butch Bakery sells 'masculine cupcakes,' "it's small, it's finite, [customers] can commit to it," he told the Journal.

Start-up costs for cupcake vendors are much less than those for a restaurant or cafe.  Butch Bakery, based in Long Island City, has grown from one to five employees since its opening last November.

They're cheap, they're popular, they're relatively easy to whip up--as far as businesses in bad economies go--but some are skeptical that New York City's cupcake craze will last.

"I don't think they'll all survive, quite honestly," Jason Bauer, CEO of New York-based national bakery chain CRUMBS, told the Journal.  "As many as the mom and pop shops open, I think some of them will close in the next year or two."

Perhaps that's just the way the cupcake crumbles.

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