Small treats everywhere as cupcake shops blossom

A trend originating from Vancouver has taken over North America in full force, and no – it’s not spandex yoga wear.

Foodies all over North America have been raving about cupcake shops for more than a decade, when Cupcakes by Heather & Lori opened as the first stand-alone cupcake store in Vancouver.

Since then, shops have been opening up across the continent and now New York, Los Angeles and Toronto are home to a number of unique stores all selling one product – the cupcake.

Three years ago, Ottawa, typically seen as conservative when it comes to food trends, became the latest city for small business owners to cash in on the so-called fad when Heather Holbrook opened up Isobel Cupcakes and Cookies in Westboro. Isobel’s was unique to the city when it opened and it paved the way for the ver 10 cupcake shops now in the downtown core of Ottawa.

Since then, cupcakeries have opened in most of the downtown neighbourhoods. The Glebe, Centretown and the Byward Market each have at least one store filled with the luxury cakes.

There are also a number of online retailers, such as Geek Sweets, who have chosen to forego operating out of a storefront and instead opted to deliver their product to customers who preorder.

Beating the Odds in an Unstable Economy

The meteoric rise of cupcake shops shouldn’t have happened in Ottawa when it did. The economy was in a recession and many didn’t see the businesses lasting because of poor consumer spending.

One of the reasons cupcake stores have seen success is the price point.

Cupcakes are relatively cheap to produce and generally cost between $2.50 and $3.50, depending on the retailer.

Consumers see these as luxury-goods because they aren’t an everyday item for a consumer to purchase, says Peter Stewart, a business adviser with the Ottawa Centre for Regional Innovation.

For example, Thimblecakes, a store in Centretown, uses only high-quality ingredients and carries a gluten-free option, which helps sell the cupcakes as luxury products, says owner Wendy Velthoven.

“We mainly use organic ingredients,” she says

The relatively low cost of production combined with their luxury status created the perfect environment for those starting a cupcake business in the 2000s, Stewart says.

However, he says he doesn’t see future entrepreneurs who want a slice of the cake having the same success as Thimblecakes or Isobel’s.

The shops in Ottawa have been successful because they were the first in the city, says Stewart.

“If you are the fourth or the fifth shop to open up and hoping to make it big on the fad, you might have the wrong idea,” he says.

A Sustainable Business?

Despite the quick rise in popularity and apparent success cupcake shops have seen in Ottawa, Stewart is wary of long-term success for these businesses.

“If you’re going to open a shop like that, you have to constantly update product,” he says.

This is a lesson that Velthoven has already had to learn fast.

“If we don’t provide our customers with what they desire, we don’t have a business,” she says. “We continually modify accordingly to their requests.”

She has since introduced many new items to complement the feature product, including house-made organic ice cream, fair-trade coffee from Happy Goat and full-sized cakes.

It is a constant process, because if they don’t change they will most likely go out of business, says Stewart.

Impact on Established Bakeries

The recent influx of cupcake stores does not worry many bakeries that have been in business for years.

“Cupcakes are such a small percentage of our business that it doesn’t affect our business at all,” says David Kardish, owner of Rideau Bakery.

Rideau Bakery has been a downtown staple since it opened on Rideau Street in 1930s.

“Their cupcakes are in a league of their own, with filling in the middle,” he says. “Ours are simpler and are in a different price point than what these new stores are selling.”

Although Velthoven says she has no desire to negatively impact any other business in Ottawa with her cupcake shop, it may be inevitable in the future to keep her business thriving.