Cupcakes go to Wall Street

A tray of carefully prepared red velvet cupcakes.

TEXT OF STORY

Kai Ryssdal: OK, so now on to something a little bit sweeter: cupcakes. You may have noticed they've moved way beyond the bake sale. Crumbs -- which is a high-end cupcake bakery out of New York -- said today it's going public. Marketplace's Alisa Roth has the skinny on whether cupcakes are the next big thing, or the next big bubble.


Alisa Roth: Cupcakes are starring in two TV shows. They had a cameo on "Sex and the City." They went from kids' birthday parties to weddings. There are gourmet cupcake shops all over the country. And now, cupcakes are going to Wall Street.

Andrew Freeman: Who doesn't love a cupcake, right?

Andrew Freeman runs a marketing company for the hospitality business. He says fancy cupcakes may be expensive. But in a recession, they can be an affordable guilty pleasure, because people still want to feel decadent.

Freeman: So I'm going to splurge the $4 on the cupcake. Which in relative terms, is probably like taking a little mini-vacation.

If your idea of a mini-vacation is a four-inch tower of butter and sugar.

Crumbs -- which sold 13 million cupcakes last year -- has big plans for its little cakes: 200 stores across the country.

Sam Yake follows retail food companies at BGB Securities. He says it can be hard for a company to maintain its quality -- and its cache -- when it expands quickly. The donut company Krispy Kreme, for example, has had a tough time since it went public 10 years ago. He says there's also a risk cupcake-eaters could get their fill.

Sam Yake: I personally would be very reluctant to invest in that. I could be wrong, but it seems to me it has a faddish feel to it.

Freeman, the marketer, says places like Crumbs have to think about ways to expand within the genre, by doing things like holding birthday parties. Which is, of course, where all this started.

In New York, I'm Alisa Roth for Marketplace.

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