The Cupcake Economy

Jacob Goldstein has a great post over at Planet Money about the cupcake economy. He predicts it’s a bubble that will soon pop.

(from Flickr user chotda)

I agree with Goldstein that it’s hard to see how the market for gourmet cupcakes will be able to sustain itself in the long-term. Now, I don’t agree that it’s necessarily a fad and one day people are going to simply quit buying cupcakes. Instead, I imagine what will happen to gourmet cupcake shops along the lines of what happened to Starbucks.

The cupcake market will continue bobbing along until the next recession hits, when people will look at their budgets and realize that they’re spending an absurd amount of money on cupcakes. People will step back, examine the situation and say, why am I paying five-dollars for a single cupcake when I could make two-dozen of them at home for the same money?

Part of the market will shift to homemade cupcakes, part of the market will shift to fast-food restaurants. McDonalds and Dunkin Donuts may eventually jump on the cupcake bandwagon. That will be the confirmation that the cupcake ship has sailed.


    On July 20, 2010 Angie said...

    But cupcakes will always be delicious.

    Ummm cupcakes ...