Lezlie Sterling / lsterling@sacbee.com

A cupcake from Icing on the Cupcake in Rocklin, Tuesday, June 30, 2009.

Rocklin-based Icing on the Cupcake says it will close

Published: Thursday, Jan. 9, 2014 - 6:12 pm

Icing on the Cupcake, a Rocklin-based dessert bakery chain that was making expansion plans less than a year ago, announced on its website Thursday that it will soon be closing its doors due to financial struggles.

The company filed for Chapter 11 bankruptcy protection on Dec. 20 in U.S. Bankruptcy Court for the Eastern District of California, listing estimated assets of $100,001 to $500,000 and estimated liabilities of $500,001 to $1 million. The bankruptcy filing estimated 50 to 99 creditors.

Matthew Eason, with the Sacramento law firm of Eason & Tambornini, represented the company in the filing. He could not be reached for comment but was quoted in a published report as saying that the company’s ownership is still not sure that it will cease operations, holding out the possibility of renegotiated leases for its sites.

On Thursday, the home page of the company’s website included a short message – under the headline “What a sweet adventure this has been!” – conveying the bad news: “After seven years in business, Icing on the Cupcake will be closing its doors January 2014 due to economic hardship. We cannot thank you, our fans, enough for your support and loyalty. We consider all of you a part of our Icing family. We have enjoyed every second of our time in your community and have loved being a part of your celebrations through the years.”

A Facebook posting by the company encouraged customers to come in by Jan. 19 for “one last smile in a box.”

Repeated calls to the chain’s four stores – at 1121 Alhambra Blvd. in Sacramento, 6839 Lonetree Blvd. in Rocklin, 2779 East Bidwell St. in Folsom and 5867 Sunrise Blvd. in Citrus Heights – were not answered on Thursday.

However, news of the upcoming closure apparently prompted a rush at the cupcake chain’s Rocklin store on Thursday. A midafternoon post on Facebook said: “Due to overwhelming response our West Rocklin store is sold out of cupcakes for the day. Thank you for the support! We will be open tomorrow (Jan. 10) and promise to up the bake!”

Icing on the Cupcake is the brainchild of Christee Owens, her mother, Shirley Nagasawa, and family friend Chuck Meridith. Under their co-ownership, the business capitalized on a gourmet cupcake trend that grew steadily through mid-2011. Back then, Icing on the Cupcake was baking 150,000 cupcakes monthly to satisfy demand. Attempts to reach the three co-owners on Thursday were not successful.

In March last year, the chain was contemplating more stores and implementing a concept shift beyond specialty cupcakes to all types of personal gourmet desserts, including specialized icings, cheesecakes, cookies and individual-size pies.

However, that speculation came even as some business experts were projecting the imminent demise of the gourmet cupcake craze.

On April 18, Max Nisen, a strategy reporter for Business Insider, wrote: “Gourmet cupcakes are a terrible business to start or expand for a number of fundamental economic reasons. One really good cupcake shop was an excellent business when the trend was in full swing, and it’s an OK one now. But trying to make a big chain out of it is a dicey business proposition, which the rapid decline of Crumbs illustrates perfectly.”

Nisen was referring to New York-based Crumbs Bake Shop Inc., whose ornate cupcake creations were part of the gourmet cupcake boom. However, last year, sales were falling fast, and the company’s stock had plunged from more than $13 a share in mid-2011 to less than $2 on the Nasdaq stock market. On Thursday, Crumbs shares closed at 70 cents a share.

Numerous business analysts maintain that gourmet cupcake chains faced two major drawbacks: Too many boutique cupcake shops saturated the market during the craze, and large portions of the public balked at paying relatively high prices, sometimes around $5 a cupcake.

Call The Bee’s Mark Glover, (916) 321-1184.

Read more articles by Mark Glover

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