Despite a last-minute buying rush by Sacramento-area cupcake fans, Rocklin-based Icing on the Cupcake closed its stores for good over the weekend.
The Rocklin-based dessert bakery chain grew rapidly during the gourmet cupcake boom, but it officially closed Sunday amid financial struggles and a declining market.
The chain operated 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.
The company, which announced earlier this month that Jan. 19 would be its last day, 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.
Sacramento attorney Matthew Eason, who represented the company in the bankruptcy filing, had held out hope that the company could carry on with renegotiated leases, but a last-minute rescue did not materialize.
An Icing on the Cupcake Facebook page posting on Sundays last day of business said: Thanks for the good times!
Icing on the Cupcake, started in 2007, was 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.
When Icing on the Cupcake started, gourmet cupcakes were becoming an increasingly hot item on Food Network shows and in trendy retail shopping complexes nationwide.
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, even as those growth plans were being pondered, business analysts were concerned that the gourmet cupcake boom was fading, a byproduct of market saturation and consumers growing reluctance to pay up to $5 for a single cupcake.
On April 18 last year, 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 its 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 companys stock had plunged from more than $13 a share in mid-2011 to less than $2 on the Nasdaq stock market. On Tuesday, Crumbs shares closed just below 66 cents a share. On Jan. 8, Nasdaq issued a warning of possible delisting unless company shares closed at a minimum of $1 per share for 10 consecutive business days by July 6.
Peter Schaub, a New York-based marketing and branding expert, said Tuesday that Crumbs has a very loyal following of cupcake fans, but that might not be enough.
As for the cupcake industry in general, Schaub also cited the saturation factor as problematic.
He added: Its hard enough to compete in food retail as it is, but when you slice it down to something as narrow as cupcakes, thats brutal. I can see where a company might sustain a cupcake chain in a very large market ... but I think its very challenging to sustain a chain of cupcake stores in a medium-size market with other like competitors.
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