Cashing in on cupcakes

Reporter: Sally Obermeder
Broadcast Date: September 23, 2009

A cupcake was once a childhood treat but it has since turned into a fashionable delicacy and a nice money spinner.

Alex and Angela Perry walked away from careers in chemical engineering to start The Cupcake Bakery.

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"People look at a cupcake and they get really hungry and they can't control themselves," Alex said.

"We first started the business thinking we were going to target kids until people started treating them as trendy for weddings, kitchen teas."

In two years the Perrys have three stores in Sydney, two in Melbourne and another five planned for next year.

Their bakery churns out over 30,000 of cupcakes a week, more than 1.5 million a year. The biggest risk now is competition.

Having worked in hospitality in New York, Kathryn Sutton was determined to open her own shop, The Sparkle Cupcakery in east Sydney.

"We have people that are just obsessed with cupcakes, we have people coming in the store to see different flavours to see them presented a different way," she said.

"Australians definitely have a thing for gourmet treats."

Forget the old chocolate and vanilla, cakes like lemon meringue, passionfruit, cheese cake, profiteroles, carrot cake are becoming more exotic.

Editor of business website, Smart Company, James Thompson said Aussies will loosen their belts in tough times for a cupcake.

"I think during the downturn we've seen things that are inexpensive treats do well," he said.

"A cupcake fits that bill, a few dollars, it's a lavish treat you can have when you can't afford to go on a holiday."

You do not have to be a baking genius to enter the market.

"If you strike the right sort of balance between good products and a strong customer base there is some good money to be made," James added.

A cupcake costs about 30c to make and most sell from $3-$4.50.

David Hannah from The Cup Cake factory focuses on bulk deliveries.

"I have more so been interested in the entrepreneurial side," he said.

"It's moving as well onto weddings and corporate events, we do a lot of morning teas, afternoon teas."

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