Video Transcript

00:09 Kimberly Weisul: So you have multiple locations at this point. You're doing 20,000 cupcakes a day. Yet you two still bake. Why?

00:19 Katherine Berman: You know, it's something that we love to do. And we really, truly do enjoy it. You know, we baked growing up with our grandmother. I have a 7-month old daughter that, you know, I'm looking forward to baking with. She comes in to work every day with us, loves watching us.

00:33 Weisul:  Does she really?

00:34 Berman: Mm-hm. She comes every day with my mother.

00:35 Sophe LaMontagne: She's been to every location now.

00:36 Berman: She's been to every location, even our shipping facility out by Dulles Airport. But she loves to watch us frost and bake. And it's something that we really enjoy doing. And I think that it's really important to always remember why. And I think that, you know, some days we have really tough days. And, you know, we always have to remember why we started this business. It's because we really, truly love baking.

00:57 LaMontagne: And I think when whether you're a CEO or president or at the top of your company, it's important to spend time doing all aspects of your job.

01:06 Weisul: Does that freak out your employees?

01:09 Berman: Yeah, sometimes.

01:09 LaMontagne: Sometimes, sometimes. You know, I think those--people--not, I mean, the newer ones, but I think people who have been with us know that we are so detail-oriented, like we had an event today and Katherine frosted all of the cupcakes herself. And so we are in the weeds like that. And I think it's very helpful because you can see what's happening at your business at the root level.

01:29 Berman: And I think that we were talking about this earlier. And I used to work for a company called Lululemon before it became, you know, the company that it is now a long, long time ago. And the CEO, Chip Wilson, would come in to the store, drop all of luggage. He'd come from Vancouver, drop all of his luggage on the floor, and just start selling to customers. And he loved that. He loved being on the floor talking to customers and start selling to them. And he told us that, you know, everyone in upper management would at least spend one day a month on the floor with everyone selling. And I think that's really important to show your employees that you know what? You're not above it all, you know? You're in there with them and you care.

02:07 LaMontagne: And it seems so obvious, but if you listen to your customers, they will tell you what you need to know. And so spending time at the sales counter packing their cupcakes, ringing up their orders on the register, you learn a lot.

02:16 Weisul: What have you learned from them that you wouldn't have found out any other way?

02:18 LaMontagne: You know what? When we started, I didn't think that certain flavors would be, you know, some of our biggest sellers (inaudible)--

02:24 Berman: You know, and there's actually a really big thing. You know, we--when we first started, our colors of our bakery were black and white. And--

02:31 LaMontagne:  And that's the color of our logo, our brand.

02:31 Berman: And that's the color of our logo and our awning. And I told Sophie wouldn't it be great if we had pink boxes?

02:37 LaMontagne: For Valentine's Day.

02:38 Berman: For--and, no, I said pink boxes and she said no, that is so silly. Why would we have pink boxes? Our colors are black and white. And I said well, we're going to be opening on Valentine's Day. What if we just have pink boxes on Valentine's Day? And she said no. And so, of course, you know, being sisters, like on the phone, ordered pink boxes and had them brought in to our bakery. And we opened on Valentine's Day, everyone had pink boxes. And the next day on February 15, we had a line down the street and we had some leftover pink boxes. Every single customer that walked through the door asked me to take their cupcakes out the white box and to please put it in the pink box that was beside me. And it was men. It was women. It was old. It was young. It was everybody. And I told Sophie, the people have spoken. They want the pink box, Sophie. And that has become an iconic signature in our bakery, the pink box. You know, when people carry out a pink box, a lot of people think hey, are those Georgetown cupcakes in there?

03:38 LaMontagne: Mm-hm. And I think that's nothing that we could've ever predicted. You could sit and write the business plan, your business plan for like, you know, months and months and you can't predict what customers will like. Sometimes things come as a surprise. We always try to listen to our customers, not just at the front counter, but on social media, too, on Twitter and Facebook. We have very active followings and we take that feedback very seriously. We have email boxes at all of our shops. And I check all of the emails myself on my BlackBerry. I have every single email coming to each location on my--and that's the kind of--

04:05 Weisul: How many do you get?

04:06 Berman: A lot.

04:06 LaMontagne: I have probably like ten email boxes on my BlackBerry. But that's how we keep on top of what's going on. If there's a problem with a wedding order that's late, I will get on top of it and we will figure it out. And so we were that--in the weeds that much, but our customers appreciate that because if something goes wrong, we'll make it right. And they'll have such a good experience with Georgetown Cupcake that they're going to tell their friends about it. When people have a bad experience with your company, they actually will tell more people, so you don't want that to happen. You want it--them to have really, really positive experiences.

04:31 Weisul: So around the time that your company was growing and becoming more and more successful, there was sort of like this cupcake craze, right, which are still very popular. How do you get across to people that like this is not any old cupcake, right, because it seems like there's so many companies in this space trying to differentiate themselves. How do you do that?

04:52 Berman: I think that in the beginning--I think a lot of people thought that cupcakes were a trend or a fad. And for us, cupcakes are part of the dessert landscape just like you would go to an ice cream shop, you know, that's been around for 50 years. You know, we see ourselves as a gourmet bakery that makes cupcakes that will be around hopefully for 50 years or longer, who knows. And for us, you know, you could get cupcakes anywhere when we started in 2008. You could get them at your grocery store. But we really wanted to make the best cupcakes in the world. And so we spent a lot of time, you know, using our grandmother's recipes and actually sourcing the very best ingredients. We use, I mean, you know, it's actually quite expensive what we do. You know, we splurge on ingredients and packaging labor. Those are the--


05:35 Berman: --the things that--and we use (inaudible) cocoa from France, Callebaut chocolate from Belgium, Madagascar bourbon vanilla, we use fresh bananas, apples, lemons, limes in all of our cupcakes. You know, we don't, you know--

05:47 LaMontagne: Cut corners.

05:48 Berman: --we don't cut corners. Our model like Sophie said is very labor-intensive because we bake in real-time. We don't have people come in, bake in the morning, and then just sell what we have. We actually tailor our baking so that we're baking in real-time so that when customers come in, they're always getting a cupcake that's been, you know, hasn't been out of the oven, you know, for longer than half an hour.

06:05 LaMontagne: And I think we do that by like looking at data and seeing what flavors we're selling during the day and how much more (inaudible) or maybe we should take off and mix up cookies and cream cupcakes or add a key lime. And I think where some companies may see room to increase margins by kind of--I don't want to say skimping on ingredients, but buying less expensive ingredients, not using the Pulgra butter, but using a generic butter, or using imitation vanilla extract versus pure Madagascar bourbon, that's where we differentiate ourselves. So when made--when we started the bakery, we said to ourselves we want to make the best, use the best ingredients, bake them fresh. And we're not--those are our principles and we're not going to change those. And we haven't changed them in five years. We are using the same best-in-class ingredients. In fact, some of them have even gotten better over time that we've been able to source ingredients that we weren't able to get at the beginning. And that's one thing that differentiates our brand.

06:53 LaMontagne: And like Katherine said, our model is very labor-intensive. Each location has, you know, at least three managers who are answering the phones or helping brides with their weddings and helping clients with their corporate orders if they're placing like 50 holiday gifts for their clients like we have people who--we have that level of customer service at each location. When you call, you're going to get a live human being who's going to help you. And that costs money. And some companies don't want to do that. But that's where we have a value proposition where other companies don't.

07:18 Weisul: Do you ever get to the point where you just like never want to see another cupcake again?

07:20 LaMontagne: No I--we were probably eating too many.

07:24 Berman: We do, especially when my--during my pregnancy. I almost got gestational diabetes because I ate so many. My doctor said you need to lay off. And--but, you know, we make over 100 different flavors every day. You know, we say it's part of the job, quality control. We don't necessarily eat the whole entire thing. But I will have bites of several different flavors a day to make sure that the quality is there. And every day you're in the mood for something different, whether it's something citrusy or something with peanut butter or a chocolate mint. You know, you're always in the mood for something different.

06:05 LaMontagne: