The Bauers' cupcake business got its start shortly after the Bauers' relationship did, in 2002. Mia was a lawyer with a knack for baking. Jason was a dreamer from Staten Island, a struggling entrepreneur whose business (a company that licensed celebrity names for grocery products such as Olympia Dukakis' Greek Salad Dressing and Britney Spears Bubble Gum) had recently sold off its modest assets.
That summer, at a time-share they split with friends in the Hamptons, their relationship just a few tender months old, Mia brought a dozen of her jumbo-size vanilla coconut cupcakes to the beach—and Jason smelled an opportunity. The idea of a bakery began to form. The following March, Mia and Jason opened the first Crumbs, on the Upper West Side of Manhattan. They got married soon after that.
Less than a year into business, Jason already wanted to expand. He had spotted a location he liked on New York City's posh Upper East Side, but he needed $200,000 to lease the space and build it. He found a bank, but it would extend only $50,000 of credit and only with his personal guarantee. So he signed up. Then he did the same thing at three more banks. Over the next five years, Jason used the same tactic to finance five more locations.
Still hungry for more growth, the Bauers, in 2008, took on an outside investor, Edwin Lewis, who paid them $10 million for a 50 percent share in the company. In January, a special acquisition corporation led by investor Mark Klein acquired the chain for $27 million in cash and an additional $39 million in stock.
Now, the company's goal is to have more than 200 locations. Mia still focuses on the cupcake flavors and marketing, although she's branching out into other creative outlets, like children's books. (Last year, she published her first, Lolly LaCrumb's Cupcake Adventure.) On the day I speak with Morrow, Jason is on a road show, wooing potential investors to the Crumbs stock. His goal as CEO is to increase earnings before taxes, interest, and depreciation tenfold by the end of 2014.
Crumbs, accordingly, is built for efficiency. Since the beginning, it has contracted out its cupcake production to commercial bakers. That means that, though all the recipes are Mia's, not one of the Crumbs bakeries is really a bakery. Not one has, or ever has had, an oven. That gives the company the flexibility to open anywhere. Expect future Crumbs in malls and other places with considerable daytime foot traffic. "It takes more than a cupcake recipe to run a successful business," Jason Bauer says. "After eight years of perfecting this model, our business comes down to real estate and people."
My meeting with Morrow ends when an old business associate of his arrives: Kambiz Zarrabi, the owner of Federal Bakers, which once made all the treats in the glass cases of D.C.-area Starbucks stores. Now, he makes cupcakes for D.C.-area Crumbs stores, as well as local Costcos and Marriotts. They tour the store, then take off to the other new locations. It's hard to imagine thoughts of massive growth like Starbucks's aren't dancing in their heads.
One Cupcake Ahead of the Cops
Just a few blocks away, amid the office towers of 12th Street NW and G, there's a smaller operation. It's a bright pink truck with minimalist graphics of coffee cups and cupcakes. The name Sweetbites is emblazoned across the side. In the window, there's a slim fiftyish woman with blond hair, in jeans and a long-sleeved T-shirt. She is Sandra Panetta, a former Environmental Protection Agency policy analyst.
I order a red velvet cupcake and tell Panetta about my mission. She agrees to let me sit in her truck for a while. The cupcake's airiness belies how buttery it is, and when I finish eating, my fingers are shiny.
Panetta, a single mother of two, started her business last May, after 23 years at the EPA. Program cuts by the Bush administration had left her feeling jaded and powerless. Worst of all, she says, she felt guilty—her aimless attitude toward work was setting a cynical example for her 13-year-old son and 14-year-old daughter.
She had been catering part time for years but itched to create a business of her own. The low overhead costs and freedom of a food truck attracted her. So, against the advice of a financial adviser, who told her to stay at the EPA, she put together a business plan and got a $150,000 loan from a bank. She bought a broken-down mail truck for $15,000, paid $35,000 more to fix it up, and built a commercial kitchen attached to her house in McLean, Virginia. She posted an ad on Craigslist for bakers and hired two. Then, when the EPA offered a buyout to senior employees, she took it.
Her day starts at 5:30 a.m., when she gets her kids ready for school. Then she joins the bakers, who have been working since 4 o'clock. When they all finish, they load the truck with 30 dozen to 40 dozen cupcakes, and she heads out after 9. At the end of the day, she drives to her son's school, then drives him home, in the bright pink truck.
As customers step up and order and she takes cupcakes from plastic trays, nests them in bakery tissue, and boxes them, she explains the ins and outs of her work.
Then, out of the corner of her eye, she spies a police officer. Food trucks operate in a gray area of city law. There's a regulation in D.C. referred to as the ice cream truck rule. It states that a food truck can't stop unless someone waves it down and can't remain in place unless there's a line of people outside. "These are professional people; they don't wave down a truck!" says Panetta. She steps outside. Luckily, this time it's just a meter maid. Panetta dutifully feeds the meter.
Even though she's financially less secure, and technically now an outlaw, this little truck is hers. She's starting to have regulars, and she has 2,800 followers on Twitter. She's working on getting a permit to sell near her son's school, so she can be closer to him.
Is she worried about the roving Sprinklesmobile? "I was a little nervous at first," Panetta says. But so far, its presence hasn't hurt sales. "I still have my loyal customers," she says.
Sometimes You're Up, Sometimes You're Down
At Panetta's insistence, I buy a carrot cupcake for the road. I spend the rest of the day marching through Washington's streets, eating more: a vanilla cupcake with chocolate icing from Hello Cupcake in Dupont Circle and a cookies-and-cake cupcake at Sticky Fingers Sweets & Eats up in Columbia Heights. My blood sugar redlining, I head into the subway to check out Red Velvet Cupcakery in Penn Quarter. Counting my share of the cupcakes I split with Morrow, I'm about to eat my seventh cupcake of the day.
