The Next Krispy Kreme?

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Is cupcake chic destined to burn out in the same way that the Krispy Kreme phenomenon of the late '90s did? So asks Jennifer 8. Lee on the New York Times's staff blog.

In addition to the semi-famous Magnolia Bakery, Billy's, and Buttercup, she writes, a company called Crumbs is pursuing the rapid rollout of cupcake shops; its owners intend to open some 40 stores, financed from cash flow, in the next year.

"This kind of growth brings to mind the tale of Krispy Kreme, another sweet phenomenon that went national very fast," Lee observes. "It, too, offered a nostalgic dessert at premium prices, with lines around the block and fawning press coverage. Krispy Kreme went public in 2000 and was a high-flying stock that confounded analysts with its market appeal, rising even as the dot-com bubble burst."

Crumbs co-founder Mia Bauer is aware of that an ambitious growth plan entails a lot of risk, but she believes she is prepared to make better choices that Krispy Kreme did. "They pirated themselves by overexpanding and the quality dropped immediately," she say. "Their choices were not the greatest. You could get them in the gas stations."

What do you think? Is the country ready for a branded cupcake chain? If so, what advice would you offer Bauer as she expands?

Mike Hofman

Mike Hofman was previously editor of Inc.com and a deputy editor at Inc. magazine, which he joined in 1996. The site was nominated for a National Magazine Award for Digital Media in 2010, and was named the best business website by Folio Magazine. In 2006, Hofman was part of a team of writers nominated for a Webby Award for best business blog. He lives in New York City.