We just published a story by Elizabeth Olson that takes a look at the Great Cupcake Rush of ’09, an almost inexplicable spread of cupcakeries around the country. As Ms. Olson reports, a handful of chains — Magnolia Bakery in New York, Sprinkles Cupcakes in Beverly Hills — seem to be thriving but for many others it’s a struggle.

Porche Lovely, for example, opened Lovely Confections Bakery in a gentrifying district of Denver. Ms. Olson writes:

For each cupcake she sells, Ms. Lovely figures she spends 60 cents on ingredients, 57 cents on mortgage payments and utilities, 48 cents on labor, 18 cents on packaging and merchant fees, 16 cents on loan repayment, 24 cents for marketing, 18 cents for miscellaneous expenses and 4 cents for insurance. That totals $2.45, leaving a potential profit of 55 cents on each $3 cupcake.
So far, that profit margin is theoretical because Ms. Lovely is still paying off her start-up costs. She’s reluctant to predict when she may become profitable in part because of the economy — but also because cupcake competitors have been opening in her neighborhood.

What is it that makes this business so attractive to would-be owners? What chances do they have of succeeding?
http://boss.blogs.nytimes.com/2009/11/25/are-cupcakes-a-viable-business/?_r=0