The Brilliant Reason You’ll Never See A Bakery Like Sprinkles Cupcakes

June 18, 2018

  By Suzy Strutner, managing editor at Grow Wire

In short: 

  • Thirteen years ago, Candace Nelson created a new category of food retail with her now-famous Sprinkles(opens in new tab) Cupcakes.
  • Early on, Nelson wisely trademarked her signature “modern dot” decoration, which distinguished Sprinkles from heaps of copycat cupcake shops(opens in new tab).
  • The business poised itself for national expansion from the get-go, allowing it to outpace other bakery brands.

You’ve probably seen it on Instagram, or in your dreams: a simple yet beautiful cupcake, set against a clean background on a teeny plate with a fork beside it. Smooth frosting. A perfectly round top. And that playful little dot in the center.

It’s a Sprinkles(opens in new tab) cupcake. Opened in 2005, Sprinkles calls itself “the world’s first cupcake bakery.” By all accounts, it was: prior to Sprinkles, a cupcakes-only enterprise of its quality and prominence didn’t exist.

And the world has never been the same.

Sprinkles cupcakes come in 24 flavors(opens in new tab), plus seasonal specials. The menu rotates weekly(opens in new tab) at each location. Sprinkles cupcakes come in 24 flavors(opens in new tab)

Sprinkles founder Candance Nelson(opens in new tab) was 31 years old when the first Sprinkles bakery opened in Beverly Hills, to a rush of local fans(opens in new tab) that demolished the shop’s supply in hours. A Wesleyan University grad who grew up overseas, Nelson did a stint in investment banking before going to pastry school. She sold special-occasion cakes(opens in new tab) to friends before concluding that cupcakes were a more lucrative, everyday product.

How COOL would it be to open a cupcakes-only bakery?!

The Sprinkles dream was born.

Nelson attended Tante Marie's(opens in new tab) pastry school in San Francisco, where she honed her baking skills. Nelson attended Tante Marie's pastry school in San Francisco

The Idea

Nelson’s childhood travels introduced her to the “doing one thing, and doing it well” concept that Sprinkles seemed to nail before everyone else(opens in new tab) in modern American food retail.

“I’ve always been inspired by the European style of shopping,” Nelson told Grow Wire. “Going to a bakery to get your bread, the cheese shop to get cheese… Something felt more special about that. Sometimes in our country, [the attitude toward] food is more ‘check it off the list, get your meal, and get back on the road.’… Going to see a food specialist really appealed to me.”

It turns out that niche focus -- doing cupcakes, and doing them well -- is exactly what caused Sprinkles to grow wildly popular so quickly(opens in new tab), along with shop’s equally simple aesthetic. The original bakery had minimal signagethe modern dot(opens in new tab).”

In the kitchen, Nelson carries a tray of chocolate marshmallow cupcakes(opens in new tab) adorned with the modern dot.Nelson carries a tray of chocolate marshmallow cupcakes

The Strategy

Nelson knew from her business background that this dot would be the key to an identifiable product. She and her husband Charles(opens in new tab) -- with whom she founded Sprinkles -- trademarked the dot early on(opens in new tab). It set Sprinkles apart from the many rival cupcake shops(opens in new tab) that popped up in its wake, with strikingly similar looks(opens in new tab).

Sprinkles’ uniqueness did its marketing for them. Nelson credits her biggest opening-week boost to a mention in the now-defunct DailyCandy L.A. newsletter(opens in new tab), a local email blast that spurred waves of press.

“We really gave people something to talk about,” Nelson said. “Nobody had seen a chic, modern, cupcake-only bakery before. It flew in face of everything we knew. And when you do something that people want to talk about, you’re letting your customers do your marketing for you.”

Her story echoes the thesis of the marketing guidebook “Play Bigger(opens in new tab),” which asserts that “legendary businesses don’t do better; they do different.”

Sprinkles didn’t fund any official marketing for years. Their never-before-seen product created a whole new category of food retail, and they became what “Play Bigger” calls a category king(opens in new tab).

Sprinkles counts celebrities like Katie Holmes(opens in new tab)Barbra Streisand(opens in new tab), and Oprah(opens in new tab) among its fans.  Sprinkles counts celebrities like Katie Holmes, Barbra Streisand, and Oprah among its fans.(opens in new tab)

The Growth Process

The “world’s first cupcake bakery” had set itself up for expansion: At its inception, the Nelsons spent their savings on a sleek website design and a well-developed online ordering system that would be easy enough for customers to use when the fan base extended beyond stores.

“From day one, we put more money into Sprinkles than needed for a [typical] bakery,” Nelson said. “We wanted a foundation for growth, to make it a national brand. Most people would think it was silly, because we were just one bakery. But we thought, ‘This is going to go places.”

Today, Sprinkles has 24 locations in nine states(opens in new tab), as well as an ecommerce business. (Customers can order cupcake delivery to areas near Sprinkles shops, and retail items -- cupcake mixes, baking books, and more -- ship nationwide.) The brand has an estimated annual revenue of nearly $16 million(opens in new tab), according to business site Owler. The Nelsons debuted a Sprinkles ice cream concept(opens in new tab) and 24-hour Cupcake ATM(opens in new tab) in 2012. Candace is a judge on Food Network’s “Cupcake Wars(opens in new tab)” and will judge on Netflix’s upcoming “Sugar Rush(opens in new tab),” another baking competition show. She published “The Sprinkles Baking Book(opens in new tab)” in 2016. The Nelsons’ latest venture(opens in new tab) is an L.A. pizza restaurant called Pizzana(opens in new tab), which got shining reviews(opens in new tab) when it opened last year.

At Sprinkles' Cupcake ATMs(opens in new tab), cupcake fans can swipe their credit cards and get cupcakes 24 hours a day.At Sprinkles' Cupcake ATMs, cupcake fans can swipe their credit cards and get cupcakes 24 hours a day

The Spirit

Of course, there were roadblocks on Candace’s path to success. But she did not -- or chose not to -- see them, a seemingly common theme(opens in new tab) among entrepreneurs who succeed.

“The nice thing about starting my own company was that I was naïve about how underrepresented women are in the hospitality and food business,” she said. (Indeed, just 23 percent of all food industry execs are women(opens in new tab), according to a 2017 McKinsey report.) “I just created a place that I myself would want to go, and, more importantly, a place that I myself would like to work.”

Unfortunately, the business gender gap is still wide(opens in new tab). Candace says that having Charles by her side is key in this regard.

When opening new Sprinkles locations, “do landlords and realtors want to talk with me, or my husband? I just know [he’ll] be more effective,” she said. “It’s still a man’s world.”

Candace and Charles pour batter in the kitchen of an early Sprinkles location.Candace and Charles pour batter in the kitchen of an early Sprinkles location.

The duo has opened dozens of Sprinkles locations together, including ones that serve ice cream.The duo has opened dozens of Sprinkles locations together

Charles has worked alongside Candace ever since she sold cakes from their home kitchen all those years ago. Candace said she never doubted the Sprinkles mission, but she did have to push through frustration, especially in finding a landlord to believe in the potential of that very first shop.

“I remember one day getting in the car after we went to look at a space and looking at Charles and saying, ‘Should we just give up? Am I just being stupid at this point?’

“But then I thought, ‘Am I going to be able to live with myself if I don’t pursue this? The answer was a resounding no. And I just had to keep at it, just keep getting up every day and doing it. We never let ourselves doubt. I really believed in my idea.”

We’re very glad she did.

Nelson's future plans include starring on a Netflix baking show(opens in new tab) and managing her new restaurant, Pizzana(opens in new tab).Nelson's future plans include starring on a Netflix baking show

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