Sweet spots

Cupcake and frozen yogurt concepts are on a tear locally and nationally, but some see a shakeout on the horizon

Are they fads or classic desserts?

It depends on who you talk to, but one thing’s for sure. Two dessert crazes of recent years — cupcakes and frozen yogurt — are thriving in Middle Tennessee.

According to some dessert industry observers, frozen yogurt is trending ahead of cupcakes, especially in the Northeast and on the West Coast.  But locally, it’s hard to tell which sweet treat is the most popular. There are plenty of national chains and independent shops to choose from in the Nashville area, and the numbers are still growing.

“I don’t think desserts ever really go out of style, but they are even more popular in a down economy,” says Sarah Voter, co-owner of Yogi’s Frozen Yogurt Bar on West End Avenue near Vanderbilt University. “People may hesitate before they go out to eat, but they will still spend on themselves by indulging a sweet treat.”

Voter’s store specializes in self-serve low-fat frozen yogurt, but she’s interested in other desserts that appeal to her clientele. She recently added cupcakes and cookies to Yogi’s menu.

There’s plenty of competition for a start-up such as Yogi’s, and from national franchises and mom-and-pop stores alike. Consider this run of recent developments:

• GiGi’s Cupcakes, a Nashville-based national franchise chain started out with three local units in 2008 and has grown to 55 nationwide in 2011. Its management team expects to have 100 franchisees by the end of 2012 as well as five local stores.

• Sparkle Cupcake Co., a store in Nashville’s Lenox Village, is under new ownership and will open a second location in Smyrna in November. Its backers expect several more local units to open in the months after that. The company has just received legal clearing to begin franchising.

• The Cupcake Collection, a popular boutique in Germantown, is expanding to Clarksville and recently took its food truck, the Cupcake Bus, on the road to college campuses.

• Sweet CeCe’s, a Nashville-based frozen yogurt franchise, has grown from a single storefront in Franklin to more than 50 units in two years. It plans on adding at least 30 more by 2012, including in 10 Middle Eastern countries and Puerto Rico.

• Berry Bear, a start-up headquartered in Clarksville, has four stores in Middle Tennessee and is also selling franchises nationwide.

• Red Mango, a major national frozen yogurt chain, recently awarded its first franchise for the Nashville Market to Farzin Ferdowsi, a high-profile local entrepreneur who owns 80 Taco Bell franchises. Red Mango joins an ever-growing list of frozen yogurt brands in Middle Tennessee — Pinkberry, Menchie’s, Krave and Yogurt World CafĂ©.

Which begs the question: Will this sweet-toothed growth binge lead to a painful purge? One local franchising expert thinks it’s coming — at least for some.

“The growth in these dessert categories has been insane,” said local franchise expert Thomas Scott, author of Franchise Sales Tipping Point and CEO of Brand Journalists, a Nashville-based firm that specializes in marketing and social media for franchisors. “The dessert industry is fickle and there are usually a lot of copycats when a trend is catching on. Some brands will fail; there’s not room in the market for all of them.

“The ultimate survivors are the ones who have a combination of factors — a great product, coupled with great branding and superior customer service,” Scott added. “And equally important is that age-old important ingredient to success — location, location and location.”

Alan Thompson, president of franchising at GiGi’s Cupcakes, said cupcakes have earned their way into the mainstream of consumer tastes, and “aren’t going anywhere, period.”

“People have been saying that cupcakes are a fad since 1995 when they began to get popular,” Thompson said. “We keep seeing an increase in interest. We used to beg landlords to give us the time of day. Now I get calls and emails every day.”

Thompson admitted that the dessert business is a competitive arena, but thinks location selection is more important than specific competitors, whether they are frozen yogurt shops or cupcake stores.

“Our stores live and die based on their location,” Thompson said. “In fact, we are right next door to a Pinkberry store in Marietta, Georgia, and they are a great complement to us.”

MaggieMoo’s Ice Cream and Treatery, a national franchise with several locations in Middle Tennessee, recognizes both cupcakes and frozen yogurt as competition. The company recently added ice cream cupcakes and frozen yogurt to its menus.

“We are all competing for the same after-lunch, after-dinner business,” said Clay Arrington, who owns MaggieMoo’s stores in Hendersonville, Jackson and Huntsville, Ala.

And the same choice real estate spots, which just aren’t being added to the market like they were five years ago. Between that and the ongoing stresses on many consumers’ wallets, the herd of dessert purveyors may soon be culled. With that in mind, a number of operators are looking at refining and evolving their concepts.

Stand apart

Brian Moore, CEO of Nashville-based Sweet CeCe’s, one of the fastest-growing frozen yogurt franchises in the country, is understandably biased in favor of frozen yogurt versus sugary desserts. He thinks the desire for healthier treats will keep driving growth and innovation in the dessert industry.

“I can put frozen yogurt in your mouth every day that’s going to make you healthier,” Moore said. “If you eat ice cream every day, you are going to be pretty unhealthy.”

Glyn Patterson, one of four owners of the recently franchised Sparkle Cupcake Co., believes his new company will become one of the winners because of its strategy.

“The key is coming up with something that makes your brand stand out and having a delicious product,” Patterson said. “Some part of your business needs to include something no one else is doing. One of our specialties is cupcake parties. We’re planning on becoming a major brand because we’re willing to roll up our sleeves and make it happen.”

Nationally known Chef Heather Bertinetti, executive pastry chef at The Lion restaurant in New York City and a guest on Rachael Ray’s eHow cooking channel, sees support for the cupcake and frozen yogurt “down-trending” but evolving into related — but somewhat different — desserts and treats.

“I see cake-pops and Popsicles coming down the pike,” Bertinetti said. “They are desserts on a stick. I think the desserts that survive just being a fad are the more simplistic ones that are easy to make at home.”