Wes Hurt cringes when anyone refers to the cupcake craze as a trend, although he admits that it is quite trendy right now. Still, that word -- trend -- suggests that his business, Hey Cupcake, a modest-but-growing chain of cupcakeries based in Austin, Texas, might flame out one day, as fads often do. And if Hurt, 32, has anything to say about it, your future great-great-grandchildren will someday be munching on a Hey Cupcake cupcake.
Hurt started his cupcakery with his childhood pal and business partner Brian Morris, 32, in March 2007, sinking $50,000 of hard-earned savings into their venture. And while they had a rough start -- they went out of business two months later due to a lousy location -- things rapidly improved after they reopened for business out of an Airstream trailer that September.
Hey Cupcake now has five locations throughout Austin -- a brick-and-mortar stand as well as four stands inside Airstream trailers. They also have a Hey Cupcake catering vehicle, which they created by purchasing an old ice cream truck for about $3,500 and then renovating it, which cost another $3,000. AOL Small Business recently caught up with Hurt, to see how his frosted empire is faring.
So you're catering with cupcakes. Are we talking birthday parties?
We would do birthday parties, sure, but we're thinking special events, parades, things like that. We just saw an opportunity that if, say, a University of Texas football game is here, that's a lot of people we could sell cupcakes to. And having a truly mobile truck made sense. We can deliver it, and with the ice cream truck, only selling cupcakes, we can tap into that theme of classic nostalgia.
I love that you refitted an old ice cream truck to sell your cupcakes, and that you were able to buy it for a relatively cheap $3,500. But keeping costs low is a necessity, isn't it? I mean, you're selling an item that has pretty narrow profit margins.
Absolutely. If you're going into any business with a price point that's only $3, you have to sell a lot in volume to make any money. I mean, a whole lot. That's one of those things people get into the business not truly understanding -- just how many items you have to sell to cover overhead and the management of people. You have to diversify. For instance, we've been developing HeyCupCakeStore.com, where people will be able to buy a full line of cupcake merchandise.
Like cupcake-themed T-shirts?
All of that. Everything cupcake-related other than actual real cupcakes. We're trying to establish a company that has longevity, that isn't a flash in the cupcake pan.
I'll pretend I didn't hear that. So how many cupcakes are you selling every month?
You know, just from a competitive standpoint, I can't or shouldn't quantify that. Let's just say in the thousands and thousands.
So let's talking about the economy. It started tanking around the time you started your business. Has the recession, and this post-recession stagnant economy we're in, hurt you any?
Actually, I think we might be benefiting from it. Cupcakes are a lot of fun, and they are fairly inexpensive. With the state of the economy and world in general, there's something about a cupcake, especially in today's budget, that's working for us. It's been weird and almost counter-intuitive. If anything is affecting us right now, it's the heat. Do I want a cupcake when it's 100 degrees outside? No, I want a snow cone. So I think that definitely affects the business, and if people have to stand outside, waiting in line under the hot sun, that can hurt. We're a young enough company -- we haven't even had our five locations for a full year -- to say for sure if the recent heat wave has affected us, but my gut feeling is that it's negatively impacting us.
So do you think you might sell ice cream or snow cones at some point?
We'll never say never, but to me, if you start to do that, it begins to dilute your brand. We specialize in cupcakes, and we're trying to focus on that. The last thing we want to be seen is as a snack shack, but if we had to do it, we'd have to go for it. It's never out of the realm of possibility.
Name: Wes Hurt
Company: Hey Cupcake
Location: Austin, Texas
2010 Projected Revenue: Undisclosed
The original version of this article appeared on AOL Small Business on 7/12/10.