A former architect, Karen Tripp opened her Mill Valley bakery just as the country was sliding into the Great Recession. Now the store is thriving, but how does she grow a new business during lean times?
In July of 2008, Karen Tripp put the finishing touches on her brand new Frosting Bakeshop in Mill Valley, California. It was the perfect location to launch a cupcake business and a new chapter in her life: an upscale neighborhood across San Francisco’s Golden Gate bridge, a destination spot for tourists, plenty of local celebrities, and Food Network’s Tyler Florence’s new store down the street. Tripp, 50, divorced and raising two teenagers, had been an architect for 25 years, but she was burned-out and ready to try her hand at something new. She loved baking (her kid's classmates dubbed her The Cookie Lady), and her market research and cross-country sampling told her that cupcakes were hot. She she decided they’d be her specialty. The shop was a dream come true.
It took six months of preparation and recipe-testing to get going. She used the $35,000 profit from selling her house for start-up costs, and designed and built the store’s detachable cabinetry herself. She decorated the store with two bold, pink and orange striped walls and two with splashy brown polka dots. On opening day, she buffed the wooden counter until it shone and arranged eleven glass cupcake stands to show off her flavors from Chocolate Obsession to Lemon Twist. Each cupcake looked like a bite-size work of art, topped with a tiny candy.
For the next few months, Tripp’s business flourished. There were splashy corporate parties like Pixar’s with over-the-top dessert budgets, and a big local real estate company ordered $1300 worth of cupcakes to give a dozen to each of its tenants. Tripp could hardly bake fast enough to fill those early orders.
Then everything changed. By December, the economy was in the worst recession since the Depression, and her corporate business “fell off the face of the mountain.” In a nearby town, 16 stores had to close, and a new competing bakery down the street from hers shuttered. Mill Valley retailers, including Tripp, wondered which of them would be next. Shaken, she wondered if her bakeshop—and her dream—would survive. She started to panic. “I had everything in this business,” she says. “I had cashed out my house, and I had no husband for back-up. It was very scary.” She sat down with her kids, Will, then 17 and Juliana, 15, and talked turkey. First, she told them they were going to move to a cheaper place so she wouldn’t be stuck with a big monthly mortgage. Then, she warned them, “Things are going to get rough for awhile.” There’d be stressful days, sleepless nights, and she’d be on a short fuse. “You’ll have to pitch in,” she said.
A vivacious people-person, Tripp, was also a high-energy businesswoman who was used to problem-solving her way out of predicaments. But opening a new business in a major downturn was a challenge she hadn’t signed on for. To recession-proof her company, Tripp knew she had to stay lean, seize every opportunity to grow, and work her, well, buns off. She was determined to “barrel through,” because she was hungry for a change. For awhile, flipping houses had seemed the answer. She scored big on her first few sales, but when the real estate market crashed, she needed to find some other way to make a living—and a life. Around the same time, her son, then a high school junior, shocked her by saying he didn’t want to go to college. “What can I do to help him along?” Tripp wondered.
That’s when she saw a small shop’s “For Rent” sign on the charming little square in downtown Mill Valley. Although she says she “can’t boil water or cook to save my life,” baking was a longtime hobby, and she had a valuable stash of dessert recipes from her grandmother, like favorite family flavors coconut, lemon, and banana. She added a rich vanilla from a friend, tweaked a Red Velvet she found on the Internet, and borrowed a carrot cake with an orange twist from a cupcake blogger.
She transformed the space, a former music store, with Will and Juliana's help. Together, they layed the laminate floor and painted the walls using locally popular, eco-friendly products. Juliana created the shop’s website, www.frostingbakeshop.com. Their do-it-yourself approach halved the start-up costs, Tripp estimates. “I had just built a 4000 square foot house from the ground up so this was a piece of cake,” she jokes.
With the recession nipping at her heels and constant worry about her balance-sheet, she “focused on every dime.” She kept her overhead as low as possible: no stockpiled supplies, whether business cards or imported chocolate. She substitutes plain white boxes (fifteen cents), with the Frosting Bakeshop stamp on them (Juliana's job) instead of fancy pink, glacine-windowed ones ($1 each). She uses “cupcake currency” and trades her baked goods for local pizza and movie tickets for her kids. Since her two year rental lease forbids baking on the premises, she shares an off-site kitchen with a tamale-maker for an extra $500 a month. Sometimes it’s inconvenient, but the savings are huge.
For her first full year, Tripp baked solo, hiring her kids to take after-school store shifts at $10/hour and give her a break. That way, she pocketed the costs for additional helpers and insurance that would jump from $250 to $500 a month. Still, despite her careful nickel-and-diming, Tripp did not take a salary for the first 12 months (though the company covers her health care and car). Instead she lived off her savings and plowed back her $4000 monthly profit into expanding the business.
Then, just as the store began to turn a modest profit, she hit a totally flat month. “The November after the election was our worst month. People were waiting to see what would happen. Is the sky going to fall?” She talked with other nervous shopkeepers and started to second-guess herself. “It was ominous. I didn’t know what to do. I felt as if I’d taken my family down the wrong road.” She kept brainstorming for new markets. Meanwhile, by December, business started to pick up.
Expansion, she’s found, takes more than just inventing new flavors, which she does every few weeks (coming next: peanut butter and jelly). She also needs fresh-baked ideas for products, new customers, and marketing strategies. To bring in foot-traffic she cooked up her own publicity campaign: flyers to schools, coupons for free cupcakes to kids through library reading programs, and donating goodies to community fundraisers. Now she’s also listed in the popular online style newsletter, DailyCandy, and gets “freebie advertising” from food and cupcake bloggers who’ve tasted her samples and loved them.
She offers cupcake-catering for baby showers, birthday parties, and even weddings. “Once the couple tastes, I always get the order,” she says—and a dessert round of fancy cupcakes is still cheaper than a typical wedding cake, a plus for many cash-strapped brides. During the busy 2009 summer season, she averaged two events per weekend –a bonus of 500 cupcakes.
“The recession has hurt us and helped us,” she says. Even in a tight economy, most people can afford to splurge on a $3 cupcake. “People are careful about their discretionary spending, even in an upscale community like ours,” says Kathy Severson, CEO of the Mill Valley Chamber of Commerce who has seen some local shops struggling but thinks the Frosting Bakeshop has the right mix to succeed. “Karen has an artful and clever product that appeals to families, and Mill Valley is very family-focused.” Adds her colleague, Denise Meehan, “It’s also very body-conscious around here, and a cupcake is not a whole cheesecake!”
“Cupcakes are the new wine,” Tripp observes, “and everyone is talking about their texture and sweetness. The bar is placed very high. To set yourself apart, you can’t just have the same chocolate in every cupcake. And I get bored, too.” Like grapes to a vintner, recipes are Tripp’s stock-in-trade. Customers want Wednesday’s Willie Vanillie to taste exactly like Saturday’s, yet “there are so many random factors like humidity and temperature” affecting the consistency of baked goods, she says. Her friend’s vanilla cake recipe tasted heavenly, but the airy, spongy dough jumped all over the pan. “I ended up throwing half of every batch out,” she says. When she tried changing it, “people came back in, irate.” In short order, she reinstated the original flavor.
“Everyone thinks the baking business is glamorous,” she says, “but the hours are horrendous.” A typical day actually starts the evening before between 9 and 10 pm when Tripp pre-measures the dry ingredients into buckets with lids. Based on orders, experience, and her precision skills as an architect, she estimates what volume of each flavor she needs. “In architecture, you miscalculate, and a building can fall over,” she says. “Here, you forget the baking powder and your cupcake falls.”
She grabs her zzzs between 10 pm and 5 am--or as early as 2 a.m. before a particularly busy day or holiday. When her alarm goes off, she cringes, then races to her off-site kitchen for four hours of nonstop baking. The chronic sleep deprivation reminds her of early motherhood. “But now I’m 50!” she sighs.
On bad days, when she oversleeps and has to go into overdrive, she worries that she’s not cut out for this work. Bleary-eyed, she risks leaving out crucial ingredients. “Don’t forget the eggs” say post-its around the kitchen. Meltdowns are not unusual. One evening she tripped and dropped a huge bowl of sticky chocolate ganache all over the floor. It took many hours of misery to scrape up that expensive mistake. Another night the power went off and she couldn’t bake a single cupcake. “I just sat down and cried and said to myself, ‘Maybe I should have stayed in architecture. ‘” But hours later, the electricity came on, the stove fired up, and after her pity break, she got back to business. The store opened three hours late but she filled all her orders.
“I love to work and I have to stay busy,” she admits, but she knows she can’t keep up this pace indefinitely. That’s why at the start of her second year, she finally hired two, non-family employees. They’re both moms and devoted customers who are splitting the day slots between them. Tripp is still in and out of the store all the time and takes the weekend shifts. “It’s not brain surgery,” she says, “but the hours and focus take a lot of commitment.”
Even with help, Tripp works 15/7 and has very little time for a life. Her friends have to stop by the store if they want to chat, and as for a movie or a date? Right now, not a priority. But with the economy finally showing greenshoots of recovery, so is her business. Each month since that dark November her sales have steadily bumped up five to eight percent.
The latest fattening of the shop’s bottom-line comes from sales of a brand new confection, “cake bites.” These are delectable truffle size blends of cake and moist frosting, dipped in chocolate that come in all the store’s signature flavors. Packed in a pretty pink gift box, cake bites mail-order better than full-size cupcakes, which, she found, collapsed before arriving. Her listing with Google Ad Sense brought in ten orders on the first day, and Tripp now ships all over the country and even abroad. At $1.75 per bite the miniature cupcake truffles are adding up to big revenue: $100 extra a day both in the store and on-line. “Cake bites are my future,” she says. Some day she can imagine setting up a large kitchen facility in a warehouse area and producing them to sell wholesale around the country.
Though staying local felt right for her first year in business, Tripp now realizes that to boost her income she has to branch out. “For a bakeshop to be successful, the volume needs to be way up,” she says. Sales at her first store have “topped out,” so she’s on track to open a second one in early 2010 in Walnut Creek, another San Francisco bedroom community, an hour’s drive from her home. This store will be in a busy, upscale mall with a kitchen facility on site and five times the volume of potential customers. “I swore I wouldn’t expand,” she says, “but when you’re selling a $3 item, you gotta sell lots.”
She’ll hire another baker to help her there, but she’s characteristically unfazed by the extra work that will be involved. “I love the baking when the stars are aligned,” she says. On good days, she bakes dancing around the kitchen to Motown or Joss Stone. Occasionally, her kids help her out in the kitchen, too, though her son Will recently decided to go to college after all (“Baking is too much work,” he told her).
The night before the store’s first Valentine’s Day, their system hummed like a well-oiled machine. The kids went to bed early that night, and Tripp woke them at 2 am to join her in the kitchen. “I did all the measuring and blending. Juliana did the scooping, filling the baking cups, and putting the paper cups in the pans. Will was in charge of getting the pans in the oven and watching the timer for removal.” For store sales, they worked out another method. The kids stood at the counter taking orders on little post-its, then brought them back to Tripp to fill the boxes. They sold out in four hours--450 cupcakes and 400 cake bites, still the record for a single day. Tripp pulled an all-nighter to make it work, but success still felt very sweet.
RUNNING THE NUMBERS
$8000 Sales needed each month to cover rent, salaries, and supplies
$12,000 Gross sales per month
$7-10,000 What Tripp dreams of netting per month after expenses
200 Cupcakes sold each day at $3 per cupcake
17 Flavors now featured every month
216 Black and White cupcakes, the most popular flavor, sold each week
125 Unsold cupcakes given away to local shelters weekly
$56 For the priciest ingredient, five pound bars of Barry Callebaut chocolate from France
12 Hours Tripp slept on the Monday after Valentine’s Day
Elizabeth Fishel is the author of Sisters and Reunion and co-editor of Something That Matters: Life, Love, and Unexpected Adventures in the Middle of the Journey.