The inspiration behind the name Fallen Angel Bakery is a celestial being’s desire for a little slice of doughy iced heaven. So says George Scott, son of Fallen Angel’s founder, KPMG chartered accountant David Scott.
The UK public’s craving for the cupcake has helped the unwrapped cake sector reach sales of £450m in 2011. This, as market research company Mintel says, is a result of “consumers shifting away from ambient cakes towards the more premium and indulgent unwrapped” cake market.
In part influenced by the hit HBO television show Sex and the City, in which the four female characters often nibbled at the calorific treats, the UK public has taken cupcakes to heart.
Such is their popularity that Scott, Fallen Angel’s marketing manager, says his father is aiming for up to five new bakeries within the next 12 months.
Target areas are those with ABC1 demographics, such as Stratford-upon-Avon, Leamington Spa, and Sutton Coalfield. The company already has branches in Solihull and Harborne in Birmingham.
The fledging chain, which is expanding with the help of private finance, is also actively looking at central London.
Key targets here include Soho, Hampstead, Wimbledon and Marylebone High Street, all of which have the essential aspirational clientele.
Fallen Angel has offers on two, as yet unnamed, London sites. Scott says that the company will take a different approach with bakeries in the capital, compared with the regions. “Our bakeries will include more rustic, wooden flooring and tables, as well as pastel, multi-coloured chairs. Each bakery will have its own unique touch,” he says.
Even international expansion has not been ruled out, with a leaning towards the Far East.
Ideal premises
The ideal Fallen Angel premises would be on A3 sites, and have between 7,500 sq ft and 8,000 sq ft of trading space, with capacity for an on-site bakery.
“Part of our selling point is having an on-site bakery – that’s the ideal situation, but we are considering A1 sites, serviced by a satellite kitchen,” says Scott, who recognises that in central London, at least, most of these sites will be leasehold.
Fallen Angel may have started building its empire on cupcakes – they are a high-margin product and easy to make en masse, says Scott – but the company should not be compared with Hummingbird Bakery.
The latter is probably the most well-known cupcake chain in the UK, having been established in 2004 by Tarek Malouf (see panel, opposite).
Hummingbird now has four branches, all in London, and the brand boasts a hugely successful cookbook, which has sold more than 300,000 copies.
But for Fallen Angel, says Scott, “our inspiration is a fascination with New Hampshire chic and visits to South Devon tea shops”.
He adds that while the company started with cupcakes, it is now developing a range of rustic sandwiches, while supplying catering orders to the likes of Harvey Nichols’ coffee shops.
No fears about expansion
Despite the retail market remaining in the doldrums post-recession, Scott says that his father, former managing director of Northern coffee shop chain, Druckers Café Patisserie – which was sold in 2007 to Patisserie Holdings – has no fears about launching an expansion programme.
“The eating out and indulgence market will always exist,” he says. “We acknowledge we are competing for a small pie, but we want a large slice of that small pie, so when the economy recovers to pre-2008 growth we will be established.”
He adds: “These times are a real test of brand stature. Good product gets people through your doors, and good service brings them back. For us it’s about this added value.”
As well as branching out from cupcakes, says Scott, the plan for Fallen Angel’s future is to make the firm a leading lifestyle brand on the high street, through the merchandising and retailing of its own branded items.
Scott adds that the company is not yet planning to do online deliveries because it wants people to enjoy the experience of visiting one of its bakeries.
However, as tasty as cupcakes are, many people, including Scott, believe the market has limited longevity. He says: “I question the growth potential outside London for strictly cupcake-only brands.
“As a bakery business, we believe it is vital to invest in our product range to cater for an increasing number [of customers] and to boost our average spend.”
Thomas Rose, of Cushman & Wakefield’s retail and leisure team, agrees that there is little faith in the longevity of the sector. “Cupcakes are another fad, and the market probably peaked in 2009.
“They are already being replaced in popularity by frozen yogurt and other impulse indulgent treats.”
Rose says the current trends are being dictated from London and, as well as frozen yoghurt, these trends include artisan coffee houses and the reinvention of the sandwich – such as Mexican, Indian and Vietnamese variations of the lunchtime staple.
Brand awareness
Rose says: “There are no cupcake sellers with a market penetration level or brand awareness on a par with the likes of Krispy Kreme, and we do not see cupcakes having the longevity or mainstream popularity that doughnuts have had worldwide.”
Rose believes that for major players to survive, they need to do more than just offer the cupcake “experience”. “Again, we see this [initiative] being led by London, as the prospect of a truly large-scale national expansion is probably limited. We see tea shops as another new trend, and this could be one way that the likes of Hummingbird could evolve.”
However, Hummingbird Bakery owner Tarek Malouf believes that the cupcake market has plenty of life in it. “Cake has always been popular and cake has always been an individual, affordable luxury,” he says. “Cupcakes are just a new way of enjoying cakes.”
With new entrants like Fallen Angel determined to make their mark, cupcakes are destined to be around for a while yet, even if they do have to share their shelves with merchandise and other types of edible product.
So there should always be enough of the little treats around to satisfy the odd, hungry fallen angel.
The US market
The Sex and the City ladies are credited with starting the cupcake phenomenon after they were filmed munching on cupcakes at New York’s Magnolia Bakery.
Today, according to Mintel, the US prepared cakes and pies market is worth $2.4bn to June 2011. Mintel says that the market “managed to find a silver lining in the economic recession as consumers looked for simple indulgences to treat themselves and find comfort”.
Mintel adds: “The phenomenon of stand-alone cupcake stores has been putting increasing pressure on in-store bakeries and FDMx-prepared baked goods. Chains such as Sprinkles Cupcakes and Crumbs Bake Shop have locations in major cities across the US and also allow for online ordering. Smaller independent shops are feeding on the demand for unique, indulgent personal treats for recession-weary Americans.
“With prices ranging from $3-$5 per cupcake, these products cost as much as an entire box of Hostess Cup Cakes, but for those looking for affordable indulgence the cupcakes hit the spot. As an example of the pace of expansion of stand-alone cupcake bakeries, Crumbs Bake Shop plans to expand from 34 stores in 2010 to 200 by 2014.”
Case study: Hummingbird Bakery
Tarek Malouf opened his first Hummingbird Bakery store seven years ago on London’s Portobello Road. He now has four outlets in the capital, but is intent on expanding. He plans to franchise in other countries during 2011-12 and to open more shops in the UK – outside London – over the next few years.
Believing that “the pace of expansion should depend on the health of the business and the infrastructure that the business has in place”, Malouf says he would consider having an outlet in most of the major cities in the UK.
“We have different shop models to fit different-sized sites, and the ability to bake on-site is the main requirement,” he says. “Therefore, ventilation and extraction must be available at any site we choose.”
Malouf has a preference for leasehold sites on “nice, high street locations”, although he does not rule out shopping centres.
Describing his competitors as “small, local home operations starting out”, he believes the market will continue to grow, with “lots of small entrants”.
Malouf adds: “We are lucky to be the sector leaders, having been first to the market in January 2004. This gives us an advantage over our competition.
“The cake and bakery market is growing as people start to appreciate that good quality and freshness with cakes, as well as savoury food, is something that matters.”
Hummingbird Bakery’s online business is also growing. A company spokesman says: “A lot of our trade is done over the internet, so yes, it’s an important part of the business, and it’s one that’s not going to go away.”
Cupcake outlets
- Bake-a-boo
- Bea’s of Bloomsbury
- Crumbs & Doilies
- Hummingbird Bakery
- Violet
- Cox Cookies & Cake
- Buttercup Cake Shop
- Lola’s
- Candy Cakes
- Ella’s Bakehouse
- bake-a-boo.com
- beasofbloomsbury.com
- crumbsanddoilies.co.uk
- hummingbirdbakery.com
- violetcakes.com
- coxcookiesandcake.com
- buttercupcakeshop.co.uk
- lolas-kitchen.co.uk
- candycakes.com
- ellasbakehouse.co.uk
