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Sweet and Vicious

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Mark Libertini, in his store in Bay Ridge.  

The combatants in the cupcake clash, however, see the stakes as much higher than neighborhood bragging rights. Having colonized Manhattan, the phenomenon’s next obvious stage of evolution is to replicate across the country, sending sweet frosted cupcakes out like spores. Though similar bakeries exist in other cities—Citizen Cupcake in San Francisco, Seattle’s Cupcake Royale—no one shop has yet stepped up to become to cupcakes what, say, Starbucks is to coffee or Dunkin’ Donuts is to doughnuts. But everyone believes the opportunity is there. “I don’t think the cupcake thing is at its height,” says Libertini. “I think it’s in its infancy. It just depends on how you bring it to the masses.”

That’s where Buttercup’s new franchise plans come in. Feierstein, 57, has been working with Buttercup since June 2003, and this fall, that work will come to fruition. Buttercup has sold three franchises, two in Manhattan and one in Staten Island, which are set to open around Thanksgiving. After that, Appel and Feierstein expect to open seven to ten new Buttercups a year. They envision franchises in every city in the country, and, someday, beyond.

“We’re getting inquiries from all over the world,” Feierstein says.

“Australia, Ireland, the Philippines, Dubai, New Zealand, Israel, Sweden, Canada,” says Appel. “We’ve probably had 25 or 30 countries. And, of course, nationally, there’s been a tremendous demand.”

“From all the states,” he says.

“Maybe not Hawaii,” says Appel.

“No, we got Hawaii.”

We don’t want to be seen as the Starbucks of cupcakes,” Appel will tell me later. “We don’t want to put one of these on every corner. But we want to have one of these in everyone’s neighborhood.” How many, ultimately, are they looking to do across the country? “Somewhere in the low hundreds.”

It’s a bold plan, especially at a time when Manhattan has more look-alike cupcake bakeries than ever before. Could there be such a thing as too many cupcake shops?

“I can imagine that,” Appel says. “But the strong will survive.”

“The weak ones will fall off the cliff,” says Feierstein.

Appel’s business model requires an investment of roughly $300,000, along with a $30,000 franchise fee paid to Buttercup for use of the name and concept and training for the new shop’s chefs, who’ll do all the baking in-house using Buttercup’s supplies and recipes. She and Feierstein see the rapid expansion of Krispy Kreme doughnuts as both a model and a cautionary tale. Krispy Kreme was also a localized phenomenon that quickly went national. It too offered a high-volume premium dessert that came encloaked in its own mythos: the “Hot Light” out front, the lines around the block, the rapturous press, the tearfully grateful customers as a new franchise came to town. But Krispy Kreme imploded. After going public in 2000, the company expanded to more than 400 stand-alone stores, as well as selling boxed doughnuts everywhere from Safeways to movie theaters. The company’s mystique was punctured, its profits fell, and its stock spiraled from $50 to just over $5. (A string of accounting errors didn’t help.) “In the old days, they were fresh, they were hot, they glistened with the glaze,” says Feierstein. “You watched them being made. Now you can find them in your gas station. Your dry cleaner will sell them to you.”

Appel and Feierstein are intimately familiar with Krispy Kreme’s failings, not least because one of the new Buttercups, on West 72nd Street, will occupy a vacated Krispy Kreme store. So Buttercup won’t be selling any baked goods wholesale—no cupcakes at the dry cleaners—and Appel vows to maintain strict quality control over her franchisees. That last measure will be especially difficult, given that she’ll be training franchisees to bake all the offerings from scratch, a much tougher task than teaching them to throw the switch on a French-fry machine.

And, of course, to protect her carefully planned franchise deployment, she’s now especially watchful for copycat competition. Thus, the lawsuit against Little Cupcake. After two of Appel’s employees left in 2002 and then started Sugar Sweet Sunshine, she began requiring that all her managers sign a confidentiality agreement. Libertini was initially hesitant to sign, she claims, because he said he’d always planned to open a place of his own. “These were his words, and you better quote me,” she says. “He said to me, ‘I would never open anything like this.’ And he had this sort of cute, coy look on his face. He said it would be more like a French café.” Libertini recalls the conversation but explains, “I had a lot of ideas back then. I’d also drawn up plans for an Internet café.”

After a minor amendment to the contract, Libertini signed. The agreement forbids employees from using “recipes, methods, techniques, specifications, standards, policies, procedures, information, concepts, systems for, and knowledge of, and experience in, the development, operation and/or franchising of Buttercup Bake Shop . . . in any other business for any other purpose.” In this context, former Buttercup employees would seem hard-pressed to open any kind of bakery uncontested, unless it’s a bakery that specializes in fish. Still, Appel may not prevail. Lawyers unconnected to the case say that courts don’t tend to favor these kinds of suits, and that the outcome hinges on how the judge interprets the confidentiality agreement and the “likelihood of consumer confusion” between the two bakeries.


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