Sweet Success

When friends and family heard former investment banker Candace Nelson had lost her job and was selling cupcakes she made from her kitchen, they thought she had gone over the edge. But when the flour settled, it turned out this founder of Sprinkles Cupcakes was just following her passion.

“I call it my early midlife crisis because the steady paychecks stopped, and I had to look inward and consider what it was I really wanted to do with my life and what it was I really loved to do,” she says. “And, for me, that was baking.”

So after losing her job at a San Francisco Internet company during the dot-com bust, Nelson enrolled in pastry school and, after graduation, began baking up a storm in her home kitchen, using top-notch ingredients and sophisticated decorating techniques to create cakes for friends and family.

When her husband, Charles (a former investment banker himself), realized his entrepreneurial wife was serious about turning her pet project into a brick-and-mortar business, he became her partner—and Sprinkles Cupcakes, The Original Cupcake Bakery, was born. Because Nelson had already developed a client base while baking out of her kitchen, when they opened the first Sprinkles in Beverly Hills in 2005, they quickly sold out of their first batch.

Soon, lines were forming out the door of the bakery, and celebrities like Barbra Streisand and Oprah Winfrey were singing Sprinkles’ praises. Williams-Sonoma launched a line of Sprinkles cupcake mixes, and The Los Angeles Times even dubbed Sprinkles “the progenitor of the haute cupcake craze,” spurring hundreds of copycat bakeries around the globe. Just five years later, Sprinkles has eight shops nationwide (with upward of 250 employees) and more expansion plans in the works. Here, founder, co-owner and executive pastry chef Nelson gives us a taste of her recipe for success.

SUCCESS: Why cupcakes?
Candace Nelson: What I realized very quickly is that, in this country, people will only buy a whole cake a couple of times a year at most, for a birthday, an anniversary or some other large celebration. My philosophy is that dessert should be a daily pleasure.

What kind of resistance did you get from family and friends?
CN: People thought I was crazy—to walk away from a really lucrative field to go work with flour and butter. There’s sort of this mentality about banking that if you’re smart enough to be doing investment banking, you shouldn’t be doing anything else.

How did you push forward through that negativity?
CN: It’s amazing when finally you are pursuing your passion and doing something you’re meant to be doing. What other people think, it doesn’t really matter anymore.

How did you know cupcakes would be marketable?
CN: I did have a testing period, which was longer than I initially had planned because it took us a year to find someone who would lease to us because everybody thought we were going to go belly up right away.

I made great use of that time. I kept building my little business, making cupcakes for friends and friends of friends, and finally I was making cupcakes for people I didn’t know. We were already using the Sprinkles name, so the buzz had already started to build. So by the time we opened our retail store, we hit the ground running.

What other obstacles did you encounter in getting the business going, and how did you overcome them?
CN: What we were doing had never been done before; there were no bakeries that sold exclusively cupcakes. And the first thing you have to consider is that maybe there’s a reason why. Maybe it just doesn’t work. That’s what everybody seemed to be telling us.

Beyond that, the timing of when we were opening, April 2005, was really still the height of the low-carb craze. Also [Sprinkles is] in the middle of Beverly Hills, which, even if people aren’t following Atkins, is known as a place where people don’t really eat that much. So all the cards were kind of stacked against us. How did we overcome them? It was one of those ideas that we thought, “If we never do this, we’ll never forgive ourselves.” It was a risk we absolutely had to take because we believed in it so much.

How did you continue to grow the business, and what challenges did you face in doing so?
CN: Initially our biggest hurdle was that we had zero experience in the restaurant industry…. So it’s not that we didn’t learn how to do things, it just took us that much longer.

Also, we’re a mom-and-pop business. We’ve spent our life savings and several very key years of our lives working on this business—we were a little protective of it. I would say we didn’t hire as quickly as we should have. We absolutely burned ourselves out working around the clock, seven days a week, for about a year in that first location. But finally we kind of got with the program and hired some key people, which allowed us to have at least a day off every now and again and also eventually to be able to expand because we weren’t going to be able to expand our business if we were working on site seven days a week.

What were your initial goals and how have you seen them through?
CN: We were big believers in our idea. We thought, “There’s no reason this idea couldn’t work in every city across America.” So we’ve always had that in the back of our heads. But, because we are still a mom-and-pop private business, keeping the quality is paramount. So we haven’t gone at it like, “Let’s blanket the United States with Sprinkles.” We’ve had a lot of opportunities. People have wanted franchises since the first month; we’ve had a lot of investors come calling. But, for us, it’s been about keeping the quality of the product, keeping the quality of the brand and growing as fast as we can while maintaining everything that we think is special about Sprinkles.

How would you describe the working dynamic between you and your husband?
CN: Charles is responsible for operations; he’s the president. We’re both co-founders and owners, but he runs the day-to-day operations. I am responsible for recipe development as well as marketing and PR and our charitable arm.

Would you recommend working with a spouse?
CN: What’s funny is, people thought we were crazy to open the world’s first cupcake-only bakery; they thought we were crazy to leave investment banking and do cupcakes; and they thought we were crazy to work together as husband and wife. But the one thing I had total comfort with was the working-together part because we actually had worked together back in investment banking. That’s how we became friends. We were working together, doing crazy hours, very stressful work, and managed to get through it with a sense of humor, and that’s kind of what our relationship is based on. And it works really well at the business.

What does the future hold for Sprinkles?
CN: Well, we’re going to continue to grow. Our goal is to hit the top 20 cities in the United States and then eventually go international. As I’ve said, it’s going to be as quickly as we can, without overextending our resources.

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