Farewell to a fellow cupcakery. The King of Cupcakes, the five-month old cupcake shop that appeared on Cupcake Wars, closed last week due to poor business planning.
Ricky’s, the Manhattan-based chain of beauty shops (with other locations in Brooklyn, Miami, and The Hamptons), was interested in finding a vendor to sell cupcakes out of some of Ricky’s locations. After being offered a Brick-and-Mortar storefront in the heart of Park Slope in return for 51% of the company, The King of Cupcakes agreed to the deal, believing that if this venture was successful, a franchise would result. Ricky’s designed the space and signage and kept their involvement as below-the-radar as possible. The King of Cupcakes team spent two months building out the space before even seeing a contract. Ricky’s, a corporation that sells beauty supplies, obviously did not understand the cupcake market and was unable to provide The King of Cupcakes with the support they required (e.g.: a good business model, marketing and branding, training, etc.)
The King of Cupcakes was naïve in their decision to join forces with a business that not only did not understand their market, but they didn’t even read the contract! Small business entrepreneurs should not get caught up in all the hype. They need to concentrate on establishing and building their business first before considering a venture with others… and NEVER give up more than 50% of your company! Learned that from watching, Shark Tank!
Watch Out for Those Sharks!
To learn more about this venture gone bad, read this article: http://heresparkslope.blogspot.com/2011/03/strange-sad-tale-of-king-of-cupcakes.html