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The gourmet-cupcake market is crashing

Georgetown Cupcake

It looks like it's finally here: gourmet-cupcake burnout. 

After over a decade of stellar sales and the proliferation of gourmet cupcake shops across the country, the Wall Street Journal says the appetite for America's favorite mini cake is starting to flop.

It points to New York-based Crumbs Bake Shop Inc., with its elaborately topped treats filled with vanilla custard, or topped with whole cookies, that has seen the price of its stock drop from more than $13 a share in mid-2011 to it current $1.70.  

“The novelty has worn off,” Kevin Burke, managing partner of Trinity Capital LLC, a Los Angeles investment banking firm, told the Journal.

Demand for gourmet cupcakes took off in the early 2000s.  TV shows like the TLC's "DC Cupcakes," a show about Georgetown Cupcake and its owners, began cropping up, as well as chains like Magnolia Bakery, which now has seven stores just in North America alone.

But over the past few years, cupcake sales have slid, which most attribute to the poor economy.

While some proclaim that the cupcake has had its time, others, like Michael Serruya, co-founder of Yogen Fruz, a chain of 1,300 frozen yogurt stores in 35 countries, says cupcakes will be around for a long time to come.

"This category isn't going away, the category is here to stay."

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