Inspired by their grandmother, in 2008, Katherine and Sophie traded careers in fashion and venture capital to follow their passion for baking and opened Georgetown Cupcake. They talked with us about their entrepreneurial journey.
The moment we knew we were ready to Start Georgetown Cupcake…
We had dreamed about opening a bakery together ever since we were young girls. Because our parents both worked, our grandparents raised us and we spent much of our early childhood with our grandmother, baking with her in her kitchen. We developed our passion for baking from her – she was a very strong influence on us growing up and was the inspiration behind Georgetown Cupcake.
When we first started to seriously discuss opening Georgetown Cupcake, our grandparents and parents initially discouraged the idea. They had come from Greece and had the mentality that they were working hard to send us to college so that we could graduate and work for large companies. So, we went to college (Princeton and Marymount) and ended up working in the finance and fashion industries. However, we never let go of our dream. We always talked about it and finally, in the summer of 2007, we asked ourselves “Are we going to spend the rest of our lives wondering ‘What if?’ ” We had a very frank and honest conversation and we decided to take the plunge and start Georgetown Cupcake. It was a very scary decision and our family was not very supportive at the time – though now they are! That moment – the one when you decide to make your dream a reality and give up predictability and stability for uncertainty and the unknown – is a very frightening one for entrepreneurs. When others around you doubt you, you start to doubt yourself and question your decision. The most important thing is to believe in yourself and stay focused on your goals.
We work on our business plan for…
Six months! It’s important to outline the broad strokes of your business including a budget and projections, but also to realize that things may change and that you need to be flexible. Our business plan went out the window the first day we opened for business.
Advice for continuously adapting your business plan…
The most successful entrepreneurs are good listeners. If you listen to your customers, they will tell you what you need to know. When we started Georgetown Cupcake, we had built our business model around the idea that customers would call in and place catering orders in advance for special events and celebrations. However, when we first opened our doors, we had a line of walk-in customers that stretched all the way down the block. Our customers wanted their cupcakes right then and there. So, instead of telling our customers our process for placing advance orders like most bakeries focused on weddings and special events – we listened to what our customers wanted and we immediately adapted our business model to focus on walk-in traffic to meet our customers’ needs.
This is also how we launched our nationwide shipping operation. In our first year of business, our customers would come into the store and say that they wanted to ship our cupcakes to friends, family and colleagues across the country. When we replied that we unfortunately did not ship our cupcakes, our customers would end up shipping the cupcakes themselves in regular boxes, and the cupcakes would end up getting damaged in transit. We eventually realized that we had to listen to our customers and adapt our business model to include nationwide shipping so that customers could send our cupcakes as gifts. Our shipping business is now the fastest growing segment of our business.
The most successful businesses are those that are flexible and that are able to adapt quickly to an ever-changing business environment, including changes in technology. Since we started Georgetown Cupcake, consumers have changed how they purchase goods – there has been a definite shift towards mobile in the past five years and as a business, no matter your industry, you need to stay at the forefront of technology in order to stay competitive. Next month, we are launching our new mobile app, to allow customers to order and pay for cupcakes on their mobile devices. Everything is moving toward mobile and businesses that don’t adapt will be left behind.
As a business, no matter your industry, you need to stay at the forefront of technology in order to stay competitive.
The world in which we live is constantly changing – the business environment, the regulatory environment, technological advances – and as an entrepreneur, you need to be able to adapt to change if you want your business to thrive.
How we identified the opportunity for a cupcake business…
We decided to focus on cupcakes because we had so many wonderful cake recipes from our grandmother and thought that if we did cupcakes, we would be able to offer a wide variety of flavors that would allow customers to customize their own assortments. However at the end of the day, we wanted to focus on making one product, and make it best-in-class.
When we started Georgetown Cupcake, we didn’t expect people to be so intensely passionate about certain flavors. There’s definitely something intrinsically personal about cupcakes and our customers are definitely passionate about their favorite flavors. Our menu development is something we take very seriously since some of our flavors (like Red Velvet, Salted Caramel, and Peanut Butter Fudge) have serious cult followings. Not many other dessert categories have such devoted and loyal followings. Cupcakes are also very versatile. Customers order them for everything from corporate product launches to their child’s birthday parties to office meetings to baby showers to black-tie weddings. One of the best and most fun parts of our business is being a part of our customers’ special celebrations in life.
Top 3 things we did early on that contributed to Georgetown Cupcake’s success…
Our business model is centered on three main pillars, which we focus on every single day, since day one. First, we committed to making a best-in-class product by using the best ingredients. In our business, that means using top-shelf ingredients like Valrhona cococa from France, Madagascar Bourbon vanilla, European style butter – and not taking any shortcuts. Second, we took the philosophy that each location should be a destination. We are very focused on choosing the best real estate for our bakeries in each of the cities where we have stores. We also design each store with an open concept so that when customers walk in, they can see the cupcakes being baked, frosted, and decorated – the entire experience is very visual. Finally, we are focused on high-touch exemplary customer service. In particular, we focus on hiring people who are as passionate about Georgetown Cupcake as we are. If you build a team of great people, then they will showcase your passion to customers, and passion is critical in a business’ success.
Ways that we established credibility as a new business…
Shortly after we first opened, Frank Bruni, the restaurant critic at The New York Times at the time, visited our bakery and wrote a glowing review of our cupcakes. We also earned rave reviews from other respected food critics, as well as baked alongside Martha Stewart and Oprah Winfrey on their talk shows. Having validation from respected food critics and influencers early on definitely helped us build our reputation as serious bakers and as a serious business.
Our first reactions when we were approached to star in our own television show…
Initially we were apprehensive, but one thing we learned when starting Georgetown Cupcake was to always keep an open-mind and to embrace new opportunities. Our television show has been an amazing experience for us –to share our entrepreneurial experience and encourage other women to pursue their entrepreneurial dreams. We get so many emails and letters from fans who want to start their own businesses and we love that we are able to share our experience with them – the highs and the lows – and it makes it less scary for them. It’s easy to get discouraged when starting a business, but when you realize that it is tough for everyone, it’s easier to deal with the uncertainty and setbacks. At the beginning, both of us got very hung up on the fact that things were always going wrong and wondered “Why can’t there be a day where everything goes smoothly?” And then we realized that the “perfect day” just doesn’t exist when you are an entrepreneur. We learned to embrace all of the daily ups and downs, and to actually love them since they are all part of the experience.
How our business would be different had we not pursued the television opportunity…
Doing a television show definitely had an impact on our business –people from all over the world are now familiar with Georgetown Cupcake. However, had we not had the opportunity to do a television show, our basic approach to operating and growing the business would not have changed. The two of us are still intimately involved in running the day-to-day operations of our business (because we love that aspect of it) and we would still have taken the same disciplined approach to expansion to new cities regardless of whether or not the television opportunity had arisen.
The biggest challenges Georgetown Cupcake has faced…
For us, the most challenging aspect of running a food and specialty retail business is managing growth while maintaining our quality and what makes our brand special. Growing any business also forces you to confront unexpected challenges every day, and dealing with these challenges can often be unnerving and cause you to lose focus.
What we do to overcome these challenges…
To maintain our best-in-class quality while scaling, we have taken a very thoughtful approach to expanding to different cities. We never want our business to have a “chain” feel to it. We are very selective with respect to real estate and opening new locations. We also take a very hands-on approach to managing the day-to-day operations of each location and spend a lot of time personally communicating with each of them. Our corporate structure is very flat – each layer of management increases the distance between the two of us and our customers. While it’s important to delegate as you grow your business, it’s very important to keep your pulse on your customers’ needs and stay involved in the details.
Over time, we also learned to “expect the unexpected.” It’s not a question of “if,” but rather “when” unexpected events will happen. The difference between success and failure is your level of preparation and readiness to act. If you plan ahead, then unexpected events are less stressful and easier to deal with when they do happen. For example, we had barely been open in business in New York City for six months when Hurricane Sandy hit our store in SoHo in lower Manhattan, forcing us to shut down for a week. For a new business, this can be a devastating loss of momentum. However, we used our national shipping capabilities to service our customers in New York City instead and were able to respond quickly.
Top 3 things entrepreneurs should consider when developing a growth strategy…
When deciding how and when to scale, you need to have:
- Proven your business model
- A plan in place to scale
- Enough capital to scale
It’s also important to consider the macroeconomic factors – waiting six months or a year can sometimes make a world of difference in raising capital. When we started Georgetown Cupcake, it was the beginning of the recession and we couldn’t get a bank loan. We had many people tell us “no” but instead of giving up, we found a way to get to “yes”. We ended up starting Georgetown Cupcake by maxing out our own personal credit cards, which isn’t an ideal way to start a business, but it was our only choice at the time. When we started, we also just focused on making our one location in Georgetown successful. We didn’t even think about opening in other cities until after our first year in business, when we had proven our business model, started to develop an expansion plan, and had the necessary capital reserves to expand our business to other cities.
How we determine the perfect location when expanding to a new city…
We are very big proponents of data-driven decision-making. We collect data everywhere we can in our business. Specifically, we analyze our shipping data to see where our cupcakes are going and where are customers are, and use this data to inform our decisions on which new cities to enter.
Within each city, we are very selective in choosing iconic neighborhoods in which to open (SoHo in New York City, Newbury Street in Boston, Robertson Blvd in Los Angeles, and Buckhead in Atlanta) so that anytime a customer visits a Georgetown Cupcake in another city, they have that same special “neighborhood” experience that they do at our flagship in Georgetown.
How we identified our competitive advantages over other bakeries…
Since we opened in 2008, our goal has been to focus on one product and to make it best-in-class. We have stayed true to the core pillars of our business philosophy and haven’t taken any shortcuts along the way. Our recipes have not changed, and we continue to bake our cupcakes from the best ingredients, to create a unique in-store experience for our customers, and to offer an impeccable customer service experience for everyone who comes into any of our stores. Consumers make decisions not just on price and convenience, but ultimately they seek out value.
Strategies we use to continue to stay competitive…
Data-Driven Decision Making
In business, it’s important to know your numbers. Your numbers will tell you what you need to know, and sometimes they tell you things you don’t want to hear. Either way, it is critical to look at them and understand them because they will help you make good business decisions. As a business, we make it a priority to constantly collect and analyze data and have designed our systems to collect data at as many points as possible so we can track a multitude of key business metrics which we monitor on a daily basis. We never guess or shoot from the hip – our numbers inform all of our decisions. For example, there are certain flavors on our menu that we love, but aren’t as popular as others. When deciding on menu updates and which flavors to eliminate, the numbers unfortunately sometimes trump our own personal favorites.
Focusing on Goals
While it is very easy to get distracted by what other companies are doing, we try to stay focused on what we’re doing and making our company the best it can be. For us, that means clearly writing down our near-term and long-term goals and reviewing them regularly. Put them on your bulletin board or frame them on your desk. It’s always important to remember and keep sight of the big picture and where you want to be headed. Sometimes it is easy to get wrapped up in just getting through the day, or the week, or the month. If you write down and review your goals on a regular basis – you are more likely to ensure that your business is on track.
Ways that we have adapted to different preferences in new locations…
We rely on data as much as possible for business decisions and leave very little to chance or guesswork. Our focus on data-driven decision-making allows us to collect data such as the number of Lava Fudge cupcakes sold during a particular hour on a particular day. We analyze our data to tailor the baking at each of our locations in different cities and at our national shipping headquarters, so that we can bake the correct number of cupcakes at each location in order to fulfill that location’s order while serving walk-in customers.
Strategies for building a loyal customer base…
One of the most valuable things we learned from our television show is the power of connecting with your customers and fans. We are always connecting with our customers through a variety of platforms: television, social media, and most recently, our live “Cupcake Cam” where we are now sharing an inside look at our business – 24 hours a day, 7 days a week. Our customers can literally join us inside the bakery all day long, for an up-close look at what goes on every single day, and experience the entire baking process from the moment the first egg is cracked to the moment the last cupcake is frosted and placed inside a beautiful box for our customers. Engaging your customers, interacting with them personally, and making them feel part of the process is an important key in creating a passion brand.
It is also important to stay active in your community. At Georgetown Cupcake, we support numerous local and national charitable organizations that are focused on women’s and children’s issues. Giving back to your community is one of the most rewarding parts of owning your own business and a way to build strong relationships within the communities you serve.
Advice for entrepreneurs setting up a shipping system…
Do your research. When we first started to research the process for shipping our cupcakes, we spent about six months testing different packaging configurations and shipping processes. We knew that standing up a dedicated shipping facility would require a major financial commitment, and therefore that extensive research and testing was critical before pulling the trigger.
Tools we use to collect and implement feedback from our customers…
We use a variety of platforms to communicate with our customers and implement their feedback each day – everything from phone and email, to social media (Instagram, Twitter, and Facebook), and in-person communication. As owners, we still work the front counter at our retail locations whenever we are in our shops, and speaking with our customers on a one-on-one basis is extremely helpful and helps us to keep our pulse on what is going on at the ground level of our business. Also, we offer a free “Secret” Flavor at each of our locations each day. We use this as a way to test out new flavors and get customer feedback on them before we decide to add them to our regular menu.
Most important habit that keeps us productive…
Making “To-Do” lists of near-term and long-term tasks. Crossing off tasks once completed gives you a sense of momentum and accomplishment.
The best part about working Together…
The best part of running Georgetown Cupcake, for us, is the ability to work together every day, as sisters, and live out our dream and our passion. Being an entrepreneur is not for the faint of heart – it will challenge you every single day, but having your sister by your side as your support system makes it easier. Your relationship with your sister is a very special one. Your sister is the one person in the world who knows you better than you know yourself and you can be completely candid with one another. We can have very frank, honest conversations with each other and not worry about each other taking it personally. This level of honesty and openness allows us to make the best decisions and gives us an edge in business.
3 must-read books for entrepreneurs…
“The Entrepreneurial Venture,” Harvard Business School Press
A collection of valuable business insights and a must-read for any entrepreneur.
“A Curious Discovery: An Entrepreneur’s Story,” by John Hendricks
An inspiring autobiography from one of the country’s most dynamic entrepreneurs.
“Four Seasons: The Story of a Business Philosophy,” by Isadore Sharp
A first-hand account of the customer service philosophy from the founder of one of world’s most iconic brands.
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