The road to higher profitability relies on creating new levels of price points that depend more on perceived value than price. If a consumer considers a $3 cupcake to be a valued treat, then the threshold has been achieved.

 

“Creating new price points in categories of products has been good for all of us,” says Page Busken of the iconic Busken Bakery in Cincinnati, now in its 90th year. “Now you can sell a cupcake for $2 or more. We like that.” Brian Busken, vice president of Busken Bakery, points out that millennials are opening more doors for creative expression at cake shops. “If you make something on-trend and adorable,” he says, “there is not as much price sensitivity.”

 

Examples include headline-grabbing creations like the Atomic Cake, a popular cake that originated on the South Side of Chicago. Longtime family owned retailer Weber’s Bakery makes a version they call a banana split torte.

 

Tom Major, president of Orland Park Bakery, explains their version of the Atomic Cake: “It is made from yellow cake on the bottom, topped with Bavarian cream, bananas and whipped cream, and then a layer of banana cake with strawberries and whipped cream and topped with chocolate cake and fudge and topped with whipped cream. The Atomic Cake is legendary.”