Vote for Sprinkles in OKC! [Archive]

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10-02-2007, 05:19 PM

Sweet tooth's ultimate reward

By Sara Ganus
Business Writer

The cupcake.
Its moist, decadent center and rich, sugary frosting are enough to make any sweet tooth's mouth water while conjuring up childhood memories of mom baking in the kitchen. First baked in the early 1800s, these miniature cakes have hardly changed — main ingredients still require sugar, butter, eggs and flour. But two centuries later, cupcakes are more popular than ever. Not only have they become an accepted wedding cake alternative, they're also exchanged as gifts and considered equally delectable to both adult and child — not to mention entrepreneur.

In the past decade, dozens of cupcake shops have opened in metropolitan cities across the country, including New York and Los Angeles, following the direction of Manhattan's Magnolia Bakery, often credited for starting the so-called "cupcake craze” in the 1990s. Just as the retro dessert's surge in popularity may come as a surprise, so does the fact that one of the entrepreneurs who has helped lead the cupcake renaissance is an Oklahoma native and former investment banker.
By capitalizing on a niche pastry, Charles Nelson, 38, from Oklahoma City, and his wife, Candace Nelson, 33, were able to establish Los Angeles-based Sprinkles Cupcakes. Two and a half years later, they are expanding their posh cupcake concept nationwide.

Bankers to Bakers
After graduating from high school at Casady, Charles Nelson left Oklahoma City to major in business at the University of Arizona and study for his master's at the University of Virginia. From there, he pursued investment banking and worked for Morgan Stanley and Alex Brown & Sons in San Francisco. There he met his wife Candace, also an investment banker. Both worked at the firm until the Internet boom. That's when Candace Nelson decided to go to pastry school to further her love of baking.

"Her great-grandmother actually had owned three restaurants in San Francisco during the Depression, so cooking actually ran in her family,” Charles Nelson said. "No matter what it was, she could get in the kitchen and make it happen.”
When she got out of the school, Candace Nelson started a cake business that did well but "nothing to write home about.” She had some loyal customers, but people just didn't order cakes. Even her best customers would order maybe four or five a year. "We'd been through a million ideas,” Charles Nelson said. "We were going to open a cooking school, or we were going to have a Belgian waffle shop.” None of them made it past the brainstorming phase until they looked to the opposite coast.

During visits to Candace Nelson's sister in New York, the couple had gone to Magnolia Bakery for its cupcakes, which became infamous in the '90s — thanks to media buzz and a cameo in an episode of HBO's Sex & The City. The cupcake craze had taken off in New York, but in other parts of the country, it was virtually untapped. "We had been there and seen it all happen,” Charles Nelson said. "We were like, OK, I totally get it. I get the cupcake thing; cupcakes are awesome. But we were like, ‘the cupcakes aren't that great. They could be so much better and really could taste a lot better.'” That's when their mission to bake a better cupcake began.

State of mind
Do one thing, and do it well. It's a simple philosophy — the source of many success stories for entrepreneurs — and it's the one the Nelsons chose to follow.
"We said, why don't we take the thing that people love the most — the cupcakes — and make a whole bunch of flavors,” Charles Nelson said. "We really believe in the European or the New York way of doing things — do one thing and just do it amazing, and that's it.” Obviously, they knew they had to be the best to survive, so the Nelsons spent the next two years developing more than 20 cupcake recipes, ranging from classic vanilla and chocolate to red velvet, ginger lemon, banana and pumpkin. "We used to sit around with like eight different vanilla cakes and try them,” he said. These cupcakes weren't the ones grandma used to make. They were going to be an indulgence — and $3.25 a pop.
They also hired an architect from Vienna to create a unique store design — forget Grandma's doilies and typical bakery decor — and a former Martha Stewart employee to design the logo and packaging. Everything was sleek, minimalist and modern.

"Most bakeries are second- or third-generation kind of affairs,” Charles Nelson said. "We want to try to say ‘Hey, bakeries can be cool and hip and have the best ingredients — no transfats, imported chocolate, real chocolate sprinkles, great flavors with natural zest.'” One of the biggest challenges actually proved to be leasing a space. The Nelsons' cupcake concept was turned down by numerous landlords. "No one wanted to lease to someone who was going to open a cupcake shop,” he said. "They were like, ‘You've got to be crazy.'”

And maybe they were.

While learning how to prepare, bake and hand-frost hundreds of cupcakes in a full-scale kitchen, they also were questioning whether the West Coast would embrace the cupcake. On April 13, 2005, they opened their first Sprinkles store in a 600-foot space on Little Santa Monica Boulevard, just a block and a half off Rodeo Drive in Beverly Hills. From there, the rest is pretty much history.

Let them eat cupcake
On their opening day, Sprinkles sold out of its cupcakes in three hours and had angry customers literally banging on the windows when they ran out, Charles Nelson said. The next day, after the Nelsons stayed up almost the entire night to prepare, it happened again. It was exciting, overwhelming and scary. "We were like, ‘Oh my gosh, everything we hoped and dreamed for is happening, and we can't handle it,'” Charles Nelson said.

Like most new business kinks, they worked through that initial problem and stuck to their original long-term plan: continue to make the best cupcakes possible.
After the stacks of bills got so high that Charles Nelson couldn't handle it himself, he asked his brother, Bobby Nelson, who still lived in Oklahoma City, to put aside the small, family-owned oil and gas company he was involved with and become his chief financial officer. With constant phone conversations, retail-oriented technology, and lots of traveling, Bobby Nelson could continue to live in Oklahoma City and work for the Los Angeles-based company, which is what he does today.
"It's as if we're on two separate floors of the building,” said Bobby Nelson, whose office is in Possum Creek Place on Western Avenue. "I don't ever feel that we're not in the same city.”

With Bobby Nelson's help, Sprinkles Cupcakes opened a second location in Newport Beach in August 2006, opting for a second California location to appease the people who were driving almost 60 miles to come to their Beverly Hills store.
After similar success there — not to mention celebrity endorsements by Katie Holmes, an appearance on the Oprah show that boosted their already booming sales by 50 percent and a request by Williams-Sonoma to sell their Sprinkles cupcake mix in stores — the Nelsons finally decided it was time to open a location outside of California. "We were like, let's go out to the middle of the country and see what happens,” Charles Nelson said. The result was nothing short of success.

In March, Sprinkles opened its third store in Dallas to similar long lines and interest among the media. Now the company's next stop is in Scottsdale, Ariz., followed by 15 other locations, including London and Tokyo. Of course, following close behind are scores of entrepreneurs who are trying to cash in on the chic cupcake concept. The company has had to register trademarks outside the U.S., including the entire European Union, Australia, Canada, Korea, China, Japan, Israel and Switzerland, and spurred a competitive cupcake environment in the Los Angeles area, similar to New York's.

Although Oklahoma City isn't on the Sprinkles list of upcoming locations, it's not completely off the radar.

"I think Oklahoma City is a great market,” Charles Nelson said. "It certainly has proven to all restaurateurs or business owners that come to town that people in Oklahoma are aware of the best brands in the country. It's definitely on the radar screen and will happen — otherwise, I'd be killed by my friends and family.”