VOL. 37 | NO. 4 | Friday, January 25, 2013
Gigi’s icing: $33M in revenues in 5 years
By Brad Schmitt
Gigi’s Cupcakes recently played host to its 54 franchisees at Gaylord Opryland Hotel. The company has grown from its first location on Broadway to 78 stores in 22 states, reaching as far west as Nevada. -- Submitted
About five years ago, Gina Butler started Gigi’s Cupcakes on Music Row with $33 in the bank.
Butler finished 2012 with 78 stores, 54 franchisees, a convention at Gaylord Opryland Hotel that drew nearly 200 people and, she says, more than $33 million in gross revenues.
Most days, that original store, at 1816 Broadway, still sells at least 1,500 cupcakes with signature high piles of icing at $3.50 a pop.
“Ninety-seven percent of all women love tons of icing,” Butler explains. “They always want the corner piece with the rose on it. So that’s why I have the high icing.”
Most folks consider the growth of Gigi’s Cupcakes to be a jaw-dropping success, and Butler is grateful for the progress, but …
“I’m not rolling it in. I’m paying out a lot of money to build this company even stronger,” she says. “So it’s been hard. Sales are down. People don’t have discretionary income for a $3 cupcake. Not twice a week now, but once a week. It’s challenging.”
‘The hot dog circuit’
Then again, Butler is used to challenges.
She came to Nashville, like thousands of others, to chase her country music dreams.
But unlike her fellow aspiring superstars, Butler did have some success.
“I’d done a little touring, even toured abroad, toured in Vegas, all around California, the ‘hot dog circuit,’ fairs and festivals,” she says.
Requirements for a Gigi’s franchise are:
- Approximately $100,000 in liquid assets and a total net worth of $250,000 (as an individual or with investors).
- Prior business experience, retail experience preferred.
- Daily involvement in the operation of the shop.
What Gigi’s will provide:
- Site selection
- Lease review and negotiation
- Design/Layout and Construction
- Equipment Sourcing
- Grand Opening support
- Ongoing marketing and operational support
Butler and her band even played some of her original songs, including “Big City,” a true story of the sorrow of being separated from her brother, who was chasing his dreams in Los Angeles. “You should write about your experiences,” Butler says. “It’s more real that way.”
Reality set in in a big way when Butler turned 32 and was still on the hot dog circuit. So she gave up her country star dreams.
“I felt like a failure. I went through a real deep depression for a while,” she says. “I had spent my whole life doing that. It was really tough to make a change.”
Two things helped get Butler out of that funk. One was a thriving house-cleaning company she started when she was 15 years old.
The other was listening to Christian author and speaker Joyce Meyer.
“I started buying her tapes. I started adding girls to the cleaning company,” Butler says.
“Every time I had doubts I would be, like, what’s wrong with being in the service industry? What’s wrong with having my own little business?”
After a couple of years, Butler says she changed her thinking, sloughing off suggestions that cleaning houses was degrading.
“I started appreciating what had been given me,” Butler says. “Instead of ‘Why me, Lord?’ I was, like, ‘Thank you, Lord.’ It’s a huge change when you start being grateful for things.”
And that’s when, several years ago, she got the fateful call from her brother after he found himself waiting in a long line outside a New York cupcake shop.
“He said, ‘This is not as good as yours. You should open up a cupcake store.’ I thought, you know what? I’ve failed as so many things before. What’s the difference?”
Butler prides herself in always paying her bills on time and amassing good credit. But when she started looking for loans to create her cupcake store, it wasn’t enough.
“Banks laughed in my face,” she says.
But one banker, with Bank of America, at least got her creditors to come down from 22 percent to a more manageable 9 percent when she took the risky move of getting more than $100,000 from her credit cards.
Even Butler’s friends were wary.
“I told my friend I’m gonna open a cupcake shop! And they’re, like, ‘Oh, bless your heart….”
So Butler cleaned houses by day and made cupcakes until 2 in the morning. For years, Butler had made apple spice cake and pumpkin bread for cleaning clients, so she converted those to cupcakes, gave them all special names, like Hunka Chunka Banana Love.
Butler started looking for locations and she fell in love with 1816 Broadway on Music Row, a spot that could create marketing sizzle and buzz.
But sizzle, buzz and location come with a price, about $4,500 a month for less than 1,000 square feet.
“I’d never paid $4,500 a month for anything in my entire life!” Butler says. “That’s a lot of cupcakes; that’s a lot of faith.”
From meltdown to franchise
She told the owner she only needed to sell about 250 cupcakes a day to make rent. Butler believed in her gut that she could do that and more and, she adds, “My gut is never wrong.”
If Butler trusted her gut, the land owner didn’t, and he required her to put up three months rent.
Butler turned to her parents, using her own savings to convert the space from steak delivery outlet to charming cupcake shop.
Butler kept the faith – until a contractor presented her with a $15,000 drywall bill that he says he had forgotten.
“I freaked out. I had a meltdown,” Butler concedes.
“Mom said, ‘God will take care of you, he will provide.’ I’m like, ‘HOW WILL HE TAKE CARE OF ME?’”
In this case, her mother’s gut was right, and after a huge opening month and some local media coverage, Butler had $300 left – after paying the drywall bill.
Eventually, Butler’s landlord convinced her to franchise, getting franchisees to pay $35,000 to start their own Gigi’s Cupcakes and paying corporate an additional 4.5 percent fee.
Butler says the goal is to build the company to 250 stores, and maybe take it public.
Pie in the sky?
Another goal is for her to back away.
“I’m a doer. But I had to take a step back. Do I want to be a cupcake baker or do I want to be a franchiser?” she says.
“It’s been a very painful process this year. I’m very task oriented. I like to micro-manage because I really want it done right.
“I had to step away from that. I hurt somebody’s feelings. Let them do it and you have to be nice. That’s been a huge transition for me.”
“I wanna buy a little place in downtown Franklin, a pie shop. I bake better pies than cupcakes. Mama Gigi’s Pies.”