The Sweetest Success

Even in lean economic times, the American appetite for cookies, cake, ice cream, and other tasty treats continues to grow. Savvy entrepreneurs are doing everything they can to grab a piece of that $23 billion pie.

Not long ago, Tracey Hughes had an enviable career as an executive marketer at Colgate-Palmolive in Chicago and New York. Then she started bringing homemade rum cakes to corporate functions. In no time, Hughes, a former fashion model, was taking special holiday orders from friends and colleagues, eventually baking up to 10 cakes a night in her small Brooklyn apartment. That's when she decided to go into the dessert business full-time.

"I grew up in the kitchen, watching and learning," says Hughes, who launched the Rum Cake Fairy Company in October 2005, armed with a handwritten book of her grandma's secret recipes and her own marketing savvy. It paid off. Two years ago, her rum cake was discovered by Oprah Winfrey and featured on the coveted "O List" of must-have holiday goodies. Since then, she's launched an entire range of cakes sold at high-end retailers.

And at a time when many businesses owners are easing spending plans to cope with the sputtering economy, Hughes and her business partner, Patricia Kolaras, are closing a deal to buyout the New Jersey bakery that mass produces her cakes.

In good times and bad, Hughes and other successful dessert entrepreneurs, can count on the American sweet tooth to help keep their businesses afloat. A recent survey of some 1,500 U.S. consumers by Techmonic, a Chicago-based foodservice research firm, did not find a single person who regularly skipped dessert. More than half said they indulged in such perennial favorites as chocolate chip cookies, vanilla ice cream, and apple pie at least once a week, though typically more often than that. That kind of appetite is driving a $23 billion domestic industry of bakeries, chocolatiers, ice cream makers, and countless other small businesses.

"Clearly, consumers love dessert," says Darren Tristano, Techmonic's executive vice president of information services. By keeping an eye on shifting consumer trends, he says, restaurant, café, and foodservice owners can leverage the appeal of desserts to boost incremental sales, and in turn help dessert makers grow their companies.

One of the more encouraging trends for these business owners is a widening definition of dessert itself, the Techmonic survey found. While cookies, cakes, and pies remain the most popular treats, yogurt parfaits, fruit plates, and other healthier options are gaining ground. According to Global Industry Analysts, a San Jose, Calif.-based market research firm, the global market for frozen desserts alone is expected to grow by more than 3 percent a year to some $97 billion by 2010, driven by a rising demand for low-fat products (although old-fashioned ice cream still accounts for nearly 70 percent of the market).

Still, facing the twin pressures of an ailing economy and healthier lifestyles -- which have seen moves to ban trans fats and other ingredients deemed harmful by public health officials, along with the posting of calorie counts on menus -- successful dessert makers in every market niche are learning to adapt.

In recent years, Maria de Lourdes Sobrino, the founder of Lulu's Desserts, has introduced sugar-free and natural versions of her popular low-cost gelatin, rice pudding, and flan dessert cups. The new products were a twist on an old family recipe, which she initially made by hand in a 700-square-foot shop in Torrence, Calif. She now sells more than 50 million cups a year at Wal-Mart, Costco, and other major supermarkets across the country.

Sobrino, who launched her business in the early 1980s after shuttering a Mexico City-based travel agency when the peso crashed, says dessert makers -- like all entrepreneurs -- have to be constantly innovative to succeed.

"You start out by focusing on one area where you can do your best," Sobrino says. "But once you're established, you have to bring new products and open up new markets all the time."

So far, the downturn in the economy hasn't hurt sales, she says -- her dessert cups sell for as low as 25 cents each -- though rising transportation and labor costs are cutting into profits.

It helps that Lulu's Desserts come in individual portions. According to the National Restaurant Association, bite-sized desserts topped the list of this year's hottest new serving trends in a survey of more than 1,000 professional chefs.

Likewise, Hughes recently launched a line of mini rum cakes, which are also helping her boost sales in the months before and after Christmas.

For Warren Brown of CakeLove, a chain of popular Washington D.C.-based bakeries, innovation in the dessert business means coming up with new recipes and flavors that set your products apart.

"I spend a lot of time in the kitchen getting my hands dirty," says Brown, a former attorney who became a familiar face on the Food Network with Sugar Rush, a weekly show on baking. Brown has opened three new outlets in the past few months alone, and is planning more locations in the year ahead.

He says like himself, many budding dessert entrepreneurs are dividing their time between the test kitchen and learning the ropes of running a small business.

"My job now is to support my business and help it grow," Brown says. "That can mean coming up with new recipes, or making payroll. Both are equally exciting."