Company: The Hummingbird Bakery
Last year, The Hummingbird Bakery sold more than a million cupcakes. That, you’d imagine, equates to over a million satisfied tummies, albeit with some being satisfied more than once. Somewhat incredibly, The Hummingbird Bakery Cookbook, written by the company’s founder Tarek Malouf, has sold more than 400,000 copies and has generally been one of the top 10 food and drink titles on Amazon since it launched in 2009, making millions for its publisher Ryland, Peters & Small. “The book is the biggest form of free advertising,” says Malouf, “and has helped spread the word around the world.”
In case it passed you by, there has been a cupcake phenomenon going on for the past few years. Riding the wave, Malouf has grown the business throughout the credit crunch, recession and muted recovery, recently opening the bakery’s third shop in Soho. All signs point to an industrious 2011 for the 85-person company, with turnover set to be close to £5m by June, having exceeded £3m in 2010. A fourth shop will open later this year, but that wasn’t always the plan. In fact, there wasn’t much by way of a prescriptive growth strategy.
Malouf was keen to start his own business, and having lived in the US for three years, while also attending an American school in London, he’d spotted that there wasn’t a place to buy high-quality American desserts. “I spent 2002 to 2004 researching the business, finding a shop, negotiating the lease and then building, which took a year,” he recalls.
The company was self-funded with help from Malouf’s civil engineer father and on its first day sold 250 cupcakes. But its influence quickly spread by word of mouth. “Things have evolved naturally,” says Malouf. “We make the same five core cupcakes and have then added to them. We didn’t have a detailed business plan or projections. I thought I’d probably only open one shop.”
Arguably, The Hummingbird Bakery’s biggest unique selling point is that all its cakes – and the range now goes far beyond cupcakes – are made on the premises. “It’s all baked from scratch, fresh to eat today, iced on the day and everything is made in the shop,” explains Malouf. “Other shops have opened and I can tell from tasting their cakes that they weren’t made that day.”
So far, the new West End shop has proved the busiest, with larger orders from the City and creative agencies supplementing passing trade. Each shop has a different customer blend, with South Kensington aided at weekends by the proximity of some of London’s largest museums.
Nevertheless, Malouf says it was hard work securing traffic in the busy streets of Soho initially. He has also had to deal with shop alterations to cope with demand, reducing the size of the seating area in South Kensington, for example, to remove bottlenecks. “The café feel costs money and at the end of the day I’m running a business,” he points out.
Managing stock levels has been honed to something of a fine art, with as little as 3% to 4% wastage on what have to be fresh products. Rather than throwing products away, the company takes requests from charities to take the left over cupcakes, for which they have to sign waivers. “And we have a link-up with the Terence Higgins Trust,” says Malouf. Last year, Hummingbird created a limited edition cupcake to mark World Aids Day, adorned with the famous red ribbon, with 25p from every sale going to the charity.
The Hummingbird Bakery experienced its busiest day of the year this month, Valentine’s Day, but Malouf admits August and January tend to be quiet periods. To introduce additional revenue streams, the bakery exhibits at the National Wedding Show, where it offers ‘Cakes by Consultation’, for which one client had a generous £7,000 cake budget.
In addition to exhibitions and its books, the company has a strong Facebook following with fans posting pictures of their own efforts, questions and photos of them in its shops. Its Twitter presence @hummingbbakery had over 9,600 followers at the last count, and Malouf has only recently invested in proactive PR activity.
Future plans will revolve around Hummingbird’s planned private investment fundraising and franchising, with potential deals already progressing in the Middle East and Kuwait. What’s more, Malouf would like to make the business a national brand, but has looked to outside help.
“There’s an opportunity to have more branches outside the UK than here,” he says. “I’m not embarrassed to admit my limitations though. I’m good at the creative bit – the product, what it looks like, what we sell. But I’ve been working with consultants to structure the business.”
But how will it fare when the cupcake phenomenon dies a death? Malouf’s not unduly concerned. “Cake will always be a part of the culture and people love home baking,” he replies.