Gigi’s Cupcakes shares recipe for growth, success

While 2008 was a year of company closures and bank failures, it was the first taste of success for cupcake entrepreneur Gigi Butler.

Still, it took 14 years for Butler to find the right business recipe. In 1994, she moved from a small desert town located between Los Angeles and Bakersfield, California, to lend her voice as a country singer in Nashville. Only 15 at the time, sang at night and cleaned houses during the day to support herself.

A year and a half before the Recession, Butler decided to hang up her honky-tonk hat and focus on her cleaning business, which she had operated for nearly 20 years. When she decided to try her hand at a bakery, she thought her business experience and good credit would land her the right financing.

As Butler puts it, however, she was laughed out of four banks. With only a little in savings, she took a $100,000 advance from her credit cards and opened the first Gigi’s Cupcakes on Feb. 21, 2008. The shop was located on Music Row, close to the clubs where she used to sing.

Since then, Butler has climbed out of credit card debt and to roughly $40 million in sales in 2016. The cupcake business has also expanded to 96 locations in 24 states, 82 of which are franchised by 62 franchisees.

And this year, the company will tack on another 20 units, hoping to grow by another 35 annually.

“Our goal form a corporate standpoint is to own 20 percent of Gigi’s, with 80 percent franchised,” said Jack Sibley, Gigi’s vice president of franchise development.

Behind the cupcake company’s growth is a partnership with private equity fund KeyCorp. The firm bought Gigi’s in June last year. Its affiliate, Sovrano LLC, owns Mr. Gatti’s Pizza.

It also moved the company’s operations to Fort Worth from Gigi’s original Nashville home.

“They’re a family business, and I’m a family business, so it was a perfect fit for me,” Butler said of KeyCorp’s acquisition. “I wanted (the business) to go into another family business that really cared and would grow it.”

She and Sibley told us more about Gigi’s expansion, including plans for a new restaurant prototype, and how the business stands out among other sweet treats.

What’s behind Gigi’s growth?

Butler: The cupcake craze was what it was a few years ago, but people see Gigi’s as more than cupcakes. It’s also about birthdays and weddings and events. It’s occasions and catering. We do a lot of business-to- business with logos for Mercedes Benz and Dell and UberEATS. People are realizing the cupcake trend has worn a little bit, but it’s still part of people’s lives.

How has KeyCorp helped your growth?

Butler: We have the manpower now, and some money behind us to do more advertising, including live TV shows. When your footprint grows, you have to grow your awareness, so it was necessary (to partner with KeyCorp).

How do you differentiate from other cupcake concepts?

Butler: I went from cleaning toilets to being one of the biggest franchisees of cupcakes in the country in eight years. So there’s the story of the brand.
And there’s also my grandparents’ and family’s recipes that I’ve taken as pies and turned into cupcake form. If you can have a cupcake that’s from a 100-year-old recipe, that’s special.

What does your new store prototype entail?

Sibley: Some of the things we’re incorporating are a new type of casing so there’s a display for customers to see the products. We’re also incorporating an expanded line of baked goods so it’ll be more of a destination, rather than a pick-up.

All new stores will be part of the new prototype. We’re working on (retrofitting) our corporate stores. When lease renewals come up, part of the lease negotiation is remodeling the stores. We’re working on a rolling basis.

What else will be new at Gigi’s this year?

Sibley: We’re rolling out an online ordering capability. We also have the Sweet Lane, which is a pick up lane. There’s a lot of new technology that allows us to go to the customer rather than relying on the customer to come to us.

Article originally written by Korri Kezar, Staff writer for the Dallas Business Journal