How Candace Made Millions From A Cupcake ATM (Sprinkles)

She turned a cupcake ATM into millions of cupcakes sold around the world. This ATM machine holds 600 cupcakes. They go through about two turns of that a day. But the cool part I thought is where can you take your business right now and make money while you're sleeping? It's not about being lazy. It's about being efficient. You're solving a market need for a client while simultaneously growing your bottom line in a way that means you can pay rent in Beverly Hills.

I'm so excited.

Soon everyone will be able to just push a button and get the cupc. So you went from, you know, the whole world thinking cupcakes were 75 cents at max to selling a $3 cupcake. First of all, where'd you get the balls to do that and what's the strategy?

It was hard. I mean, sometimes as a first time founder, it's hard to really charge what you're worth. But we were selling a premium product and everything had to reflect that. I was really raising the bar with what I was putting out into the world. And again, the price had to reflect that. Not that people weren't outraged. I mean, we had people spin around and walk out when they heard the price of our cupcakes.

That's w so why? I mean, I see the reason. If you don't have a high margin, a high enough margin, you as an entrepreneur have to play this crazy volume game, which is not fun and often doesn't work, especially when you're first starting out. You can't make enough money off of 275 cent cupcakes to have a storefront in Beverly Hills.

Not gonna happen.

So how did you think about pricing and what were the, like one or two things that made your cupcake worth three bucks? Besides that? You said it was.

We 100% had to lean into the design of our product. And also just the sor of handcrafted, artisanal nature of the product itself and the ingredients that were going into it. People were used to buying cupcakes at the grocery store that were made for kids. They had like shortening laden frostings and waxy sprinkles that, you know, the decorations were plastic cupcake mix. So we just elevated it all. We made, you know, cupcakes perfect for special occasions and also for gift giving. So all of a sudden we'd elevated this little kids product into something that could compete with a beautiful candle or a beautiful bouquet or. Or something that was like, you know, a great gift to give.

I mean, you kind of created this category of premium desserts at high price points. Now there are these other companies that are doing it with cookies and yogurt and whatever, but before you, that wasn't really a thing. And I'm obsessed with this idea of boring businesses. Cupcakes were boring.

They were boring. Bakeries were boring, they were dusty. No one was looking at them. Everybody was going after, you know, the high flying tech businesses. Nobody was looking to make their millions in cupcakes, right?

And so where else could you look at the world around you and think, man, if I took this thing that other people think is ugly, but they still use, other people think is boring, but they still are involved in it and up the level, I mean, I think that's where the next evolution of sort of our everyday community businesses are. And you did it at a crazy feat because this thing over here is a cupcake atm, right? Which you came up with. And the story that you came up with, it is amazing. So tell them about how that happened.

This is all about embracing that what if thinking, right? So I was pregnant with my second son. I had eaten my fair share of dark chocolate cupcakes through both of my pregnancies, mind you. I came home from a party late one night, was jonesing for a cupcake and there were none in the house. And I got mad. I mean, maybe a little hormonal, but I was mad. And I thought, why can't I get a cupcake at 11 o' clock at night? Why can't I? There should be a way to do that. And instead of just turning over and going to sleep, I embraced that sort of what if thinking, like, would that look like, how could you do that? By the way, we pay rent here 24 hours a day. Why shouldn't we be monetizing 24 hours a day. Cupcakes in an atm machine? Mama.

Okay, so, Candice, you started this company at kind of a, probably a low point for you. Tell me what happened.

Well, what happened was I had been working in investment banking, then I got a job in the tech world and I lost my job in the dot com bust was without a job. I had no plan, I had no passion. Until I remembered that I loved to bake. And I decided to go to pastry school instead of business school.

I can't imagine if I got fired being like, you know what I'm gonna do? I'm bake a cupcake and turn it into an empire. But like, good for you. What does it take to start a company that does this?

Well, I started really Small. I mean, there was no overhead when I was working out of my kitchen. All in. We were running really lean on the labor side because it was my husband and myself. And then we called in friends on the weekends to help us out.

That's amazing. Yeah. Okay, so let's break this down.

Yeah.

So to start the cupcake company, you had basically $0. And let's say when you're doing in your kitchen, you're spending like a couple hundred bucks, I would imagine, on supplies.

Absolutely.

So we got a couple hundred bucks. And then stage is, you're like, man, people like these cupcakes. They're kind of differentiated. And I have to have a spot that's probably licensed and certified with the city. California loves the regulations. And so you had to get a location. The first one was 600ft, right?

Exactly.

What did it.

Square feet, front and back.

Oh, my gosh.

It was little.

Little guy.

Yeah, really little. And it cost us. Let me tell you what, this was my entire life savings at the time. It was mind boggling to me that I had spent this but $200,000 to renovate, build out, design the space.

And you used all your own money, didn't bring any capital from anybody else?

We used all our own capital. It did not bring any outside capital. No one would have funded us. It sounded like a totally pie in the sky idea. Everyone thought we were nuts.

How long did it take before you actually made any money? Were you just like making cupcakes, putting it back in inventory. Making cupcakes, putting it into inventory, Absolutely.

But because we were so lean on labor, I mean, essentially it was my husband and myself and we were selling a lot of cupcakes and there's a decent profit margin on cupcakes. We started cash flowing immediately and we paid back our investment within six months.

For somebody that was going to go out and start an X company, let's say, in the CPG space, what would you tell them to replicate from that experience?

It depends on your goals, but if you're wanting to scale, honestly, I think I didn't build a team fast enough. It was great to have all those profits early on, but given that my goal was to scale nationally, I should have hired and staffed up early so that I wasn't sleeping on the bakery floor. And I could have been already planning my second location. It took us a full year to get our act together. Even though we had the money to open our second location. The agents are your way in to all of the celebrities in town. I remember one day there was an agent's assistant that was in the front of our bakery. He was there to bring back three dozen cupcakes for his apartment. His boss, the agent, top dog in top dog at the agency. And we didn't have three dozen cupcakes. And he just sat there and said, I'm not moving until you do. I said, it's gonna be a while. And he goes, that's okay. You could see he was just sweating because he was not gonna go back to his boss and tell him he hadn't gotten those cupcakes.

I love that. I mean, the things that I see there that I think you've done really well, just almost naturally are one, create a market of one, like cupcakes already existed, but how could you take it and twist it into something that nobody else has ever done before? And then two is go local to go national. I mean, you really said, I am going to be the LA girl, the hometown girl, and I'm gonna get these people who are local and centers of influences into my business, which I think not enough people do. They're always looking for the New York Times when they really should be looking for the Oklahoma Times. And then the third thing I think you did that's really interesting is you didn't spend a ton of money. You were thoughtful in the early stages. Let's talk about finding your rock. That's what Candace did. She found big rocks, even boulders to throw into the water that become ripples that mean that she only has to do one activity, and that activity leads to a multiplier effect, meaning she gets an unfair advantage for her action. When it came to Candace, that meant that she's going to the few people in whatever neighborhood you're in that are going to tell a few other people that have a huge multiplier effect. So in this example, you know what I would do is if I was starting a company today, I'd probably think something similar. I'd go like, who's the top number one influencer in Beaumont, North Dakota? Who's the top number one celebrity that's located in Indiana? And I'd probably be going to some of them and trying to, like, drop off a little something, give something away. Because the funny thing about rocks are you give it for free. But the ripples, they're not free.