Magnolia Bakery, the New York company that rose to fame during the cupcake craze of more than a decade ago, is looking ahead to its next chapter under new ownership.
The venture-capital firm co-founded by developer
a key figure behind the Hudson Yards development, and entrepreneur
has acquired the bakery chain from owner
and his fellow investors in a deal that closed earlier this year. The two parties declined to reveal the purchase price.
Magnolia Bakery rose to prominence in the 2000s when it appeared on the “Sex and the City” HBO series and on “Saturday Night Live.” Since then, the chain has grown to encompass more than 25 locations across the U.S. and overseas.
The chain’s e-commerce business thrived during the pandemic, with online sales nearly tripling in 2020, according to the company. Officials declined to provide annual revenue figures for the bakery.
“I’ve just been amazed watching this brand,” said Mr. Higgins, who sees opportunities to grow Magnolia by expanding its online operations and possibly introducing the sale of packaged products at grocery stores.
Mr. Higgins didn’t rule out adding more Magnolia retail locations, including one potentially at Hudson Yards. Magnolia has already opened a new store this year in Manhattan’s Columbus Circle neighborhood and is set to open one at the new Moynihan Train Hall.
Mr. Abrams said the decision to sell Magnolia was driven partly by the challenges of trying to expand the company without significant additional capital.
“There was a lot of money needed that we didn’t have,” said Mr. Abrams.
a veteran baker who previously served as Magnolia’s chief operating officer under Mr. Abrams, has assumed the role of chief executive.
The venture-capital firm, RSE Ventures, already has investments in other food brands such as chef
Momofuku company and Milk Bar, a cutting-edge dessert outfit.
Magnolia is a good match with the rest of RSE, Mr. Higgins said. In particular, he said that VaynerMedia, a digital agency that is part of the RSE family, could help with growing Magnolia’s e-commerce operations.
Mr. Higgins and Ms. Lloyd said they weren’t concerned that the cupcake craze has passed its peak moment, noting that Magnolia has long emphasized a broader line of products and has put special emphasis in recent years on its banana pudding. Mr. Abrams also noted that cupcakes constituted just about 30% of Magnolia’s sales.
Magnolia isn’t the only bakery associated with cupcakes that has looked for ways to redefine itself. Sprinkles, a chain based in Austin, Texas, recently added chocolates to its product range. And it is also innovating within its cupcake lineup: For this coming Father’s Day, Sprinkles is introducing a cupcake with a beer-infused chocolate frosting.
Magnolia is well-positioned for growth under RSE, food-industry experts said.
Gourmet cupcakes will remain popular, said Darren Tristano, chief executive of Foodservice Results, a research firm. “They continue to be what’s considered an affordable indulgence,” he said.
Crazy for Cupcakes
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