But the client is convinced that this expansion will end soon. My town alone has 5 or 6 of them (with 2 more slated to open this year) and there's just no way even a town of my size (pop. 50,000) can sustain it.
I definitely see cupcake shops at chi-chi spots in NYC, LA and SF but I've never seen one in a city with < 1M population or in a rural or posturban area.
Now a kilobuck a day isn't going to earn you a private island retirement. That's for a hole in the wall in a cruddy area not a giant palace right off the interstate and barely keeping in business and paying the bills. But it is theoretically survivable.
WRT the fad itself disappearing, most small businesses collapse and are replaced by other small businesses so in the long run they'll all eventually disappear, to be replaced with the next new fad at about the same financial and survival stats.
Its been interesting watching financial changes in my town since the housing bubble popped, before the pop the purpose of a small business was to separate a sucker from his home equity loan money, so the landlords didn't care about infrastructure or parking, etc, but suddenly now that the amateurs are gone from the market, once again CRE actually needs to appeal to be rented, parking is not an option anymore, etc.
The remaining shop (which has several shops in the city, still) will likely survive, but they've also pivoted a bit by selling other things, too.
Don't forget that there's also a weekly TV show ("Cupcake Wars") giving the trend a lot of exposure.
I was always skeptical of cupcakes because they were (1) annoyingly expensive and (2) blatantly unhealthy, but SF seems to have addressed both of those concerns.
[1] http://adage.com/article/news/crowded-fro-yo-pond-sweet-frog...