Battle of the Baked Goods

Some time ago I wrote in this space about a company called Insomnia Cookies, which uses the unusual business model of delivering freshly-baked cookies to their customers – as late as 4:00 in the morning, which is the source of the name. Since then we’ve seen a number of food-service companies leave the area (or go under completely) and several others arrive, but there’s one in particular that caught my attention. You see, it turns out that there is more than one company in this market that delivers baked goods to your door – and they’ve been around for some time…

If you enter the term “sugar shack” into your browser, you’ll find out that it’s a technical term for a small processing facility where various types of sap (primarily maple, but there are a number of others) were rendered into sugar prior to the Industrial Revolution; some are still in use today after a century or more of operations. You will also find at least a dozen businesses calling themselves “The Sugar Shack,” ranging from a café in Huntington Beach, California, to a bakery in Sioux City, Iowa, to a strip club in Lake Geneva, Wisconsin. Our local Sugar Shack is located on Clippert Street in the Frandor shopping complex in Lansing, and they sell cupcakes. They also sell brownies, and cookies, and they will make you a cake or a pie if you want one, but the most remarkable thing about them is that they deliver – until after midnight on weekdays, and until just before the bars close (1:30 AM) on weekends…

The difference between the two companies is obvious at once: like most of the Sugar Shacks around the United States, ours is a local business, and according to their website, one that has been operating in the Lansing area for nearly 40 years. Insomnia, on the other hand, is a multi-unit company operating in a number of different states and offering franchise opportunities to entrepreneurs who believe that a late-night cookie delivery service might prosper in their home town. The difference between the two business models is rather more subtle, however. Both companies sell cookies and brownies (and ice cream-related derivatives of each), and both of them will deliver these goods to you long after most restaurants have closed for the night. Insomnia’s menu is more limited and much more fixed, however; the Sugar Shack also has cupcakes available (in a bewildering array of flavors and styles) and will also maker larger cakes and pies on request, and decorate them in any fashion you’d like…

A much more interesting question is how well these companies will do in a depressed market, especially if they go head-to-head for the same customers. From what I can tell, Insomnia appeals almost entirely to the college student demographic – since that is the primary market for sweets delivered to your door at 4:00 in the morning. Their products have limited utility outside of that market segment, since people from other demographics will generally have the option of obtaining cookies from more conventional channels in advance of their need (or, in some cases, making their own). The Sugar Shack, on the other hand, has a wider utility in supplying a potential need for parties and celebrations where something more substantial than cookies (even really good cookies) is required; this should, in theory, give them a wider target market and a larger possible audience…

So far, both companies appear to be doing well in Lansing’s student-rich market, and the current national economic crisis does not appear to have impacted the demand for sweets in the area. But there’s no telling what the future could bring. I’ll keep an eye on both companies and report back in this space – purely in the interest of business education, of course…