The rise and fall of the Sprinkles empire

After the dotcom bubble burst in the early 2000s, Candace Nelson reevaluated her career.

- By Suhauna Hussain

KAYLA BARTKOWSKI Los Angeles Times

SPRINKLES Cupcakes in Manhattan Beach is locked up. An episode of "Sex and the City" helped propel the burgeoning cupcake industry.

She had just been laid off from a boutique investment banking firm in San Francisco's tech startup scene and realized she wanted a change.

From her home she launched a custom cake service that soon morphed into an idea for a cupcake-focused bakery. Nelson and her husband — whom she met at the Bay Area firm where she had worked — then pooled their savings, moved to Southern California and together opened Sprinkles Cupcakes in a 600-square-foot Beverly Hills storefront.

The store quickly sold out on opening day in 2005, and over the next two decades the Sprinkles brand exploded across the country, opening dozens of locations of its specialty bakeries as well as mall kiosks and its signature around-the-clock cupcake ATMs in several states.

But now the iconic cupcake brand is no more.

Sprinkles abruptly shut down all of its locations on Dec. 31, leaving hundreds of retail employees across California, Arizona, Florida, Nevada, Texas, Utah and Washington, D.C., in a lurch with little notice and no severance and scrambling to fulfill a surge of orders from customers clamoring to get their last tastes.

Sprinkles' demise comes at a tough time for the food and beverage industry. At brick-and-mortar food retail locations, the nonnegotiable ingredient and labor costs can be high. And shifting consumer sentiments away from sugar-filled sweets and toward more healthy and functional options, strained pocketbooks and pushes by federal and state governments to nix artificial colors and flavoring are creating uncertainties for businesses, those in the food industry said.