Market minnows: Cake Box could be a flyer over the next few years

Admittedly it feels a little dangerous backing a cake-seller so soon after the disaster that was Patisserie Valerie.

But if the house brokers at Shore Capital are anything to go by then Cake Box could be a flyer over the next few years.

According to Darren Shirley, analyst at the brokerage, “we’re expecting double-digit growth and this to be strongly cash generative. It currently has 111 stores and it should open 24 new ones per annum.”

Cake Box was founded by chef Sukh Chamdal in 2008 with the opening of a single shop in east London. Being a Sikh, he and his family couldn’t eat eggs because they are classed as meat and it is against their religion.

Undeterred, he wanted to find a solution so that he could have cake with his tea or when celebrating his daughter’s birthday.

He said: “My daughter told me that she wanted a birthday cake but not one with dead chickens in it. What do you do?”

Chamdal therefore took a £30,000 government grant and got to work creating an egg-free cake recipe.

He found the answer and the business grew rapidly, culminating in a float in June last year.

Recent results show that sales soared from £8.7 million in 2017 to £12.8 million in the year to March 2018, and pre-tax profits jumped 73% to £3.34 million.

Chamdal operates a franchise model which he says empowers and incentivises the shop owners.

The franchisees pay an upfront fee, in return for which they receive a fitted-out store, training and ongoing support.

They are also supplied with weekly batches of sponge cakes and fresh cream as well as jam and chocolate.