Celebrating the Cronut’s 10th birthday, we can also enjoy its economic side.
Let’s take a look.
Cronut Economics
Described as “Pastry Nirvana,” the Cronut was introduced on May 10, 2013, at Dominique Ansel’s NYC Bakery in Soho. With no room for more staff, he baked only 200 daily. Affordable, the price was $5.
Cronut Markets
Too low, the $5 price left many on the demand side unhappy or maybe just envious. Similar to a ceiling, the price was below where the market wanted to go. As a result, only 10 minutes after opening, none might remain. Also as a result, there was rationing and a black market. With Chef Ansel cutting the maximum purchase from 6 to 3 Cronuts, some people resorted to Craigslist.
You can see the shortage was the distance between quantity supplied and quantity demanded at $5:
Property Rights
Knowing that ownership was also a crucial market ingredient, Chef Ansel trademarked the Cronut. Protecting his right to the name, the law did not stop others from copying the recipe. They just could not call it a Cronut (or any name that was so similar it could create confusion). In a landmark case, the 7th circuit declared that there could be “no monopoly in the copyright sense in the ideas for producing certain foodstuffs. Nor can there be copyright in the method one might use in preparing and combining the necessary ingredients.”
Our Bottom Line: Behavioral Economics
Most of all though, the cronut is the story of a phenomenon. With innovation a typical entrepreneurial characteristic, Chef Ansel experimented for three months with temperatures and pastries and fillings. The result was a rose glaze that enveloped a Tahitian vanilla ganache.
But now we have the crucial part.
From there, Instagram and FOMO took over. It was not just a food. One professor called the Cronut phenomenon “social currency.” He was selling a message that said the people who could get a Cronut were smart and special. They had good taste and access to something most of us could not get ahold of. At Grub Street, he had a blog post that said, “the Cronut may very well change your life.”
You see what happened. We have much more than food. We have an exclusive experience.
And even now, the Cronut is limited and photogenic. Chef Ansel’s Las Vegas and Hong Kong bakeries don’t all sell Cronuts, Through May 31, his 10th anniversary Cronut with raspberry jam and Pistachio ganache will be available.
My sources and more: Having heard about the Cronut’s birthday on NPR, I found this Gothamist history and the story of its trademark. I also returned to our own posts about the first Cronut, here and here,.
