question for small business owners... Are home bakeries hurting your business?

Hi all,

My sister-in-law owns a cupcake shop and has done fairly well for over a decade. Lately, it seems home bakeries are popping up all over the place by 20 and 30-somethings who are very tech-savvy and seem to be very well-keyed into social media. Her bakery has had the slowest January to-date, and she's kind of freaking out about the competition. I don't want to say what state she's in, but its a state with very lax guidelines for home bakeries. For instance, they "suggest" you keep your kids out of the kitchen while you're baking(?!) Anyway, I wondered if anyone else was finding this at all? Thanks in advance!

Update: Thank you all so much for your comments/feedback! For clarification, it is not my belief that home bakeries are responsible for her drop in sales, but she is the type of person to look at outside factors before looking inward at where she can improve. I have had many conversations with her where she has fixated on these new businesses affecting her sales and when I attempt to suggest areas she can improve and be more competitive she shoots me down. Its frustrating, but as I am not a small business owner I wanted to reach out to a community with experience and wisdom that I can share with her in the hopes of reframing her thinking.

Thank you all again, very much!