Staff members also place cupcakes on parking tickets administered to vehicles outside their stores.
"It has the ability to turn a really average situation into something manageable," Mr Frater said.
The idea blossomed after an upset young customer came into the store.
"We had a little girl come in with her dad and she was crying. She had just had her first haircut and didn't like it and the dad was trying but failing to fix things so we gave her a cupcake."
The system will work by nominations being emailed to the store or via social media with the hashtag #RandomActsOfCupcakes.
"Anyone can send through a nomination, if there is someone who has had a promotion or had a baby or someone who has had a really rough day at work," said Mr Frater.
"If they have broken up with their boyfriend or girlfriend, anything," he said. "Any situation a cupcake might make better."
The most deserving nomination will be selected from all those collected each week.
Mr Frater said Random Acts of Cupcakes would become a permanent part of the business.
The initiative was a play on words of "random act of kindness" that many people will associate with Random Acts of Kindness Day (RAK), an international movement where people perform selfless acts for strangers.
RAK New Zealand director Megan Singleton said the event had run for 10 years here and was beginning to spill beyond just one day.
"Since we have been running it we have started to see different businesses do 'random act' campaigns, it has become part of Kiwis' everyday vernacular."
On the web
Send nominations to randomact@petalcupcakes.co.nz or post to Twitter with the hashtag #RandomActsOfCupcakes
