There are many different ways to decorate a cake with an image, but a great way to create a personalized cake is with an edible photo. You'll want to start by finding a local bakery that offers custom cake picture printing. These pictures are created using edible ink and can be inserted onto nearly any cake, whether you plan to buy a store-bought cake or make your own.
The best pictures for a cake are generally rather simple, with few minor details and a simple background, because the printers that create the edible pictures are typically rather low in resolution. The bakery will tell you what size picture you need to bring in. You might also want to think about the colors in the picture, as some colors are more appetizing than others. Most bakeries are able to work with digital files, so you don't need to print out a photo that you have saved on a disk or a jump drive.
If possible, crop the picture before you bring it to the bakery, so that you get the exact image that you're looking for, minus any unnecessary background images. They may be able to add some text as well, such as a name or phrase across the top or bottom of the picture. You can even order edible ink pictures online. They will come shipped to you in a plastic bag and don't need to be refrigerated until the bag is unsealed.
You can apply an edible picture to nearly any type of cake, from sponge cake to regular old chocolate or vanilla. Virtually any type of icing will work as well, including butter-cream, sugar paste, and fondant. However, you may want to select a lighter color frosting (white is ideal), because edible photos are typically made from very thin, semi-transparent icing.
To preserve the quality of the picture, don't take it out of the sealed bag until you're ready to use it. Wait several minutes so that the picture starts to dry out a little. This makes it easier to peel away the backing sheet. Even so, be sure to peel the backing sheet off gently; it should peel off easily without any force. If it's too humid, continue to let the photo dry until it slides easily off of the backing sheet, but don't leave it overnight or it will likely dry out too much and crack.
Once you have the backing off of the picture, you're ready to apply it to your cake. Your picture will apply and blend best on slightly damp frosting. It won't adhere well to frosting that has dried to a crust, but frosting that is overly wet can cause the ink to run. You can dampen overly-dried frosting using a fine spray or a dampened pastry brush, but don't over-wet it and never wet the photo itself (this will cause the image to run together).
Carefully place the picture on your prepared cake, starting with the middle first and working your way towards the edges. Using dry fingers, you can gently smooth out any wrinkles or bubbles that appear (if your fingers are damp, you could smear the ink). If the icing happens to tear, you can usually mend it by gently pressing it back together with a dry finger and waiting an hour or so.
When done correctly, your picture should appear as if it was painted directly onto the frosting. However, if there are visible edges (most often dependent upon how dry the icing was) you can camouflage them with some pipe icing.
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