"I was under the impression that velvet is a type of texture related to clothing" is Nagesh's quick response to Chiyoko, somewhat under his breath so as to not disrupt the chain of conversation Laurie just started. 
"I'm willing to roll with anything," Manai answers. "I mean, we don't have any constraints, right? So we could make anything, from a gingerbread house to a temple, to a car..."
......do not make them a car. 
"I think everything involves a certain degree of structure and engineering logic to it, so yeah," she concludes with a carefree shrug. "What do you think? Would you like a temple better? It'd definitely a lot more open, right?"

"Gingerbread base," Galaxian adds, spreading his arms apart for dramatic effect. 
Ever the master of self-sabotage, the narrator muses, and then is promptly impaled by a certain lion-eared woman in the name of holiday spirit. 
Anyways, Nagesh kinda just nods along in a way that signifies he doesn't have anything to add but simultaneously is engaged in the conversation. 
"Do we have a collective opinion on food colouring?" Chiyoko asks. 
"Oh yeah," Galaxian goes. He blinks in rapid succession. "I think I remember being told before how big amounts of that can make things taste weird, and since this project is kinda big, we probably should consider that."
"I believe that is part of the reasoning behind red velvet," Chiyoko says. "Though it is mostly the visual effect..."
Guess the topic's back to red velvet again. Wonder why.
"Do you guys want a sample of red velvet? Like maybe cupcakes?" Galaxian offers, seemingly having noticed that at least two members of the group don't know what it is. "Or are you guys on a diet?"

"Oh, I believe the gingerbread component can include colouring--for instance, if one wanted the gingerbread to appear red--but yes, I was more so referring to the decorative components," Chiyoko specifies. 
Manai rubs her hands together, looking a little like a greedy gremlin in the process. She's probably not distracted from the actual topic, though. Hopefully.
"I suppose we are having a refreshment break?" Chiyoko adds, glancing over at Galaxian, who's eager as ever to start manifesting food out of nowhere and handing it out to others with no other regard. In fact, it looks like he's preparing more than just red velvet.
Ah yes, a break from getting distracted.

"I am not going to lie," Nagesh comments, "the premise feels like some sort of flavour overload. Specifically sweetness."
"Cupcaaakes," Galaxian says.
Maybe it wasn't necessary to prepare a multi-layer tray for five people...y'know what, never mind.
Nagesh takes a good long look at what is happening, contemplates asking if the wrappers are edible too, and then discards the idea. 
Anyways, it doesn't even take five seconds for two cupcakes to appear in front of everyone. Looks like they're skipping the getting-up step for now. ...though, the tray is still there, so on average it looks like they could do five cupcakes per person if they really wanted.
The cupcakes are pretty standard, really. It's the wrapping that gains more attention. They seem like custom-made wrappers for a specific occasion, probably for a little kid who really really likes cute cartoon versions of farm animals. Laurie has one with chickens and another one with cows and goats visibly baaing.