Usually used as a derogative term for calling a person of wealth a spoiled 'you have it too easy' piece of shit brat!
Usually called to rich kids who drive BMWs and Mercedes-Benz's and get their college and college housing totally paid for and also get a hefty monthly allowance that's so great that they have absolutely no need to work in order to maintain their lavish lifestyle. This is a cake eater.
Synonymous with calling someone: Spoiled rich little fuck!
Tim: "Yeah, but dont worry about that cocky fucker, he's just another cake eater!"
It is now used as a nickname for all people who live in Edina, MN. Although meant to be an insult (for the dominantely white, rich, and stuck-up high school), many students from Edina now take pride in it. Example: An Edina sports shirt that read, "Cake: Breakfast of Champions"
This term is most well known by its reference to Edina native Adam Banks in "The Mighty Ducks."
Minneapolis kid: "Shut the fuck up before i rip you to pieces you fuckin cake eater"