The cupcake crumbles: The demise (and resurrection) of Crumbs Bakery

Crumbs cupcakes have a devoted following.

Crumbs cupcakes have a devoted following.

crumbs logo

News broke earlier this month that Crumbs Bakery, the cupcake vendor that burst on the scene at the height of a national cupcake boom to became a fixture in our national malls, is a bust, and is filing bankruptcy. In terms of its impact on its industry, it would be as if Godiva closed all of its chocolate shops: a very big shock to chocolate vendors everywhere.

Crumbs started as a single bakery in New York City in 2003 and went public in 2011. Its signature softball-sized cupcakes incorporated Girl Scout cookies and other treats and drew a delirious fan base. But, the fad appears to be waning. The chain began shutting unprofitable shops this year. On July 1, Nasdaq suspended trading of the company’s shares, saying it no longer met requirements for market capitalization, net profit or shareholder equity (New York Times, July 8, 2014).

So, what went wrong? I’ve got a few ideas, based on our own experiences as a chocolate manufacturer, wholesaler and retailer.

Several years ago, Bacci Chocolate Design waded into the cupcake pool ourselves, launching Boston Cupcake Girl. We liked cupcakes, had all of the ingredients on hand, and it felt like a smart move, especially for our Winchester store which needed something special to bring the people in the doors. It enabled us to test out the farmers markets, where the product was enthusiastically received. Boston Cupcake Girl lasted a while but we realized we were losing money on unsold items. No one wants yesterday’s cupcake! Eventually we dropped the line and consider ourselves wiser for the experiment.

Crumbs, unfortunately, had a single product, and honestly, not a great one at that. It was a niche product with no guarantee of continued success once the fad passed. They did not appear to be prepared to expand their line or offer other items. Additionally, their decision to locate in malls cost them a small fortune in rents. The writing on the wall was always there.

At Bacci Chocolate Design, we are keeping a constant eye on food trends to keep our business innovative and fresh. We also diversify our offerings through our corporate gifts and national reach. Boston Cupcake Girl was a great experiment, and we learned so much about trends and affordable luxuries, and where and when people enjoy eating cupcakes. Strolling a farmers market on a summer day? Yes. Trudging through a mall lugging shopping bags? Not as much.

At the recent Specialty Foods Association Fancy Food Show in New York City we were gratified to see that chocolate continues to grow as a specialty category, so we feel we are well placed to enjoy steady growth as a business.

The Crumbs story may not yet be finished. The most recent news is that reality television personality Marcus Lemonis plans to acquire the chain out of bankruptcy and reopen the Crumbs shops. He plans to take the company beyond just cupcakes, possibly adding ice cream and other snacks to attract more customers, according to news reports. That’s a good start. We’ll be watching. And we’ll also be keeping an eye on all of those frozen yogurt shops that have sprung up out of nowhere.

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