That’s the way the cupcake chain crumbles (or not)
The cupcake craze may be over, but Crumbs Bake Shop may live to sell its gourmet versions another day. Earlier this week, when the chain announced it was shutting its doors immediately, numerous business obituaries covered Crumbs’ rise as a result of the cupcake fad that was sweeping the country in the early 2000s. All fads come to an end, however, and there are just so many $4+ cupcakes even a gluttonous society is willing to buy.
But, as with Mark Twain, it appears as though tales of Crumbs’ demise may have been premature. According to various reports, Crumbs is close to securing financing from a group of investors, including Marcus Lemonis, chairman of Camping World and Good Sam Enterprises. Mr. Lemonis may be better known as the star of CNBC’s reality show "The Profit," which features stories about rescuing small businesses.
"We know that everyone has an emotional connection to the Crumbs brand and its products and we’re pleased to be in talks with various interested parties that are allowing us to pursue all of our options for the business, which includes consideration of restructuring alternatives," said Edward Slezak, the CEO and chief counsel of Crumbs, in a statement via The New York Times.
Mr. Lemonis and Fischer Enterprises, which bought Dippin’ Dots in 2012, are expected to provide necessary financing to Crumbs, with the two eventually buying the company outright.
According to CNBC, Mr. Lemonis views Crumbs as "a good brand that has lost its way." The plan would be for Crumbs to diversify its offerings and turn itself into a bakery with products beyond cupcakes.
An example for Crumbs to follow may be Magnolia Bakery, a company that may think it is the originator of the cup cake fad.
In an interview with The Wall Street Journal, Magnolia CEO Steve Abrams said, "It’s one thing to have a great product. But you have to use that to build something. That was their downfall. For us, cupcakes have been under 50 percent of sales since the day I took it over."
- CNBC’s Marcus Lemonis & Partners Near Deal to Buy Crumbs Bakery – CNBC
- Crumbs Bake Shop nears lifeline from investor group – CNBC
- Crumbs Cupcakes May Live Another Day – The New York Times (tiered sub.)
- Crumbs Bake Shop Closing Its Doors – The Wall Street Journal (sub. required)
- Magnolia CEO: Crumbs May Die, But the Cupcake Lives On – The Wall Street Journal (sub. required)
- Crumbs cupcake casualty can’t sugarcoat business – Chicago Tribune
- Crumbs, the cupcakery that couldn’t, closes up shop – The Washington Post
- Two Important Lessons From Crumbled Crumbs Bake Shop – Forbes
What lessons, if any, should be taken from the problems faced by Crumbs and the desire by companies to chase fads? What will it take for the company to succeed going forward?