Poof -- 'crumbs' Is Gone

Business By -K8memphis Updated 16 Oct 2014 , 3:23am by mariel9898

-K8memphis Posted 8 Jul 2014 , 4:10pm
post #1 of 25

sad-- i hate stuff like this especially in the baking world --

 

3 years ago:

 

Quote:

 Crumbs Bake Shop, the country’s largest cupcake chain, will go public through a $66 million merger with an investment company, the57th Street General Acquisition Corporation.

 

http://dealbook.nytimes.com/2011/01/09/cupcake-bakery-to-go-public-in-merger/?_php=true&_type=blogs&_r=0

 

now:

 

Quote:

 Crumbs says it is shuttering all its stores, a week after the struggling cupcake shop operator was delisted from the Nasdaq.

 

http://money.msn.com/business-news/article.aspx?feed=AP&date=20140708&id=17756352&ocid=ansmony11

24 replies
ellavanilla Posted 8 Jul 2014 , 4:22pm
post #2 of 25

i was just about to post this article!

http://www.washingtonpost.com/news/morning-mix/wp/2014/07/08/crumbs-the-cupcakery-that-couldnt-goes-broke/

 

 

wonder about their biz plan?

MBalaska Posted 8 Jul 2014 , 5:01pm
post #3 of 25

The talking heads on the business channels are calling the cupcake business a "fad" and a passing one at that.

-K8memphis Posted 8 Jul 2014 , 5:16pm
post #4 of 25

Quote:

Originally Posted by MBalaska 
 

The talking heads on the business channels are calling the cupcake business a "fad" and a passing one at that.

 

sounds about right to me -- for a free standing business -- i never knew how they did it in the first place -- but still i'm sorry for them and all the employees

embersmom Posted 8 Jul 2014 , 5:21pm
post #5 of 25

Quote:

Originally Posted by MBalaska 
 

The talking heads on the business channels are calling the cupcake business a "fad" and a passing one at that.


I was a little taken aback when I heard it, but not entirely surprised for this very reason.

 

Don't know if anyone else has seen such, but our local BJ's has been selling Crumbs cupcakes in packages of 3 for the last couple of months, much like the way Cake Boss did with his line of cakes (they're a dud, btw, at least in my store's district -- nobody wants to spend more than $20 on a cake simply because of the brand.  They're not even very tasty, IMO). 

 

There was an article in the NY Times, I believe, a few months ago about Sprinkles setting up ATM-like dispensers for their cupcakes.  Presumably the machines are filled with fresh product every morning, you choose a flavor, deposit your money, and presto, a cupcake!  Wonder if they're making a profit on them...

Dayti Posted 8 Jul 2014 , 5:22pm
post #6 of 25

I certainly don't agree with the opinion in the article that what people want now are cronuts!!! That was over before it even started...yuck.

MimiFix Posted 8 Jul 2014 , 5:29pm
post #7 of 25

I wonder how this will affect cupcake sales in general. Now that the iconic Crumbs has suddenly closed every store, it might reflect poorly on this product category. 

MBalaska Posted 8 Jul 2014 , 5:56pm
post #8 of 25

The news just said that one single cupcake had 780 calories in it.  Wow  those must have been big cupcakes.

Most likely it was simply poor business/management choices that collapsed the organization.  Cupcakes will still be rolling along as they do, wonderful delicious handheld bites of yummy!

Dayti Posted 8 Jul 2014 , 6:01pm
post #9 of 25

Quote:

Originally Posted by MBalaska 
 

The news just said that one single cupcake had 780 calories in it.  Wow  those must have been big cupcakes.

Most likely it was simply poor business/management choices that collapsed the organization.  Cupcakes will still be rolling along as they do, wonderful delicious handheld bites of yummy!

They are huge...bigger than a Starbucks muffin and slightly more calories. They did offer various sizes though, it's not like they only sold the massive ones.

Agree that it was likely poor management/shareholder demands, and that cupcakes will still be around for a veeery long time (well I hope so...I sell them to make a living...!)

embersmom Posted 8 Jul 2014 , 8:22pm
post #10 of 25

Quote:

Originally Posted by Dayti 
 

I certainly don't agree with the opinion in the article that what people want now are cronuts!!! That was over before it even started...yuck.


Heh, we just started offering them.  We can't keep them in stock!

TheSugarLab Posted 9 Jul 2014 , 12:57am
post #11 of 25

I remember thinking they were way too big! The closest one to me was about 45 away and most of my staff hadn't heard of them. I used to think you could only get away with just cupcakes if you were one of the "big guys", but I guess it doesn't always work out even for them. One of the main reasons I don't just sell cupcakes. People are asking for more than cupcakes. 

costumeczar Posted 9 Jul 2014 , 1:22am
post #12 of 25

They were talking about this on a talk show and one of the hosts said that she had friends who had started saying "I can make those at home myself" and that people were complaining about the prices. Too much expansion, too much competition.

MBalaska Posted 9 Jul 2014 , 1:59am
post #13 of 25

You just can't make people buy something that they don't want to buy.  NO matter now wonderful you think that your product is.  Ya gotta give 'em what they want.

and if that means that you have to change with the times, and you choose not to, then you'll get left behind with the 'Pet Rocks' and 'Cabbage Patch' dolls.

Norasmom Posted 9 Jul 2014 , 2:18am
post #14 of 25

Although I believe in pricing so as not to undercut, I found Crumbs to be expensive, more expensive than they should have been.  Going public, expanding too quickly, relying heavily on investment capital as opposed to profits and putting shops in high rent areas may have been some of the reasons they went kaput.  I am sad for them, though.  Someone's dream has ended, as have about 700 jobs.

mariel9898 Posted 9 Jul 2014 , 2:30am
post #15 of 25

I remember Crumbs when they first opened, then when they opened across the street from Bryant Park near my office. It was the the place to go for cupcakes and we used to order them all the time.

 

To me, Crumbs going bust is not about people not wanting cupcakes anymore, it's about what happens when a business is bought out by a private equity company and taken public. Then it's not about the product anymore, it's about money, money, stock price and more money. Private equity companies e do not care about products, they care about making money. Crumbs cupcakes used to be very good, nice tasty cakes in several flavors, the icing contained real butter and some shortening and tasted very good for American style buttercream. I really liked the pistachio and the coconut. I always thought they were too big, but they were good. Then came the investors, the public listing and the money trail and it all went downhill. Gone was the real butter, in was a noticeably artificial taste to their products and just yuck! The quality of the products just went downhill because the company no longer cared about quality but about making as much money as possible. The last time I had a cupcake from Crumbs it tasted of staleness and shortening. 

 

People will pay $4 for a really good cupcake. People will not pay that much for a really bad cupcake. Especially when there are plenty of places to get really good cupcakes for less than $4. If you are going to be upscale (and pay upscale rent), then be upscale, you can't make a product that tastes like something that you can get at any convenience store for less than $1 and expect to get $4 or more for it.

 

Three years ago when Crumbs went public, I predicted it would be out of business within 5 years and I remember saying don't take me up on that because that's a sucker bet.

 

If anyone is interested in a really good, cupcake in NYC try Sugar Sweet Sunshine. They are a good size and they make a very nice Swiss Meringue type buttercream and the cupcakes are only $2 each, a price which was only recently raised. And no, I have no affiliation to them.

 

So the moral of this story is: Beware Private Equity Money. Beware of anyone saying that your product is so good that with their help you can put one on every corner and mall in America and will be a gazillinaire. Crumbs is not the first to fall for this and it's won't be the last.

Norasmom Posted 9 Jul 2014 , 2:40am
post #16 of 25

The private equity investors lost a ton of $$ as well, but no worries for them, they have more.  :D  LOL  

mariel9898 Posted 9 Jul 2014 , 2:55am
post #17 of 25

Quote:

Originally Posted by Norasmom 
 

The private equity investors lost a ton of $$ as well, but no worries for them, they have more.  :D  LOL  

 

Somehow I doubt they lost that much, though the stock peaked only a few months after going public and never went much past $5+ per share.

liz at sugar Posted 15 Jul 2014 , 1:27am
post #18 of 25

If any of you are fans of the show "The Profit" on CNBC, you'll be interested to know that Marcus Lamonis just stepped in to provide financing for Crumbs, paying their payroll and bankruptcy filing expenses.  He will look at the profitability of each store, look at expanding the product line to other sweets, etc.  I am guessing it will be a featured company on his show this fall or winter.

 

If you haven't watched the show, it really emphasizes the basics of business in each episode.  I highly suggest it!


Liz

-K8memphis Posted 15 Jul 2014 , 3:44pm
post #19 of 25

good to know, liz -- tu --

 

i will look for this -- hope they pull it out of the fire -- now it's gonna be fun to watch for it's resurgence/resurrection --

 

go cru-umbs go cru-umbs !

chassidyg Posted 13 Oct 2014 , 3:39pm
post #20 of 25

I figured Sprinkles would go under before Crumbs. I thought Crumbs cupcakes tasted a whole lot better then Sprinkles. I couldn't even get my kids to eat a Sprinkles cupcake. I wasted $43 on a dozen no one in my house would eat!

enga Posted 13 Oct 2014 , 6:16pm
post #21 of 25

Quote:

Originally Posted by mariel9898 
 

I remember Crumbs when they first opened, then when they opened across the street from Bryant Park near my office. It was the the place to go for cupcakes and we used to order them all the time.

 

To me, Crumbs going bust is not about people not wanting cupcakes anymore, it's about what happens when a business is bought out by a private equity company and taken public. Then it's not about the product anymore, it's about money, money, stock price and more money. Private equity companies e do not care about products, they care about making money. Crumbs cupcakes used to be very good, nice tasty cakes in several flavors, the icing contained real butter and some shortening and tasted very good for American style buttercream. I really liked the pistachio and the coconut. I always thought they were too big, but they were good. Then came the investors, the public listing and the money trail and it all went downhill. Gone was the real butter, in was a noticeably artificial taste to their products and just yuck! The quality of the products just went downhill because the company no longer cared about quality but about making as much money as possible. The last time I had a cupcake from Crumbs it tasted of staleness and shortening. 

 

People will pay $4 for a really good cupcake. People will not pay that much for a really bad cupcake. Especially when there are plenty of places to get really good cupcakes for less than $4. If you are going to be upscale (and pay upscale rent), then be upscale, you can't make a product that tastes like something that you can get at any convenience store for less than $1 and expect to get $4 or more for it.

 

Three years ago when Crumbs went public, I predicted it would be out of business within 5 years and I remember saying don't take me up on that because that's a sucker bet.

 

If anyone is interested in a really good, cupcake in NYC try Sugar Sweet Sunshine. They are a good size and they make a very nice Swiss Meringue type buttercream and the cupcakes are only $2 each, a price which was only recently raised. And no, I have no affiliation to them.

 

So the moral of this story is: Beware Private Equity Money. Beware of anyone saying that your product is so good that with their help you can put one on every corner and mall in America and will be a gazillinaire. Crumbs is not the first to fall for this and it's won't be the last.

You hit that nail right on the head. Quantity before quality never works and greed doesn't help matters. 

cakebaby2 Posted 13 Oct 2014 , 6:44pm
post #22 of 25

Is "sprinkles" that dame who used to pontificate on cupcake wars?

Always thought she was too sweet to be wholesome 

-K8memphis Posted 13 Oct 2014 , 8:16pm
post #23 of 25

Quote:

Originally Posted by cakebaby2 
 

Is "sprinkles" that dame who used to pontificate on cupcake wars? 

 

 

yes

Pastrybaglady Posted 15 Oct 2014 , 5:29pm
post #24 of 25

I know this is an older thread but I just saw a box of Crumbs cake mix at Target yesterday.  So they're still trying to make a go of it.  This way makes sense if they were no longer using fresh ingredients anyway.

mariel9898 Posted 16 Oct 2014 , 3:23am
post #25 of 25

Crumbs is actually back:

 

http://www.entrepreneur.com/article/238415

 

Not sure how good it will be.

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