Crumbs Closes Up Shop as US Cupcake Craze Wanes

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Americans may still be eating cupcakes, but they won’t be eating Crumbs anymore.

The iconic chain that helped create the cupcake craze has finally given up business after it grew too fast and encountered the petering out of the cultural phenomenon that birthed it. Crumbs Bake Shop notified employees on Monday that it would be closing all of its stores at the end of the business day, and management has turned to trying to figure out what to do with its assets.

While we pondered in 2009 whether the cupcake bubble had burst, it’s not like the cupcake phenomenon has completely crumbled. Premium cupcake chains such as Georgetown Cupcake (of TLC fame), Sprinkles (of cupcake ATM fame) and mini-cupcake maker Baked by Melissa still draw queues in the US, while Sex and the City‘s beloved Magnolia Bakery, founded in New York’s West Village, is drawing crowds to its first-ever shop in Japan.[more]

It’s not just other cupcake-makers who are to blame. Crumbs been facing competition from the French macaron craze sweeping America and one French pastry chef in particular: category disruptor Dominique Ansel, whose bakery in New York’s Soho neighborhood still attracts early morning line-ups as tourists and locals wait for his famed Cronuts and new innovations like his chocolate chip cookie shot.

While they will always be birthday party stalwarts, cupcakes in general have been going the way of muffins by gradually losing their grip on the peripatetic American populace, especially one increasingly in the grips of the return of low-carb diet thinking and healthier fare, from kale chips to Organic Avenue juices.

What’s more, the Crumbs brand was getting long in the tooth. The first Crumbs store opened in March 2003 on the Upper West Side of Manhattan, and quickly became well-known for innovative and oversized gourmet cupcakes, some topping more than 600 calories, in flavors such as cookie dough, caramel macchiato and red velvet cheesecake that retailed typically for $3.50 to $4.50 each. It also tested gluten-free-only locations.

Crumbs CEO Ed Slezak placed part of the blame on the cupcake itself, which he said is “too narrow of an assortment” and “too tight a niche to attract a sufficient number of people” daily, in an interview earlier this year with CNBC. “At the heart of it, I think that cupcakes by themselves do not attract enough people every day any longer,” he added. “Maybe when Crumbs was 10 stores, it most certainly did.”

In reporting dismal earnings earlier this year, it’s clear that Crumbs paid the price for expanding beyond those ten stores, with over-expansion a critical factor in its demise. The brand grew to 78 locations in 12 US states and the District of Columbia, including 17 stores in super regional malls, before the company began closing stores last year. 

Its stock once reached $13 a share after the company went public three years ago, but the listing fell below 30 cents a share last month and stopped trading July 1.

Alas, Crumbs, it was sweet while it lasted.

• Connect with Dale on Twitter: @daledbuss

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