Cupcake Chain Crumbs Closes All Stores
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The nation's largest cupcake chain is no more.
On Monday, Crumbs Bake Shop notified all employees that it would be closing all 65 stores at the end of the business day, reports The Wall Street Journal. The company is now evaluating its limited remaining options, including bankruptcy.
Crumbs' shop closure comes on the heels of its delisting from the Nasdaq on July 1. The exchange's decision to force Crumbs to delist stemmed from Crumbs' failure to meet the minimum $2.5 million stockholders' equity requirement.
Until today, Crumbs was the largest cupcake chain in America. However, as the cupcake craze has died down, the chain has struggled in an overcrowded marketplace. In the first three months of this year, the company's net loss widened to $3.8 million from $2 million the same period a year ago. Sales were at $9.1 million, down 25 percent from a year ago.
With little hope for the future – Crumbs stated in May that it expected to record net losses in future periods – the drastic move of shutting down shops seemed like the only solution. Indeed, shops were already shutting down on their own accord, with seven underperforming stores closing in the month and a half from the end of March to mid-May.
Crumbs, which began as a single bakery in New York City in 2003, debuted on the Nasdaq in June 2011 at $13.10. When the delisting announcement was filed on June 26, shares were trading at 23 cents. Shares ended the day on June 30 at 4 cents.
However, even as media outlets cite Crumbs' downfall as a sign of the end of the cupcake era, competitors are convinced that the cupcake isn't dead. Some are diversifying: Sprinkles branched out into ice cream and cookies in May 2012. Others are just getting started: following three victories on Food Network's Cupcake Wars, Sweet Arleen's began franchising last year and believes that the franchise is on the cusp of national growth.
“Cupcakes are a staple of the dessert landscape in the U.S., and they’re always going to be,” Georgetown Cupcakes co-founder Sophie LaMontagne recently told Entrepreneur.com. Crumbs may have crumbled, but other cupcake stores are confident that the bite-sized treat will never die.