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Back in 2003, a small bake shop opened in the Upper West Side. What made this bake shop so unique, however, was that they exclusively sold gourmet cupcakes. The bake shop: Crumbs. The family-owned company pioneered the cupcake craze across New York City, and soon began rapid expansion, so that by the end of the decade, it had locations across the country. Back in 2011, it was purchased by a shell company, and went public later that year. Since then, they faced serious financial problems, losing $10.3 million in 2012 and $18.2 million in 2013. In June, the stock plummeted below 30 cents, which prompted Nasdaq to suspend Crumbs’ stock from the exchange. In response to this, the cupcake shop is closing all of its stores and ceasing operation.
Crumbs cupcakes like these are no longer available to consumers, due to the stores’ abrupt closing.
The chain’s website listed the closings as temporary, however, there is little hope that this will be fixed. As a result of the shutdown, hundreds of employees and part-time workers were let go. They had 48 stores in 10 states and Washington, DC, all of which closed Monday night. In the previous two years, it had closed many other stores. According to Craig Garthwaite, a business strategy professor at Northwestern University, the closure isn’t that surprising. Crumbs is making a product that’s ultimately very easy to imitate, and in the end, they’re selling a brand; making a cupcake isn’t too hard. There wasn’t much reason for people to choose Crumbs over other cupcake venues, since in the gourmet market, it’s more likely that customers prefer niche companies with local ties. Even as more cupcake shops opened up in an attempt to capitalize on the cupcake trend, demand for gourmet cupcakes has declined.
While cupcakes are always going to be popular, the gourmet fad is fading away. After two successive years of rapid decline after going public, Crumbs CEO Edward Slezak acknowledged that the company needed to evolve its business model drastically. Despite the warning signs, the announcement that all shops have closed has come as a major shock to both customers and employees. Less than a month ago, shops in the Tri-State area launched a new breakfast menu and gave away free morning pastries.
Maria Haymandou 