Guess Which Giant Cupcake Empire is Crumbling?
The cupcake craze, once a “pop-culture supernova,” is on its way out, and so too is Crumbs, the supersize cupcake shop that capitalized so intensely on the pastry phenomenon, reports Crain’s New York.
The once super-trendy bakery chain saw its highest stock price in 2011 (approximately $14 a share) and has since then experienced dwindling sales, due in part to Hurricane Sandy, which cost the New York-based company an estimated one-time loss of $700,000.
Currently, a single share of Crumbs stock is roughly 38 cents.
In 2013, the company stated its intention to close a number of its underperforming stores, and made an effort to reach other markets by expanding to supermarkets. Earlier this year, Crumbs also introduced a line of cake mixes in partnership with a gourmet bake mix company.
In the company’s annual report, Crumbs’ accountants reported of the company that there was “substantial doubt about its ability to continue as a going concern.”
A new management team, under the helm of CEO Edward Slezak who joined the company in Fall 2013, is faced with the daunting task of recovering from “growing losses and a fast-dwindling pile of cash.”
Darren Tristano, executive vice president of food-based consulting firm Technomic, pointed to the repercussions of attaching to such an inflated trend.
“The story… is taking a single product with a high craving factor and overinvesting in it," he told Crain’s.
Karen Lo is an associate editor at The Daily Meal. Follow her on Twitter @appleplexy.