Early this month, Crumbs, a brand at the helm of the high-end cupcake trend for over a decade announced the overnight closure of all its stores, and faced bankruptcy.
But amid an increasing number of questions about the start of an inevitable end to the cupcake bubble, star of CNBC business turnaround reality-show The Profit, Marcus Lemonis, told his network that he would be heading up an investor group seeking to bail out the beleaguered bakery.
He confirmed he had lent Crumbs “not that substantial an amount of money”, with plans to further invest and reinvigorate the company.
Is there any life left in the cupcake bakery model?
As soon as Carrie Bradshaw and her fashionable friends stopped by Magnolia Bakery in 2000, what was once considered kids’ party fodder was catapulted into a full-blown food craze.
The screen has been fond of the cupcake ever since. From Kristen Wiig’s aspirational cake business in the hit move Bridesmaids to magnolia bakery runs in fashion magazine blockbuster The Devil Wears Prada to the titular characters fledgling cupcake business in New York based sitcom 2 Broke Girls.
And, as America turned to comfort food during the recession, husband and wife team Jason and Mia Bauer’s Crumbs bakery, first opened in Manhattan in 2003, expanded rapidly, listing on NASDAQ in 2011. But success was relatively short lived. It lost $10.3m in 2012, and then a further $18.2m the following year, with many describing its public offering as premature. The firm was forced to delist this year due to a rapid fall in profits.
Crumbs offer is based entirely on high-calorie, super-sized cupcakes, retailing from $3.50. The lack of diversity in its offer comes first in many analyses of the chain’s demise. Steve Abrams, CEO of rival store Magnolia Bakery described Crumbs as “a one trick pony” in a Wall Street Times blog. “Is there enough room for a one-product company?” he asks.
This is first on the list for Lemonis in his attempt to turn the company around, he said. “I like the brand, I like the concept, but in no universe in the long run does a … cupcake retailer make it,” he said. “You have to add different lines of revenue.”
According to NPD group, In the 12-month period ended in April, cake servings at restaurants declined one percent, compared with an 8 percent rise in the corresponding period of 2011, when the cupcake trend was going strong.
Food trends have moved on and it is certainly difficult to imagine Carrie Bradshaw’s equivalents tucking into cupcakes 14 years down the line – they are far more likely to be eating cronuts – or to be caught hanging round a Brooklyn street food market. But is this really the end of the cupcake?
It’s an absolute no from Abrams. “Can it be a craze if it has lasted 14 years? This is not going to kill the cupcake.”