Cupcake shop Crumbs shuttering all its stores

Lauren Glassberg has more on what made the cupcake shops crumble.
Tuesday, July 08, 2014
Crumbs says it is shuttering all its stores, a week after the struggling cupcake shop operator was delisted from the Nasdaq.

The New York City-based company said all employees were notified of the closures Monday. A representative for Crumbs could not immediately say how many workers were affected or how many stores it had remaining on its last day.

"Regrettably Crumbs has been forced to cease operations and is immediately attending to the dislocation of its employees while it evaluates its limited remaining options," the company said in an emailed statement. That will include filing for Chapter 7 bankruptcy liquidation.

A press release from its website in March listed 65 locations in 12 states and Washington, D.C. The website had not been updated with notification of the closures late Monday.

Crumbs was founded in 2003 and went public in 2011, selling giant cupcakes in flavors including Cookie Dough and Girl Scouts Thin Mints. More recently, however, it had been suffering from a steep decline in sales. For the three months ending March 31, Crumbs Bake Shop Inc. reported a loss of $3.8 million, steeper than the loss of $2 million from the same period a year ago.

The company had warned in a filing with the Securities and Exchange Commission this past May that it "may be forced to curtail or cease its activities" if its operations didn't generate enough cash flow.

As of the end of last year, Crumbs listed about 165 full-time employees and about 655 part-time hourly employees working in its stores.

At the Wall Street location Tuesday, customers offered an analysis.

"They're a little overpriced, especially during a recession, eight dollars for a cupcake seems a lot, it's a little drastic," one customer said.

"I do think their cupcakes are awfully big, maybe if they were a little smaller," said another.

Some were even surprised to learn that it was publicly traded.

"I had no idea that that many calories were on the Nasdaq, that's pretty surprising," said Tim Pratt.

Pratt was actually disappointed to learn of Crumbs' demise. He wooed his now wife with Crumbs.

"I said I figured we'd get some cupcakes and she said, 'well what time?'", he said. ('So you lured her with Crumbs?') "I did, I'm surprised to see them close," he said.

The company isn't sure what it will do next. It could file for bankruptcy, but it's also considering licensing its brand through its coffee and cake mixes.

In the meantime, there are employees to consider, as many as 800..most of them hourly workers.

Related Topics:
business cupcakes New York City
(Copyright ©2014 by The Associated Press. All Rights Reserved.)

Load Comments