Friday, May 17, 2013

Cupcake empires crash

It is not only the large highly organized political empires that can crash.  Commercial empires can crash.  First it was the Dutch East India Company, now it is the cupcake empire of Crumbs Bake Shop

Doubling in size in less than two years, it has expanded its outposts (retail stores) to 67 locations.

Forget Gold, the Gourmet-Cupcake Market Is Crashing
Emily Maltby and Sarah E. Needleman, Wall Street Journal, 17 April 2013 (hat tip: Big Picture)
After trading at more than $13 a share in mid-2011, Crumbs has sunk to $1.70. It dropped 34% last Friday, in the wake of Crumbs saying that sales for the full year would be down by 22% from earlier projections, and the stock slipped further this week.
Crumbs in part blamed store closures from Hurricane Sandy, but others say the chain is suffering from a larger problem: gourmet-cupcake burnout.
"The novelty has worn off," says Kevin Burke, managing partner of Trinity Capital LLC, a Los Angeles investment banking firm that often works in the restaurant industry...
"It's a short-term trend and we're starting to see a real saturation," he adds. "Demand is flat. And quite frankly, people can bake cupcakes."

There is some sort of cupcake shop in Raleigh, NC in a hip urban location on Glenwood Avenue.  I have never been to it, but my wife and then ~ 6 year old son have.  When they came home with their carefully packaged possessions, they looked like:  cupcakes.

Seems somewhat limiting to me, but then that's probably what a lot of Portuguese probably said at first about trying to sail south along the African coast:  "What for? There's nothing worthwhile down that way?"


kymber said...

bahahahahahah! oh Russell - sometimes you just kill me with your impeccable sense of humour! but it's true...not only political empires crash and i feel sorry for the poor cupcakes!

your friend,

James M Dakin said...

I love the dumbass empires. Dog breeding. It seemed like easy money. The empire crashes after the first litter or two. Folks don't have $500 for a dog, nor $5 for a friggin cupcake. Unless its Hostess of course.

Linda said...

I never "got" the whole gourmet cupcake thing. So, it crashed. I had heard it was sliding under. Now, I hear that macaroons are the latest trend.

russell1200 said...

Kymber: have no fear, with a little yeast and glutton, the cupcakes will rise, nice and fluffy, again.

Jim: $5 is probably a cheap cupcake. The big deal around here are various pet hotels, groomers, and what not. The other overbuilt empire was those places where you came in and prepared (except for heating) a weeks+ of food. Not a bad idea, but they were super cheap to build and the market was flooded. The nail places still seem to be hanging on.

Linda: macaroons? I have vaguely heard of them. Are they good? I am sure at some point my family will bring some home and tell me.

Linda said...


or this:

Not sure which. The first is what I know, have made, and eat.

russell1200 said...

Linda: thanks. I might try and see if my MIL can be persuaded to make some for me.