Caving underneath losses, Crumbs Bake Shop Inc. has sealed a high-end bakeries in Los Angeles and elsewhere after some-more than a decade of compelling a cupcakes that tapped a nation’s honeyed tooth.
Financially, a nation’s biggest cupcake sequence recently mislaid a batch inventory on Nasdaq and defaulted on about $14.3 million in financing. It mislaid $3.8 million in a initial quarter, scarcely twice a $2-million detriment in final year’s initial 3 months.
But a flourishing consumer antipathy for abounding desserts, generally ones like a prosperous Crumbs cakes, also indicates a cooling marketplace and presumably worse times forward for those bakeries that concentration usually on cupcakes, analysts said.
Stephanie Ellis, a mouthpiece for a New York bakery, pronounced employees during 48 stores in 10 states and a District of Columbia were told of a closures Monday, a final day of business. She did not contend how many workers mislaid their jobs. Crumbs had about 165 full-time and about 655 part-time employees during a finish of final year.
The association pronounced it would weigh a “limited remaining options,” including a Bankruptcy Court liquidation.
On Larchmont Boulevard in Los Angeles, shades were drawn and a tiny “Closed” pointer hung haphazardly on a doorway of a dilemma emporium that outlines that final Crumbs store in a area.
Larchmont locals were astounded that a tiny emporium sealed so quickly. They described it as “bustling” and a “very renouned area joint.”
“I am in shock,” pronounced Barry Cohanim, a manager during a adjacent Larchmont Beauty Center whose favorite cupcake season was cookies and cream. “People were always flitting by carrying a red bags, and we would always sequence boxes of them for a events.”
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The cupcakery had grown quick on a remarkable recognition of cupcakes as choice desserts after a strike radio array “Sex and a City” featured New York’s Magnolia Bakery in a early 2000s.
Crumbs non-stop in 2003 and charity giant, specialty cupcakes in a accumulation of flavors such as red velvet, fluffernutter and s’mores — eventually for as most as $5 each.
Competing cupcakeries, such as Sprinkles in Los Angeles and Georgetown Cupcake in Washington, D.C., popped adult opposite a nation and boasted lines out a door.
Despite a high prices, Crumbs survived a Great Recession and a industry’s 15% dump in sales in 2009, according to a NPD Group consulting firm, as Americans stopped splurging on specialty purchases.
As sales softened 8% industrywide in any of a subsequent dual years, Crumbs went open early in 2011 and saw shares strike a high of $16 by midyear.
But quick expansion, competition, high prices and changing consumer habits became too much. The sequence sealed some-more than 20 stores this year, including ones in Beverly Hills, Malibu, Glendale and Hollywood. The batch sealed during 11 cents a share Jun 30, a final day on Nasdaq.
“The disturb is fundamentally over,” pronounced Bonnie Riggs, an NPD grill analyst. “The marketplace is jam-packed and a newness has ragged off.”
Cupcake sales forsaken 6% in 2012 and were prosaic final year, according to NPD. They slipped 1% by a initial 4 months this year.
Pricey cupcakes interest to small, abundant demographics and to consumers who wish one ambience of a trend, Riggs said. People aren’t shopping a Crumbs cupcake any day.
“It’s an sparse purchase, and there’s not adequate business to means a judgment like that,” she said.
Others, though, see some-more of a cooling trend and a place for well-run cupcakeries.
Stable success has to do with gripping distance and cost eatable in an unstable, vacillating market, pronounced Kevin Burke, a grill attention consultant during Trinity Capital, a Los Angeles investment banking firm. Consumers, he said, also are changeable toward some-more sustaining snacks and less-indulgent desserts.
“Monstrosity, 600-calorie cupcakes that cost $5 a cocktail don’t fit in with yoga studios and extract shops,” he said. Crumbs was “competing in a changing marketplace with a product that was over a top.”
Charles Nelson, who with mother Candace started Sprinkles in 2003 out of their residence in Los Angeles, pronounced his sequence is still elaborating and sales are up.
Though he started it as a cupcake-only bakery, Nelson pronounced he now refers to Sprinkles as a “specialty dessert store” since it has altered with a market. The sequence sells ice cream and cookies, that still dark in comparison to sales of a famous cupcakes.
The other desserts incorporate Sprinkles’ categorical attraction, formulating such concoctions as cupcake-topped ice cream sandwiches and cupcake chunks swirled into ice cream. Nelson pronounced a sequence skeleton to open 10 some-more stores in a subsequent 12 months, with one in Crumbs’ former Glendale spot.
“We are unequivocally happy with a expansion trajectory,” Nelson said. “We still trust in cupcakes and a marketplace and know cupcakes are not dead.”
At Georgetown Cupcake, that non-stop in 2008 and now has a possess existence TV show, “DC Cupcakes,” executives also see clever growth. Its Los Angeles store, one of 20 nationwide, became “a renouned destination” as shortly as it non-stop final year, mouthpiece Farial Awan said.
Magnolia Bakery, meantime, is saying aloft sales not usually from expanding to 7 stores domestically and 7 abroad though also by charity other desserts, such as banana pudding, cookies and pies, that move in roughly half a sales.
Compared to prices during Crumbs, cupcakes are $3 any during Georgetown and $3.75 during Sprinkles, with mini options for less. Sprinkles also offers vegan, sugar-free and gluten-free options to attract health-conscious customers.
Crumbs also grew too quick in an inconstant economy, Burke said. The sequence swelled to 70 stores in 10 years, with a bulk of operations in high-rent areas such as Manhattan, Beverly Hills, Malibu and Greenwich Village.
“They fell plant to wanting to be in smart places with a top rent,” he said.
A few doors down from a sealed Crumbs store on Larchmont, Elan Tanzer sits with a organisation of friends during a Peets Coffee Tea Inc. store, blank a one object they mostly enjoyed with their morning coffee.
“Our crony would always move 8 cupcakes while we had a coffee,” she said. But she’s certain of one thing: “Red velvet. Red velvet will never die.”
Times staff author Chad Garland contributed to this report.
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