Crumbs: The Return of the Cupcake

Crumbs: The Return of the Cupcake

Back in July, Bridg’s Andrew Landau reported on the collapse of Crumbs Bake Shop. This article explained how the one-product store failed to adapt to the end of the cupcake trend, and was forced to close all 70 locations in a single day.

Three months later, Crumbs has officially re-opened thanks to Lemonis Fischer Acquisition Company LLC.

After reading about the return, it looks like our evaluation on the collapse was right on the money.

Here’s what you should know about this sweet revival, and the major changes Crumbs has made to their business model.

1. Expand product diversity.

Crumbs’ fortune followed the great cupcake boom of the mid-2000s.

It climbed to epic heights in the early days, becoming the first cupcake IPO in 2003, before crashing back to earth as the hype died down. Over the last ten years, Crumbs’s stock plummeted from $13 to  $1.27.

As Andrew previously mentioned, Crumbs’s one-product concept was the main source of its demise. With nothing but cupcakes to offer, consumers lost their interest in Crumbs when cupcakes went out of fashion and lost its value.

Acknowledging ‘lack of diversity’ as the greatest reason for Crumbs’ downfall, the restored business’ first move was to diversify the menu.

Now, in addition to the signature cupcakes, Crumbs will have a menu that includes cookies, brownies, more gluten-free options, and even frozen treats.

crumbscookies

It’s set to launch in December. Be excited!

This drastic change will result in lowering their cupcake offering by 20% to focus on greater product variety.

The Lesson: Consumer trends change on a monthly basis. Don’t put all your cupcakes into one basket.

While consumer habits aren’t exactly predictable, you can stay ahead of the game by consistently tracking your customer level data whether its collecting online browsing history or analyzing in-store purchasing history.

( Bridg Data™ allows you to track your customers’ buying habits across all channels.)

2. Quality over quantity. 

Crumbs’s expansion was too much, too fast.

Realizing this, Crumbs  has kept most of locations outside of NYC closed.  As of now, only 25 of the 70 stores have re-opened (Good news Angelinos, the Larchmont location made the cut).

Crumbs_map

Here’s a map of the current 25 open locations- DIVIDE AND CONQUER!

Rather than focusing on branching out as far as possible, Crumbs is now taking the company mission back to its original mom-and-pop approach by focusing more on consumer values.

As Andrew previously pointed out, Crumbs’s attention shifted from customer value to rapid commercialization. This was felt by customers, leading to a drastic decrease in traffic.

The Lesson: Focus on marketing quality products and  services to your present customer base before thinking too far ahead in terms of expansion.

3. Collaborate.

One half of the investor group, Lemonis owns other sweet companies like Key West Lime Pie Co., Wicked Good Cupcakes, and Sweet Pete’s, while the other half, Fischer Enterprises owns Dippin’ Dots and Doc Popcorn.

In addition to creating more product variety in the menu, Crumbs aims to fuse different types of foods from each of their new ownerships’ brands. This is the perfect opportunity for consumers of other brands to be introduced to Crumbs. For example, Dippin’ Dots fans can now try Crumbs’ new Dippin’ Dots Delight cupcake.

plus_dippin_dots

It’s like regular Dippin’ Dots but better, because you’re no longer limited by a spoon! 

This type of product fusion is a great way to bring fresh life to stale product.

Take Taco Bell’s Doritos Gorditas Crunch and Beefy Fritos Burritos, or Jack in the Box’s Spicy Sriracha Burger. Collaborating with another brand not only introduces new flavors to these companies’ menus, but also welcomes fans of Doritos, Fritos, and Sriracha into trying their products.

The Lesson: Collaborations can help create a channel to introduce unfamiliar consumers to your brand.

tacojack
Spice up your life!

Don’t want to be the next Crumbs?

Well, fortunately you live in 2014 and not 1914. While boom-and-bust consumer trends are still a problem, today’s forward thinking retailers have tools to fight back.

You need to know:

  • When loyal customers haven’t visited in a month.
  • When new customers have started to come in once a week.
  • When customers who have spent $5 a month suddenly spend $20.

You don’t need focus groups or big expensive consulting firms to stay alive. You just need to have a clear view of your customers.  If they’re a lapsing customer you want them to come back. If they’re new you want them to be loyal. If their spending has increased you want it to go up even more.

With a platform like Bridg, this level of understanding is possible.

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