Crumbs Bake Shop announced Monday that it would be closing all of its stores.
The company, founded in 2003, was once the world’s largest cupcake vendor, according to The Wall Street Journal.
But in mid-2011, its same-store sales started declining just as the company was orchestrating a massive expansion. Crumbs was forced to begin closing stores, putting its expansion plans on hold.
That was the beginning of a downward spiral from which the company never recovered.
Here’s what led to the decline.
1. An increasingly crowded market. Crumbs’ same-stores sales started declining in mid-2011 as the cupcake market was rapidly growing more crowded. When Crumbs opened in 2003, there were only three bakeries devoted to cupcakes nationwide, according to Newsweek. By 2011, there were hundreds.
2. High real estate costs. Crumbs’ stores were too large for its needs, according to Darren Tristano, executive vice president at the food industry research firm Technomic. The company’s shops averaged about 1,000 square feet, with one outlet near Chicago measuring 3,300 square feet, Tristano told Crain’s New York Business reporter Aaron Elstein.
“That meant high rents and lots of extra space in places where shoppers seldom lingered,” Elstein wrote. All Crumbs really needed was enough room for a cupcake display case and a register.
3. Consumers have been losing interest in cupcakes. As Crumbs was expanding, analysts began warning that the nation’s cupcake craze was subsiding. The Wall Street Journal concluded last year that Crumbs’ downfall was the result of mass “gourmet-cupcake burnout.”
4. Despite falling same-store sales, Crumbs kept opening new locations. The number of locations climbed to 70 in 2013, up from 35 in mid-2011, when the same-store declines had begun.
Before closing all its stores Monday, the chain was down to 58 locations, according to Crumbs’ most recent filing with the SEC.