Just last year, Crumbs was touted as the world’s largest gourmet cupcake business with 70 stores globally (and arguably the largest cupcakes, clocking in 6 ounces, four inches tall and upwards of 600 calories)—but its sales had been falling off for several years, alongside sales of cupcakes as a whole across retail and foodservice channels.
According to NPD Group, in the 12 months to April 2014, cupcake servings declined 1% at US restaurants and retail shops, compared to an 8% increase in servings during the same period in 2011, when gourmet cupcakes were gaining popularity.
So what changed? Warren Solochek, vice president at NPD Group, says that the price-value relationship for many cupcake shops on Crumbs’ level simply couldn’t be sustained, coupled with the fact that cupcakes aren’t purchased very often.
“Given the current economy and the fact that there has been very limited growth in discretionary income, I think that there is a very low likelihood that gourmet cupcakes or cupcakes in general will be able to exist as a category onto themselves going forward,” Solochek told FoodNavigator-USA. “It’s hard to understand how they could generate enough ongoing business. I think everybody likes to buy cupcakes, and certainly gourmet cupcakes for special occasions or gifts, but for any kind of restaurant to exist, you need a lot of regular business.”
Crumbs was born on Manhattan’s Upper West Side in 2003, a few years after a scene from HBO’s “Sex and the City”—during which the main character munched on a cupcake from New York City’s Magnolia Bakery—incited a city-wide cupcake craze that quickly spread across the country. Gourmet cupcake shops began popping up everywhere, and supermarket bakeries answered by rolling out their own premium versions of the handheld cakes.