Sometime in the past decade, cupcakes, the single-serving frosted cakes that moms lugged to classroom birthday parties, became OMGCUPCAKES!, a cultural phenomenon that had folks waiting in long lines and forking over three bucks or more for a gourmet red velvet (or carrot, mocha or gluten-free red velvet) treat. Search for “cupcakes” on Pinterest and–no wait, don't. Your browser might just explode.
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But the craze may be crumbling. As evidence, the Wall Street Journal points to New York-based Crumbs, the biggest player in the cupcake industry. After expanding rapidly to 67 locations across the country, the chain is now experiencing a major loss in sales.
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.
But are cupcakes really a dying fad or is this just a case of poor business management?
In a 2008 New York Times story, Crumbs founders Mia and Josh Bauer seemed determined not to follow in the footsteps of donut phenomenon Krispy Kreme.
“We look at them all the time,” Bauer told the Times. “We don't want to make the same mistakes by overexpanding.”
“I was a fanatic when they opened up,” she said. “They pirated themselves by overexpanding and the quality dropped immediately. Their choices were not the greatest. You could get them in the gas stations.”
“We will expand to places where there is a demand,” she said. “We want to be very careful and strategic and not to expand too quickly.”
Still, if the trend is really heading to Dunzoville, what will the next sweet fad be? Fancy push-pops? Mini-pies? Boozy popsicles? I, personally, vote for the mochi donut.
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