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.