Is the announced demise of Crumbs—the 50-unit national cupcake chain—a culinary earthquake whose accompanying tsunami will now wipe out cupcake shops across the country? Yesterday, papers and business blogs immediately proclaimed the end of the cupcake trend as the obvious explanation. “Cupcakes are over,” shouts a pundit. “Too much reliance on a single product,” says another expert.” “Simply a ginormous calorie bomb,” comments another. Even “too expensive” was listed among the many of the chain’s cupcake crimes.
Should cupcake businesses everywhere throw out their muffin pans, burn up the liners and make plans to become the next salad bar? Maybe, if you believe these supposed “experts.” But let’s all hold on a minute before proclaiming the end of an entire segment of the pastry business and dig a little deeper into the real reason businesses fail.
It’s always sad to see any business collapse, no matter how big or small. Whatever the cause, Crumbs executives and team members had their hopes, dreams, ambitions and incomes crushed with this announcement. No one plans to fail. There are vendors who will be stiffed, rents left unpaid and earned wages owing. Overnight, an insured employee may no longer have medical coverage. Stores will be locked and product left molding.
It will be a difficult time for many. ICE has sent graduates and externs to work at Crumbs—some had risen to executive positions. On the other hand, I remember assisting a student who was in love with an expensive but terrific location for a small café in the suburbs. She was very close to signing a lease until she received a call that Crumbs swooped in at the last minute and made a higher offer the landlord couldn’t refuse. Now that landlord is learning how the cupcake crumbles.
So what happened at Crumbs and what are the lessons to be learned by students who want to open a food business? It’s easy for experts say the trend is over, but I don’t think so. Aren’t we over-cookied? Hamburgered? Hot Dogged? Donuted? Trends peak and then they stabilize. A few even dissipate or fade away, but they also evolve.
What happened to Crumbs is probably a combination of many things. As a professional who follows restaurant successes and failures and uses the stories as teaching tools, I’ve found that the reason many—if not most—fail is “not in our stars but in ourselves,” as they say.
The aforementioned “causes” of Crumbs’ failure, now its obituary, are just the symptoms—not the disease. It’s the operator and what goes on behind closed doors that most often lead to any failure. Was there executive strife, general greed, boardroom patronage, biased decision-making or imprudent strategies? The truth could touch on some of these factors and more. Changing trends can make for choppy waters, but skilled captains can navigate through. If and when the story does come out, I won’t be surprised that the truth will be far more complex than the early critics predicted. But as present and future restaurateurs and business owners, our focus should be the inside of corporate headquarters, not the outside world.
For ICE students interested in opening a single-product business, there are many opportunities for analysis. What really goes into making this type of business a success? To start, you need a high traffic and appropriately-sized location, strong management, a workable rent, flexibility (in case product diversification is needed), an understanding of market flow, and a top-notch and unique product—not to mention adequate financing. Once this level is secured, then, like a house of cards, more cards can be slowly stacked to conservatively grow the business—ever with a careful hand.
The actual causes of Crumbs collapse are still a mystery. But our students already know this story. To survive, they must study their business skills well, be creative, be flexible and—most of all—be wary of the lure of the $$$. To quote John D. Rockefeller, “The secret of success is to do the common thing uncommonly well.” History suggests that he knew something about success. I wonder if he liked cupcakes.
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