Daniel Gross at Yahoo! Finance reports on Crumbs Bakeshop, their IPO, and their major cupcake bakery expansion plans:
Of course the food business is a fickle one. But Crumbs is putting up impressive numbers. Sales last year were $31 million, up 33 percent from 2009, and up nearly six-fold from $5.3 million in 2007. The typical store does sales of $1.1 million and has operating income of $231,000. Crumbs runs a tight bake shop. It eschews advertising, and its primary marketing strategy is to give away free cupcakes when it opens a new store. Since it contracts out production, new outlets don't have to be equipped with expensive baking equipment. Keeping opening costs low -- about $300,000 per store -- has allowed Crumbs to expand without taking on debt.
Having made it in New York, Crumbs is seeking places with lots of daytime population, density and foot-traffic -- "urban markets, big buildings with lots of people working all day long," as Jason Bauer put it. This year Crumbs plans to open 14-16 stores in existing markets, including one on 125th St. in Harlem, and one in Washington, D.C.'s Union Station. Next year it plans to open more than three dozen in entirely new markets such as Atlanta, Dallas, Denver, San Francisco and Seattle...
But what if we're in the middle of a cupcake bubble? Cupcakes have been around for decades and are part of America's dessert culture. Says Jason Bauer: "If you can convince me that someone is going to stop eating a cookie, then I can understand why they are going to stop eating a cupcake." Bauer believes that cupcakes are essentially taking market share from cake.
The ultimate answer to those concerned about a bubble lies in the numbers. For the past eight years, Crumbs' comparable-store sales have on average grown by double-digits annually. And while the cupcake industry has boomed from just a few stores several years ago to between 400 and 500 today, Bauer believes many of them will close. "There are a lot of great bakers out there with great recipes, but it takes more than a great recipe," he says. "You need to make payroll in January when there are five feet of snow on the ground...Ultimately, a lot of the mom and pops will close down and ones like us will be here for the long term."
And here's a video with more information, also from Yahoo! Finance:
Of course the food business is a fickle one. But Crumbs is putting up impressive numbers. Sales last year were $31 million, up 33 percent from 2009, and up nearly six-fold from $5.3 million in 2007. The typical store does sales of $1.1 million and has operating income of $231,000. Crumbs runs a tight bake shop. It eschews advertising, and its primary marketing strategy is to give away free cupcakes when it opens a new store. Since it contracts out production, new outlets don't have to be equipped with expensive baking equipment. Keeping opening costs low -- about $300,000 per store -- has allowed Crumbs to expand without taking on debt.
Having made it in New York, Crumbs is seeking places with lots of daytime population, density and foot-traffic -- "urban markets, big buildings with lots of people working all day long," as Jason Bauer put it. This year Crumbs plans to open 14-16 stores in existing markets, including one on 125th St. in Harlem, and one in Washington, D.C.'s Union Station. Next year it plans to open more than three dozen in entirely new markets such as Atlanta, Dallas, Denver, San Francisco and Seattle...
But what if we're in the middle of a cupcake bubble? Cupcakes have been around for decades and are part of America's dessert culture. Says Jason Bauer: "If you can convince me that someone is going to stop eating a cookie, then I can understand why they are going to stop eating a cupcake." Bauer believes that cupcakes are essentially taking market share from cake.
The ultimate answer to those concerned about a bubble lies in the numbers. For the past eight years, Crumbs' comparable-store sales have on average grown by double-digits annually. And while the cupcake industry has boomed from just a few stores several years ago to between 400 and 500 today, Bauer believes many of them will close. "There are a lot of great bakers out there with great recipes, but it takes more than a great recipe," he says. "You need to make payroll in January when there are five feet of snow on the ground...Ultimately, a lot of the mom and pops will close down and ones like us will be here for the long term."
And here's a video with more information, also from Yahoo! Finance:
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