The NY Times article this morning mentioned a possible new IPO – no not the much ballyhooed one for Facebook or even LinkedIn but for Crumbs Bake Shop http://nyti.ms/ibEzdz. A $ 66 million merger with an unnamed investment company would make Crumbs Bake Shop the first publicly traded cupcake brand (take that Hostess!). First opened in 2003, the largest cupcake chain in the United States (yes there really are others), Crumbs posted $ 31 million in revenue in 2010 – the cupcakes retail for $ 3.75 so one could surmise that they sold more than 8 million cupcakes. The plans are for Crumbs to expand to 200 retail locations by 2014.
By IPO standards this is a small deal. And I share the viewpoint that this public offering may represent a cupcake bubble. The first thing I thought was how quickly people have forgotten the story of Krispy Kreme. I look at Crumbs as an indulgence as was Krispy Kreme back in the early 2000’s. You remember don’t you? It seemed everywhere you looked a Krispy Kreme was opening or partnering with a local retail outlet. Krispy Kreme had its own IPO in April of 2000 but over expansion and fierce competition from Dunkin’ Donuts conspired to crush its share price which today is under $ 7.00 – it went public at $ 21.00 per share.
If you’ve never had a Crumbs cupcake you have missed an indulgence for sure. But how often could you really enjoy an indulgence before it became a non-indulgence and thus less interesting? I don’t understand they need for an IPO to grow to 200 units by 2014. What’s the overall plan?
I have no ill will toward Crumbs and wish them nothing but luck even if I completely do not understand what
they are up to. Do you?
First donuts, then bagels, then cinnamon buns, then cupcakes… I guess pies will be next. Clearly Crumbs is the leader in their category but an IPO seems like a stretch.
I agree – a stretch both in concept and waistline. Thanks for reading Bruce.