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Crumbs Finds Out Its Eyes Were Bigger Than Its Stomach (Though A Citigroup Trader Could've Told Them That)

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On June 24, 2011, a trader at Citigroup took on an extremely bold challenge: to finish, and keep down, a Crumbs Colossal Cupcake, within a 35 minute time limit. For those unfamiliar with the Crumbs's menu, a standard, regulation-size cupcake contains about 3 metric tons of sugar. The Colossal Cupcake? "...towers at about six and a half inches high with deliciousness and love baked into every bite. Soft sponge cake with mountains of frosting and heaps of fun decorations will have cupcake lovers everywhere rejoicing. A huge (and we mean huge) surprise for a birthday or any occasion you can dream of. Serves 6-8.” And while said trader successfully devoured this beast of a cupcake, he was unsuccessful in keeping it in his body, rendering the attempt a failure, despite an extremely valiant effort.

At the time, there seemed little more to take away from the experience than the fact that someone had taken on a Food Eating Challenge of otherworldly proportions, and the Food Eating Challenge ended up taking him. No one stopped to think that maybe he should have gone for 3 or 4 standard size cupcakes; still a sickly amount of sweet, but probably a more manageable one. That going head to head with a cupcake the size of a cake was a fool's mission; that it was to bite of more than anyone could chew. Now, we know it was foreshadowing what would one day come.

Crumbs Bake Shop Inc. (CRMB), the cupcake chain facing default on more than $14 million in loans, closed all of its stores yesterday after years of struggling to make money in a crowded market. “Crumbs has been forced to cease operations and is immediately attending to the dislocation of its devoted employees while it evaluates its limited remaining options,” the New York-based company said today in an e-mailed statement. The move follows an attempt to reinvigorate the company under Chief Executive Officer Edward Slezak, a lawyer and former Aeropostale Inc. (ARO) executive who took the reins at Crumbs in January. After losses of about $23 million the past two fiscal years, Crumbs tried to bolster sales in April by forging ties with BJ’s Wholesale Club. That included selling a croissant-doughnut hybrid called a crumbnut at the warehouse chain...

Demand for cupcakes surged over the past decade, enticing chains like Crumbs and Sprinkles to spread out across the country. Crumbs was hailed as a “breakout company” by Inc. magazine in 2010 and became a publicly held business the following year through a merger with 57th Street General Acquisition Corp. The company, then run by Crumbs co-founder Jason Bauer, planned to open 200 locations in the top 15 markets by the end of 2014. The pressures of being a publicly traded company may have led Crumbs to grow too quickly, said Peter Saleh, an analyst at Telsey Advisory Group in New York. “Once you go public, you start promising certain growth metrics,” he said. “Private companies can expand at a much more modest pace if they so choose.” Crumbs was known for its large cupcakes, including a $42 “Colossal” version that served as many as eight people.

Crumbs Closes All Stores as Crumbnuts Fail to Revive Chain [Bloomberg]

Earlier: Colossal Cupcake Gets The Better Of Citi Trader


Citigroup Did It! Sort Of!

[Mike Corbat wipes sweat off brow.]