Crumbs closes its stores, but may survive

There was plenty of news last week about the cupcake chain Crumbs…first the announcement of its closing, then the news that new investors will step in to save the brand. The discussion at RetailWire centered around whether the cupcake “fad” is sustainable, but I feel that’s missing the point. It’s really an issue of how Crumbs ran its business, not whether cupcakes are a passing fancy:

I’m not sure that cupcakes themselves are the problem — calling them a “fad” is like calling donuts a “fad” just because Krispy Kreme had the same kinds of problems. Yes, there are too many places to buy cupcakes, and every city has its own local examples of failures. But four years into the “Cupcake Wars” series on Food Network might be a sign that the category is postpeak — not explosive, but still sizeable and profitable. (Who doesn’t love cupcakes, after all?)

It sounds like the lessons of Crumbs — whether it survives or not — are more particular to its business model. Did it expand too fast? Did it offer enough diversity on its menu, like Magnolia? Did it have the financing and infrastructure in place to support its growth plans? These are all cautionary questions that any growth-oriented retailer needs to ask, no matter whether it is selling cupcakes, jeans or candles.

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