What went wrong crumbs case

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Questions and Answers

What is a challenge in selling gourmet cupcakes?

Occasional nature of the purchase (correct)

High competition in the market

High production costs

Difficulty in storing the products

What could have been a viable strategy for Crumbs to overcome declining sales?

Increasing advertising expenses

Diversifying the product line (correct)

Reducing prices of cupcakes

Focusing solely on online sales

Why did Crumbs fail to adapt to the changing market?

Inadequate supply chain management

Lack of innovation in products

Over-reliance on a single product (correct)

High employee turnover rates

What could have helped Crumbs to prevent its failure?

Pursuing new business opportunities Signup and view all the answers

Why did Crumbs experience declining same-store sales?

Shift in consumer preferences Signup and view all the answers

What could Crumbs have explored to overcome its decline?

Expanding into food delivery services Signup and view all the answers

What was the primary reason for Crumbs' decline in sales?

Gourmet-cupcake burnout Signup and view all the answers

How did the market for cupcakes change between 2003 and 2011?

It became more competitive Signup and view all the answers

What was the average size of Crumbs' shops?

1,000 square feet Signup and view all the answers

What was the consequence of Crumbs' failure to adapt its business strategy?

Default on debt Signup and view all the answers

Why did Crumbs' same-store sales start to decline in 2011?

Due to gourmet-cupcake burnout Signup and view all the answers

How many new locations did Crumbs add from mid-2011 to 2013?

35 locations Signup and view all the answers

What was a major problem faced by Crumbs, as reported by The Wall Street Journal?

Gourmet-cupcake burnout Signup and view all the answers

What was the main reason for Crumbs' delisting from the NASDAQ Stock Exchange?

Default on debt Signup and view all the answers

What was the target market for Crumbs Bake Shop's products?

Customers looking for gourmet cupcakes Signup and view all the answers

What was the primary reason for Crumbs Bake Shop's decline in same-store sales in 2011?

Change in company ownership and management Signup and view all the answers

What was Edward Slezak's approach to growth as the new CEO of Crumbs Bake Shop?

Striking licensing deals to sell Crumbs-branded products Signup and view all the answers

What was the result of Crumbs Bake Shop's partnership with David Burke?

Poor sales, leading to the termination of the partnership Signup and view all the answers

What was the focus of Crumbs Bake Shop's expansion in its early years?

Expanding to new locations and selling gourmet cupcakes Signup and view all the answers

What was the significance of Crumbs Bake Shop's 'Colossal' cupcake?

It was the largest cupcake offered, serving up to eight people Signup and view all the answers

Why did Crumbs Bake Shop start closing unprofitable locations?

To cut losses and reduce debt Signup and view all the answers

What was the ultimate outcome for Crumbs Bake Shop?

It closed all of its stores and went out of business Signup and view all the answers

Study Notes

Crumbs Bake Shop's Failure

Crumbs Bake Shop was delisted from the NASDAQ Stock Exchange due to debt defaults of up to $14 million.
The company's decline can be attributed to several factors, including an increasingly crowded market, loss of consumer interest, high real estate costs, and lack of strategy pivot.

Crowded Market

In 2003, Crumbs was unique with only a handful of bakeries devoted to cupcakes nationwide.
By 2011, the market had become saturated with many bakeries and kiosks offering gourmet cupcakes.

Loss of Consumer Interest

Cupcakes were a hot trend when Crumbs opened, but consumers eventually lost interest.
The Wall Street Journal reported "gourmet-cupcake burnout" in 2013, which contributed to Crumbs' declining sales.

High Real Estate Costs

Crumbs' stores were large, averaging 1,000 square feet, with some locations measuring up to 3,300 square feet.
The high real estate costs were a significant burden for the company.

Lack of Strategy Pivot

Despite declining same-store sales, Crumbs continued to open new locations and maintained its focus on cupcakes.
The company failed to diversify its product offerings or adapt to changing consumer preferences.

Company History

Crumbs Bake Shop was founded in 2003 by Jason and Mia Bauer, a husband-and-wife team.
The company expanded quickly, becoming the largest cupcake chain in the United States with 79 locations at its peak.
Crumbs went public in 2011, but its same-store sales started to decline, leading to its eventual closure in 2014.

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