The high end cupcake market is crumbling

The craze hit a high mark in June 2011, when Crumbs Bake Shop Inc., a New York-based chain, debuted on the Nasdaq Stock Market under the ticker symbol CRMB. Its creations—4″ tall, with fillings such as vanilla custard, caps of butter cream cheese, and decorative flourishes like a whole cookie—can cost $4.50 each.

After trading at more than $13 a share in mid-2011, Crumbs has sunk to $1.70. It dropped 34% last Friday, in the wake of Crumbs saying that sales for the full year would be down by 22% from earlier projections, and the stock slipped further this week.

Crumbs in part blamed store closures from Hurricane Sandy, but others say the chain is suffering from a larger problem: gourmet-cupcake burnout.

“The novelty has worn off,” says Kevin Burke, managing partner of Trinity Capital LLC, a Los Angeles investment banking firm that often works in the restaurant industry.

Crumbs also indicated that certain locations “incapable of reaching acceptable levels of financial performance” would need to close.

There…feel better now?

cupcakes          As in all good things…

The first thing I did with my Hostess cupcake was carefully peel off the icing top with the white squiggle and lay it on the plate. Then I would dig out the cream filling, eat the sticky chocolate icing next (ever try to peel the squiggle off?), and the cake last. All brought down with a smooth cold glass of creamy milk. Heaven. For about a nickel a cupcake…and a second one right at your fingertips…

Now get out there and get yer coffee on!

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