Courtesy of my main man
The Red Cowboy comes
this gem from the Wall Street Journal. Sadly for all you folks out there with a sweet tooth, it seems that the great cupcake bubble of 2011 is in the midst of bursting.
The icing is coming off America's cupcake craze.
The dessert became a cultural and economic phenomenon over the last
decade, with gourmet cupcake shops proliferating across the country,
selling increasingly elaborate and expensive concoctions.
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.
Yeah, that'll happen. In part, it's something I discussed in
this post about "Brie Syndrome" back when
Harry & David filed for bankruptcy. Once something becomes ubiquitous and commoditized, its days as a viable business tend to become numbered, unless the original purveyor adapts quickly and capably.
Either way, this article had some absolutely amazing gems in it. This passage here, for example, was fabulous.
Husband-and-wife entrepreneurs Jason and Mia Bauer opened the first
Crumbs bakery in 2003 on Manhattan's Upper West Side. Today, the
company, which also sells $42 "colossal" cupcakes that serve six to
eight, is one of the largest players in the gourmet-cupcake industry,
with locations in at least 10 states and the District of Columbia.
Crumbs went public in June 2011 after a shell company bought it. The
buyer, 57th Street General Acquisition Corp., had raised money the
previous year for its Crumbs purchase. 57th Street changed its name to
Crumbs Bake Shop shortly after the merger.
A "cupcake" that serves six to eight?? IT'S CALLED A CAKE, YOU IDIOTS! A CUPCAKE THAT FEEDS SIX TO EIGHT IS CALLED A CAKE!! I mean, honestly people, what are we doing here?
And a shell company? Really? You people set up a shell company just so that you could buy a cupcake shop and take it public? Seems a little over-the-top, don't you think? But hey, what do I know, right? These people are all way richer than I am by now, and all on the back of a nice little cupcake bubble.
Man, I can't wait for the scone bubble. It's gonna be EPIC.
[Wall Street Journal]
