Landmark Cupcake-Maker Crumbs Closes Amid Sharp Decline in Sales

Crumbs, the New York-based cupcake shop that launched dozens of imitators, has baked its last pastry.

Facing default on over $14 million in loans, the struggling company was taken off the NASDAQ listing earlier this week when stocks fell below .30 cents per share. It closed at 11 cents a share on June 30, its last day on the stock exchange.

After initially planning to open 200 stores nationwide, Crumbs Bake Shop Inc. closed 20 within the last year and shut down completely following Monday's announcement. The chain employed over 800 employees both full and part-time at the end of 2013.

Founded by Jason and Mia Bauer in 2003, Crumbs turned homemade goods into a gourmet market craze. The 11-year-old firm operated 48 stores in 10 states, mainly in affluent areas like Washington D.C. and Los Angeles.

It was the largest cupcake chain in the United States and sold over 50 pastries, the most notorious being the Colossal Crumb; a $35, 5,600 calorie cupcake big enough to serve eight people.

Competitors, like Sprinkles and Georgetown Cupcake, caught on and improved on the Bauers' idea. They expanded beyond metropolitan areas and adjusted prices accordingly.

Soon enough, companies weren't waiting for customer to come to them. They isolated cupcake shops, sent out food trucks, and installed dessert-dispensing ATMs and kiosks in areas with heavy foot traffic.

Crumbs persevered and went public in 2011 after seeing an eight percent increase over the previous two years. Bauer's inauspicious goal of expanding got underway just as the cupcake market started cooling. Sales suddenly dropped six percent in 2012 and flat lined last year.

Edward Slezak took over CEO duties in January and immediately joined forces with BJ's Wholesale Club to keep the flailing business alive.

Experimentations with a croissant-doughnut hybrid called crumbnuts, which resembled the popular cronuts, couldn't compete with cookies and ice cream offered by others. By the time Crumbs tried to diversity its business model, its finances were too far in the red.

A $1.2 million per store surplus in 2009 fell by 42 percent four years later to just under $650,000.  Like Krispy Kreme in the late 1990s, it fell victim to a fad.

Deemed "The Last Cupcake from Crumbs Bake Shop," an EBay user is selling a birthday cake flavored cupcake for $250. A picture of the receipt shows it was purchased in New York City on Monday. Another opportunistic user is selling a box of three for $275. Only the latter has a bid thus far.