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Crumbs Bakery Stock Crumbles as Fad Fades

ABC News Radio(NEW YORK) -- Designer cupcake shops, led by the Crumbs chain, drew lines around the block a few years back and expanded their locations rapidly. Yet, the sugar high might be over.

“It really just doesn’t have the luxurious feel that it once had,” said Sierra Tishgart, an assistant editor at food and restaurant blog Grubstreet.

Crumbs Bake Shop stock that went for more than $13 two years ago is now trading around $1.30, meaning one of its cupcakes sells for about the value of four shares of stock.

“They’re everywhere.  Crumbs is all over the city, Magnolia is now abroad.  They’re in Dubai,” Tishgart said of a competing bakery.

Last week, Crumbs sank more than a third after it announced sales were down 22 percent amid lack of demand for their ultra cupcakes and a host of competitors who have moved into the market.

“These are singularly focused concepts,” Darren Tristano, executive vice president at Technomic Inc., a Chicago research and consulting firm that specializes in the food industry, told The Wall Street Journal.  “You’re not going to Crumbs every day.  It’s a short-term trend and we’re starting to see a real saturation.  Demand is flat.  And quite frankly, people can bake cupcakes.”

Copyright 2013 ABC News Radio

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