Business

Narrow-minded Crumbs was always going to get iced

There’s no icing on this cupcake.

The collapse of Crumbs Bake Shop, which closed all its stores and laid off its workers on Monday, spells trouble for the entire sweet-tooth industry.

Whether it’s cupcakes or cronuts, stores that try to cash in on a single dessert fad are doomed to fail unless they diversify — and fast, experts said.

“Any concept that has a narrow focus offering only one product that is pricey is vulnerable to receiving a fate similar to Crumbs,” said Bonnie Riggs, an analyst with market research firm NPD.

While customers were surprised by Crumbs’ sudden closure, the writing was on the dessert a few years ago. Since the depths of the downturn in 2009, the cupcake industry has only had one up year, in 2011, when sales rose 8 percent, according to NPD. Last year, sales slumped 1 percent.

Steep competition from other desserts and a lack of a loyal customer base spelled the end for Crumbs, according to Riggs.

To be sustainable in an industry predicated on discretionary cash, at least a third of a company’s buyers must be repeat purchasers who account for 60 percent of its volume, Riggs said.

Sweets shops with few repeat purchasers can only survive in large metro areas, where customer traffic is larger and is able to accommodate increasingly cautious customers, she added.

A would-be customer peers through the darkened windows of Crumbs at 3rd Avenue and 54th Street in Manhattan on Tuesday.James Messerschmidt

Krispy Kreme, the doughnut chain, Mrs. Fields, the cookie store, and TCBY, the yogurt retailer, each suffered similar fates when they underwent their own rapid rollouts.

Each had to drastically pare back the number of stores to just a popular and profitable core to survive.

Crumbs, which was founded in 2003 and went public in 2011, sold big cupcakes in novel flavors such as Girls Scouts Thin Mints.

With the cupcake craze cooling, the company entered supermarkets and convenience stores with new offerings — but by then it was too late.