July 11, 2014

What Happened to Crumbs?

Not so long ago, Crumbs Bake Shop was one of the fastest rising brands in DC. Today, all five locations here have closed. We caught up with two local retail experts to hear three reasons why.

There’s a little bubble building for rents in retail in DC,” says Bill Miller, who heads up Miller Walker Retail Real Estate along with partner Alex Walker (snapped near their Georgetown office yesterday).

Bill says, “The problem with food is, you’re only as good as your last meal. And customers are very hard to get back.

  1. Retail Rents are Going Up

There’s a little bubble building for rents in retail in DC,” says Bill Miller, who heads up Miller Walker Retail Real Estate along with partner Alex Walker (snapped near their Georgetown office yesterday). Since some landlords are commanding $100/PSF or more in retail, competitors are expecting the same, putting pressure on tenants to reach unrealistic sales goals to justify the high rents and stay in business. Crumbs, which this week filed for Chapter 7 bankruptcy and immediately shuttered its 65 locations nationwide, may have fallen victim to the rent rise, since its sales were known to be less than stellar and it leased small, highly-visible locations in major markets.

  1. Customers are Getting Smarter

Here’s Crumbs’ now-shuttered 19th and L location, which we snapped yesterday. When Crumbs first arrived in DC a few years back, competition in the baked goods space wasn’t nearly as stiff as today. As there’s more to choose from, customers are flocking to the best, the guys say. Crumbs may have suffered from an inferior product. And one bad experience is enough to turn people away, Bill says: “The problem with food is, you’re only as good as your last meal. And customers are very hard to get back.”

  1. Customer Experience

Competitors of Crumbs have been able to make visitors feel like they’re getting a unique experience when they walk through the door, or in the case of Georgetown Cupcake, wait in a long line. And even bigger chains like Au Bon Pain and Le Pain Quodtidien are offering experiences and items as good or better than the specialty operators.