A Crumbs revival: Lemonis to reopen select stores in L.A., elsewhere
The closed Crumbs Bake Shop Inc. store on Larchmont Boulevard in Los Angeles, along with a handful of others across the country, soon will be back in business -- with a new line of desserts as part of a revamped game plan.
The new Crumbs will offer gluten-free and vegan desserts to go along with its large, trademark Crumbs cupcakes, said Marcus Lemonis, who heads an investor group that is acquiring the chain.
“Every store will have a different product offering to match its market,” said Lemonis, who heads Camping World and Good Sam Enterprises and stars on CNBC’s “The Profit” TV series.
He said he is determined to reopen at least 27 high-end, specialty Crumbs stores within 90 days, noting: “If I can do it faster than that, I will.”
The failed New York cupcakery filed a voluntary Chapter 11 petition in U.S. Bankruptcy Court in New Jersey on Friday after closing its 48 stores in 10 states earlier last week. Lemonis and Fischer Enterprises then formed a joint venture, the Lemonis Fischer Acquisition Co., to acquire Crumbs Bake Shop assets.
In January, Mark and Scott Fischer, who bought ice cream chain Dippin’ Dots out of bankruptcy in 2012, invested $5 million in Crumbs through Fischer Enterprises and took a 15% stake in the company. The father-son team now owns 15% of Crumbs shares.
Lemonis Fischer provided an additional loan of $317,000 to the chain July 10 and agreed to provide $1.1 million in debtor-in-possession financing, according to a Securities and Exchange Commission filing Wednesday.
Lemonis said the money is being used to keep rents current, retain employees and “get some stores reopened quickly.”
The Larchmont location will be the only Crumbs stored in California for now, but Lemonis said he plans to add more stores in Los Angeles and San Francisco, especially in tourist areas such as Universal Studios.
“We want to become a small, local sweet-and-snack shop with a variety of brands,” he said. “We aren’t trying to be a Starbucks, Caribou Coffee or Mrs. Fields. That’s what Crumbs aimed for in the past, and that’s why they lost their way.”
Cupcakes still will be the main draw, but the Lemonis-Fischer group has its hands in a host of other snack and dessert brands, such as Sweet Pete’s Candy, Betty Lou’s Snacks, Matt’s Cookies and some gluten-free baked goods.
Lemonis said he already is in talks to offer customers two artisan coffee brands, including Coffee of Grace, which is owned by actor Robert De Niro’s wife, Grace Hightower.
Analysts called the purchase “risky,” but Scott Fischer said the Crumbs brand is well-established in the marketplace and has a loyal customer base. He said the goal is to broaden its appeal to gain an “even larger customer base.”
Crumbs has been in dire financial straits for years. It recently lost its stock listing on Nasdaq and defaulted on about $14.3 million in financing. It lost $3.8 million in the first quarter, nearly twice the $2-million loss in last year’s first three months.
Lemonis shook off analysts’ warnings, saying he knows it’s a high-cost, high-risk venture.
“If we execute well, it will have high reward,” he said. “We are going to promote to consumers in a very local, grassroots way.”
In the meantime, the entrepreneur joked that he is adopting a new slogan while pulling together a very expensive Crumbs revival: “Will work for Crumbs.”
Follow @bri_sacks for more food-biz news.