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How CRUMBS Bakeshop Started a Global Cupcake Obsession

Entrepreneur Ventures is an early-stage venture capital firm partnered with Entrepreneur Media that is dedicated to backing passionate and innovative founders as early as day one. In this series, we are profiling the amazing entrepreneurs that Entrepreneur Ventures is working with to share their insights on building and growing a thriving business.

Back in 2003, Mia and Jason Bauer launched a business — and a global trend — when they opened CRUMBS Bakeshop in New York City. Their signature gourmet oversized cupcakes not only had lines out the door, but these frosting-covered superstars sparked a cultural phenomenon that put cupcakes at the center of popular entertainment, from movies to reality shows. At its peak, CRUMBS boasted that it sold more than one million cupcakes a month.

Related: Looking for Investment? Pitch Entrepreneur Ventures Here.

After ten years in business, Mia and Jason exited and sadly watched from the sidelines as, within a few short years, the new owners of CRUMBS made some unfortunate moves that led to the collapse of CRUMBS.

But the cookie (and cupcakes) didn’t completely crumble, and a mix of persistence and good fortune landed the company back in Jason and Mia’s hands where it is once again flourishing. We spoke with the couple about their bakery’s rise, fall and rise again to learn their recipe for success and their new approach to getting their goodies into hungry people’s hands. Here are some highlights from that conversation.

The Rise of the Cupcake Craze

Jason Bauer: Mia and I started the CRUMBS Bakeshop brand back in 2003 in New York City. We were just dating at the time and wanted to open a business together. Mia was an attorney and I was in the licensing business. We were looking for a change. People thought we were crazy.

Mia Bauer: I was a good baker and we both felt that the neighborhood bakery had disappeared in New York. I grew up working in one, so it was very nostalgic for me. We wanted to make a place where families came in with their kids and we knew their kids’ names and we knew how they liked their coffee.

JB: So we gave Mia’s recipes to a family friend who happened to own a commercial bakery and he showed us how to scale them up as commercial formulas. When we opened, we offered 150 types of items: muffins, scones, cookies, croissants, you name it. But it was the cupcakes that really caught people’s attention. This was way before the cupcake craze and people had never seen these oversized, decorated cupcakes before. We kept selling out of them and knew we were on to something.

Credit: CRUMBS Bakeshop

Street-Level Marketing

JB: We intentionally used clear clamshell packaging and we put them in a clear shopping bag. So when anyone was walking anywhere with the cupcakes, people would see it and be like, “Oh my God, what, what is that?”

MB: It created this great buzz in the city and we had lines out the door every day.

Related: The B2B Creator Economy Is the Next Big Thing. Here’s the Company Making It Happen.

The Big Exit

JB: After nine years, we had 50 retail locations in 12 states. We were selling a million cupcakes a month. We were approached by a SPAC who wanted to buy us, and we were able to negotiate very favorable terms. We got some cash in our pockets, but ultimately got a lot of stock. They took over the company. Mia and I exited. They hired the former chairman and CEO of a large clothing brand called Aeropostale. The vision was to make it a mall brand, like Cinnabon or Auntie Anne’s. Well, it took them about four years to destroy everything we built. And by 2016, it was gone.

MB: It was hard emotionally because it was our baby. And it hurt us financially because we had all this stock in a company that went bankrupt.

CRUMBS Bakeshop Reborn

JB: I spent about four and a half years at WeWork during all the craziness. When that imploded, I was doing some trademark research for a new opportunity. This was during the pandemic. And for some reason, I just decided to type in CRUMBS Bakeshop. And it said dead, abandoned, unrevivable. They let the trademark lapse. So that night we bought it back for $350.

MB: And it is interesting because we had previously tried to buy it back for a much larger sum and got turned down. Things like this don’t normally happen! It really felt like it was meant to be.

Same Formula, New Model

JB: We love retail but we made the decision to launch a line of CPG products for supermarkets instead of doing brick-and-mortar. We felt this was a good move because we had tested the brand awareness and the brand equity was still very strong. People had an emotional connection to the CRUMBS brand. We loved having the stores, but it was pretty clear that e-commerce and supermarkets were the way to go.

MB: It was such an amazing experience having the shops, we didn’t want to try to go back and relive those days. We still have a connection to our customers and we are still providing them with delicious products. The recipes have remained virtually unchanged. And we’re still extremely hands-on. Nothing gets scaled up without me, Jason, and our kids testing everything.

Related: How This Entrepreneurial Couple Is Revolutionizing Brand Loyalty

Credit: CRUMBS Bakeshop

Advice to Entrepreneurs Seeking Funding

JB: It’s easy to say, “Only take strategic money. Only take money from investors who can help you build your business.” We have been able to do that, fortunately, because we have a great legacy brand. That makes it a lot easier for us to raise capital. We’re not trying to launch “Jason and Mia’s Cupcakes” from scratch. I hear nightmare stories all the time from other entrepreneurs trying to raise money in a really down market. So my advice would be first try to find an investor who can help you grow. But if you desperately need capital and you have a non-strategic investor interested? Take the money. You’re passionate about your business, you have that burning desire. You have to go for it.

The Next Phase

JB: We’re in between 1,000-1,500 stores right now and our e-commerce is exclusively on Goldbelly. Our goal for this year is to really get solid distribution east of Chicago. And then next year start to expand. And if another offer comes along to buy CRUMBS from us again? Let’s just say that that’s not our goal this time around.

MB: We want to grow a company that is meaningful in people’s lives. We want to be that thing you’re so excited to bring home from the supermarket. That’s what makes us happy and proud.

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