I sent a PGB team email today with my thoughts on the demise of the 65-store cupcake chain in the States called Crumbs.  In the next few days I’m sure all of us on the team hear questions along the lines of, “Are things ok?”.

A reporter from the National Post called me today about the Crumbs’ bankruptcy and I shared with her my view  that the issues were management-related rather than a death knell for cupcakes. I was interested to hear that she had heard the same thing from other cupcakes business owners across Canada: we’re all doing well, experiencing solid growth and planning cautious, well-executed expansion.

Lyndon Johnson is credited with saying, “Any jackass can kick down a barn but it takes a carpenter to build one”. I don’t know the people who started Crumbs or the investors who bought it through a public offering in 2010. I know they would have put heart and soul into the company and also that behind the scenes there were likely unfortunate challenges that would test any company.  So all I can comment on is what the public financial statements say and looking at the 2014 1st quarter results, the numbers tell a troubling story.

Until the day the stores closed across the States, they were still experiencing strong revenue…and yet a negative bottom line. They had $8 million in sales for the quarter from January to March 2014, and although that was way down from earlier quarters, to have a loss can only mean too much debt, too much rent and an eye off the ball on matching the purchase of supplies to the sales. In a business like cupcakes, you can’t afford to overbuy expensive inventory like butter and eggs and have it go to waste…but you also can’t underbuy and therefore not be able to meet demand.

Having given this critique, I would be foolish to not take lessons from this story. Poor customer service, some lacklustre locations and too many of them, only one product, uninspired packaging, poor financial management…even if I feel that we have these points in hand, running a business is like those motivational posters say about life: it should be seen as a journey, not a destination. Are there things we can do at Prairie Girl to “wow” our customers more? Is there some way to help franchisees be accurate on their store locations? Have we designed really innovative packaging for our new menu items in the fall? Are we paying the best price for every single inventory item? And so on…

I’m not going to let this flashy news story spook me but neither am I going to say “we could never sink”. We know where that attitude got the Titanic.

About the author

Jean Blacklock

Jean opened the popular Prairie Girl Bakery in the financial district of Toronto in 2011. She owned and operated the business until it closed in 2021 as a result of the pandemic’s impact on downtown Toronto. Read more about her background in commerce, law, and entrepreneurship here.

By Jean Blacklock


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