As the frozen yogurt trend starts melting down, here now, a cupcake bubble. The cupcake chain Crumbs Bake Shop — with 34 locations in California, New York (14 in NYC), DC, Virginia, Chicago, New Jersey, and Connecticut — is going public through a $66 million merger with an investment company, the 57th Street General Acquisition Corporation (it's technically not an IPO like NPR called it). They're going to apparently have the company's shares listed on a major exchange, and use that money for an aggressive expansion plan: The owners told Dealbook that they plan to "expand to 200 locations by 2014."
And they sell a lot of cupcakes! Last year the chain claims to have sold about 13 million of them, posting an "estimated $31 million in revenue and generated $2.5 million in earnings before interest, taxes, depreciation and amortization." The cupcakes normally sell for $3.75, and we're not very good at math, but is making around 20 cents profit per cupcake a business you want to be in? Especially considering that cupcakes aren't produced on premises, but instead the company outsources "all of the baking to commercial baking facilities."
Magnolia Bakery had better watch its back, what with the expansion plans of its own.
· Cupcake Bakery to Go Public in Merger [Dealbook/NYT]
· All Crumbs Bake Shop Coverage on Eater [-E-]
· All Cupcakes Coverage on Eater [-E-]