Entrepreneurs’ ventures is an early-stage enterprise capital firm in partnership with Entrepreneur Media that goals to support passionate and progressive founders from day one. In this series, we profile the amazing entrepreneurs Entrepreneur Ventures works with to share their insights on building and growing a successful business.
In 2003, Mia and Jason Bauer founded the company – and started a global trend – CRUMBS Bakery in New York. Not only did their signature, gourmet, oversized cupcakes have lines on the doors, but these frosted superstars started 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 over a million cupcakes a month.
After ten years in business, Mia and Jason left and sadly watched from the sidelines as, in a few short years, the latest owners of CRUMBS made several unlucky moves that led to CRUMBS’s demise.
But the cookie (and cupcakes) didn’t completely disintegrate, and a combination of perseverance and luck brought the business back into Jason and Mia’s hands, where it flourished once again. We talked to the couple about the ups and downs of their bakery to learn their recipe for success and a latest approach to getting delicious treats into the hands of hungry people. Here are some highlights from this conversation.
The birth of the cupcake craze
Jason Bauer: Mia and I founded CRUMBS Bakeshop in 2003 in New York City. We were dating back then and desired to open a company together. Mia was a lawyer and I used to be in licensing. We were looking for a change. People thought we were crazy.
Mia Bauer: I used to be a good baker, and we each felt that the neighborhood bakery in New York had disappeared. I grew up working in one, so it was very nostalgic for me. We desired to create a place where families got here with their children, we knew their kid’s names and how they liked coffee.
JB: So we gave Mia’s recipes to a family friend who owned a industrial bakery, and he showed us easy methods to turn them into industrial recipes. When we opened, we offered 150 varieties of products: muffins, bagels, cookies, croissants, you name it. But it was the cupcakes that basically caught people’s attention. This was long before the cupcake craze and people had never seen these large, decorated cupcakes before. We sold them out and knew we had something.
Source: CRUMBS bakery
Street level marketing
JB: We deliberately used transparent clamshell packaging and placed it in a transparent shopping bag. So when someone went anywhere with cupcakes, people would see it and say, “Oh my God, what, what is that?”
MB: This created a huge buzz in the city and we had lines out the door every day.
The Great Exodus
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 that desired to buy us and we managed to barter very favorable terms. We have some money in our pocket, but ultimately we have a lot of inventory. They took over the company. Mia and I left. They hired the former president and CEO of enormous clothing brand Aeropostale. The vision was to make it a mall brand like Cinnabon or Auntie Anne’s. Well, it took them about 4 years to destroy all the things we built. And in 2016 he was gone.
MB: It was emotionally difficult because it was our baby. And it hurt us financially because we had all the shares of the company that went bankrupt.
The revival of the CRUMBS bakery
JB: During all this madness, I spent about 4 and a half years at WeWork. When that broke down, I used to be doing trademark research looking for latest opportunities. It was during the pandemic. And for some reason I made a decision to type CRUMBS Bakeshop. And it was written that he was dead, abandoned, unattainable to revive. They let the trademark expire. So that night we bought it back for $350.
MB: This is interesting because we had already tried to purchase it back for a much larger amount and were rejected. Things like this don’t often occur! I actually felt prefer it was meant to be.
Same formula, latest model
JB: We love retail, but we made the decision to launch a CPG product line for supermarkets moderately than selling in-store. We thought it was a good move because we had tested brand awareness and the brand equity was still very strong. People were emotionally attached to the CRUMBS brand. We loved the stores, but it was quite clear that e-commerce and supermarkets were the solution to go.
MB: Visiting the shops was such an amazing experience that we didn’t wish to go back and relive those days. We are still in contact with our customers and proceed to offer them with delicious products. The regulations remained virtually unchanged. And we are still extremely practical. Nothing might be developed without me, Jason and our youngsters testing all the things.
Source: CRUMBS bakery
Advice for entrepreneurs applying for funding
JB: It’s easy to say, “Only accept strategic money. Only accept money from investors who can help you build your business.” Fortunately, we were in a position to do this because we have a great, heritage brand. This makes it much easier for us to lift capital. We’re not attempting to launch Jason and Mia’s Cupcakes from scratch. I hear horror stories all the time from other entrepreneurs trying to lift money in a really weak market. So my advice is: first try to seek out an investor who will allow you to grow. But if you desperately need capital and are interested in a non-strategic investor? Take the money. You are passionate about your corporation, you have this burning desire. You have to go for it.
Next phase
JB: We currently have 1,000 to 1,500 stores and our e-commerce is exclusively on Goldenbelly. Our goal for this yr is to have really solid distribution east of Chicago. And then next yr we’ll start growing. What if there is one other offer to buy CRUMBS from us? Let’s just say that is not our goal this time.
MB: We wish to develop a company that can make a difference in people’s lives. We wish to be what you are so joyful to bring home from the supermarket. This is what makes us joyful and proud.