Communications Lessons in the Demise of a Cupcake Company

CRUMBS
Image: anediblemosaic.com

It’s dunzo for Crumbs. The cupcake company on Monday said that it was shuttering all its stores and filing for Chapter 7 bankruptcy liquidation. Could a different PR strategy have saved the bakery company?

The move comes after Nasdaq Stock Market last week delisted Crumbs, citing the company's failure to meet a requirement of either having at least $2.5 million in shareholder equity or meeting benchmarks for its market cap or annual net profit, according to The Wall Street Journal.

Crumbs currently has 48 stores in 10 states and the District of Columbia, according to its website. The company launched in 2003, selling ginormous cupcakes in a variety of unique flavors, such as caramel macchiato and Girl Scouts Thin Mints, for $3.50 to $4.50 a pop.

Indeed, it wasn’t too long ago that Crumbs distinctive shopping bags seemed to be emblazoned on the consumer landscape, with folks hauling dozens of the cupcakes to birthday parties and office meetings alike.

However, the company met with new competition (read: the “cronut”) and eventually fell on hard times; earlier this it started to close its stores.

But that doesn’t necessarily mean consumer sentiment for Crumbs has waned. A search for #Crumbs on Twitter found a lot of love for the brand (which may  come back to life, depending on the bankruptcy proceedings). Here are two examples:


 

Maybe the company’s bankruptcy was inevitable. Maybe its original business plan was too ambitious. Maybe it made the wrong bet on a supplier. Maybe it should not have gone public.

On the other hand, Crumbs’ demise could be a classic case of failing to listen to your customers, which, in a social media age, is paramount for senior PR managers.

Did Crumbs gauge consumers on which direction the company was going—and whether it was the right direction? When the company started to close its stores earlier this year did Crumbs launch any focus groups to see, from a consumer standpoint, whether it could stop the bleeding? Did the company reach out to any influencers or seriously ramp up its media relations and/or social media efforts?

These are all questions that communicators need to ask not when the walls are on fire, but when things are running smoothly. It’s the PR pro’s job to see around the corner and use all of the media channels at his or her disposal to get a sense of the brand’s long-term prospects.

From a PR perspective, how would you have tried to stave off Crumbs’ bankruptcy?

Follow Matthew Schwartz on Twitter: @mpsjourno1