This July marks the 225th anniversary of the Storming of the Bastille in Paris, which catalyzed the bloody French Revolution and eventually resulted in the beheading of the deposed French queen, Marie “Let Them Eat Cake” Antoinette. (Joyeux Quatorze Juillet, by the way.) But as of last week, July now marks yet another anniversary involving unfortunate associations with baked goods: the abrupt demise of the boutique cupcake chain Crumbs Bake Shop.
The surprise closure of Crumbs last week had fans of other single-item stores—which now shill everything from doughnuts to honey and coffees to olive oils—concerned. Were they all doomed to meet the same untimely end?
Not quite, says Harvard historian Nancy Koehn. In fact, the single-item store offers consumers a major and attractive advantage: it makes decisions very, very easy. As Koehn notes, when restaurants provide too many options, things can quickly devolve into chaos. Even perusing the menu is migraine-inducing: “You start turning the pages – and there’s like seven pages – and, pretty soon, you’re just overwhelmed. And you turn to the person next to you and say, ‘What are you having? Let’s have a meeting about our choices!’” she says. “It gets complicated.”
Rescuing consumers from the burden of choice is often enough to get people off the sidewalk and through the front door—at first. But in order to achieve lasting success, the single-item company usually has to expand beyond its artisan olive oil or bread pudding borders.
Take the industry’s quintessential success story: Starbucks. The company’s staggering success can be attributed, in part, to an extremely shrewd real estate strategy which took into account which retailers nearby would serve the needs of their own customers. First, it was bagel shops, then juice companies – anything Starbucks could do, as Koehn says, to get customers “in your neighborhood and in your store.”
Crumbs, on the other hand, was not quite so savvy. The company went public quickly, before it had gained enough momentum to adequately handle the operations, disclosures, and management burdens that come with being publicly traded. In their public reports, Koehn says, there were no mentions of paying attention to real estate strategy the way Starbucks had. And, perhaps most importantly, they didn’t build up a base, never expanding to offer anything to the person wandering in who may not want just a cupcake.
But that was just Crumbs. Despite naysayers predicting the impending implosion of the single-item economy, Koehn says the enterprise is far from doomed, as long as chains manage themselves competently. (Yes, even cupcake stores.) In the case of Crumbs, she explains: “A lot of what we’re seeing here is a high profile, media-obsessed or media-friendly brand, that ran into bread and butter business and operational financial problems.”
“The idea of it isn’t crazy,” Koehn continues. “But it is all about execution. Day in and day out. Transaction by transaction.”
To hear more from historian Nancy Koehn on the demise of Crumbs, tune in to our full interview with her, below.