Crumbs' Grand Reopening Doesn't Address Two Of Its Biggest Problems

Crumbs Bake Shop kicked off its grand reopening Tuesday, three months after the company suddenly shut down all 48 of its stores because it was running out of money.

Aside from a couple new freezers and a new paint job, the first store to reopen - located on Broadway and 37th street in Manhattan - doesn't look much different than it did several months ago.

Once the largest cupcake company in the world, Crumbs was saved from permanent closure by a joint investment from Fischer Enterprises, which owns Dippin' Dots, and Marcus Lemonis, the CEO of Camping World and host of CNBC's "The Profit."

Inside the new store, there's a cooler stocked with Dippin' Dots and a freezer displaying new "Monster Munch" ice cream cups and chocolate-dipped key lime pie ice cream bars.

Business Insider/Hayley PetersonA cooler stocked with Dippin' Dots.There are also new cupcake flavors branded with the names of dessert companies owned by Lemonis, such as Sweet Pete's Salted Caramel Chocolate and Key West Key Lime Pie.

Business Insider/Hayley PetersonAmong the non-cupcake items are Crumb Nuts, which are donut-croissant hybrids mirroring a Cronut, and Baissants, which are a cross between a bagel and a croissant.

Business Insider/Hayley PetersonThere's also a Nutella Crozel, which is a chocolate-filled croissant-pretzel hybrid.

Business Insider/Hayley PetersonA table in the middle of the store displayed new gluten-free cupcakes. On the left is the freezer holding the ice cream offerings.

"We believe we have found a winning formula by combining the beloved Crumbs cupcake with an exciting new mix of products," Scott Fischer, COO of Fischer Enterprises, stated in a press release.

It remains to be seen whether the changes will solve two of Crumbs' biggest problems: High real estate costs and cupcake "burnout."

Crumbs' troubles began in mid-2011, when it was orchestrating a massive expansion, according to former Crumbs president and CEO Julian Geiger. Same-stores sales started declining as the cupcake market was rapidly growing more crowded, and analysts began warning of a possible cupcake bubble. The Wall Street Journal would later conclude that Crumbs' downfall was the result of mass "gourmet-cupcake burnout." At the new Crumbs, cupcakes are still a huge focus, as shown in the display case below.

Crumbs has also been plagued by high real estate costs, according to Darren Tristano, executive vice president at the food industry research firm Technomic. The company's shops averaged about 1,000 square feet, with one outlet near Chicago measuring 3,300 square feet, Tristano told Crain's New York Business reporter Aaron Elstein. Without the need for any baking equipment on site, it doesn't make much sense to have massive stores. "That meant high rents and lots of extra space in places where shoppers seldom lingered," Elstein wrote. Crumbs is planning to reopen another 25 locations within the next 30 days in cities including Boston, Chicago, Los Angeles, Newark, Delaware, and Washington, D.C. Business Insider/Hayley PetersonEventually, all of the stores will reopen. That means many of the company's former employees will have a chance to get their jobs back. Crumbs district manager Michelle Cavanaugh told Business Insider she was re-hired as a result of the reopening. She she said she was also able to hire back all of her former employees. "We are thrilled to have Crumbs reopened and to still offer our same great products, plus a lot more," she said.