57th Street partners with Dawn Food Products
by Jeff Gelski
NEW YORK — Dawn Food Products, Inc. will be the exclusive consolidated supplier of raw materials for the contract bakery manufacturers of 57th Street General Acquisition Corp., the owner of Crumbs Holdings, L.L.C. 57th Street announced the partnership with Dawn on Aug. 11, the same day 57th Street released second-quarter financial results, which included a 30% increase in net sales but a 6% decrease in comparable store sales.
Dawn Food Products, a full-service bakery supplier based in Jackson, Mich., runs a distribution network that consists of 26 company-owned facilities across North America as well as internationally.
“Partnering with Dawn Foods is a natural fit for our business model,” said Jason Bauer, co-founder of Crumbs and president of the company. “It gives our contract manufacturers the supplier consistency we need to support our aggressive growth plan and allows us greater control over cost of goods sold through the increased transparency of the price of goods entering our bakery partners.
“In addition, this relationship will result in improved product quality through tighter inventory control while providing a sound foundation for our supply chain by ensuring a reliable stream of required ingredients.”
57th Street General Acquisition was formed in Delaware in 2009 and then acquired its interest in Crumbs Holdings, L.L.C., a national bakery and retailer of cupcakes, in May of 2011.
For the second quarter ended June 30, 57th Street had sales of $10.3 million, up from $7.9 million in the previous year’s second quarter. The decrease in comparable store sales was due in part to deliberate cannibalization of several of the highest performing locations.
“The decline in comparable store sales was largely a function of our small store base and our intent to cannibalize several of our highest performing locations,” Mr. Bauer said. “For that reason, we continue to believe that total revenue growth, store operating week expansion and store-level returns are a more accurate account measure of our progress.”
The company in the second quarter suffered a net loss attributable to the controlling and non-controlling interests of $508,000, which compared with net income of $529,000 in the second quarter of the previous year.
For the six months ended June 30, 57th Street General Acquisition’s net sales increased 33% to $20 million from $15 million. Net loss attributable to the controlling and non-controlling interests was $439,000 for the six months, which compared with net income of $970,000 for the same time period of the previous year.
Comparable store sales decreased 2% for the six months ended June 30.
In its 2011 development outlook, 57th Street General Acquisition said it now expects 16 to 18 new store openings for the year, an increase from an earlier forecast of 14 to 16 new store openings. The company as of June 30 had 35 stores opened across six states and the District of Columbia. The company expects 2011 net sales to range between $40 million and $45 million.