Crumbs Bake Shop gets funding boost
by Eric Schroeder
NEW YORK — Crumbs Bake Shop, Inc., the largest cupcake specialty store chain in the United States, has closed on a $5 million senior secured credit facility. The funding paves the way for Crumbs to implement a new business plan that focuses on developing a licensing program, adding franchised stores to complement Crumbs’ company-owned stores and the ongoing initiative of closing or co-branding existing stores that are currently unprofitable.
The funding is being provided by Oklahoma City-based Fischer Enterprises, which owns about 15% of Crumbs. Fischer already has funded an initial $3.5 million and has committed to funding an additional $1.5 million on or before April 1. Fischer also owns beaded ice cream maker Dippin’ Dots, L.L.C. and intends to explore possible synergies that may be created in the areas of co-branding, cross-branding and distribution.
“We are thrilled to work closely with Fischer Enterprises as Crumbs begins the next phase of the growth and evolution of the brand,” said Edward Slezak, interim chief executive officer and general counsel of Crumbs Bake Shop, Inc. “This transaction, coupled with Fischer Enterprises’ experience and expertise in franchising, will be instrumental as we execute our new business plan.”
When it announced third-quarter results on Nov. 14, 2013, Crumbs listed total assets of $24,526,423 and total liabilities of $18,016,277. The company sustained a loss of $5,692,537 in the third quarter ended Sept. 30, 2013, which compared with a loss of $1,112,094 in the same period a year earlier. Net sales were $11,421,345, up from $9,895,174.
Crumbs said it spent $6,575,291 in cash on investing activities in the nine months ended Sept. 30.
Scott Fischer, chief operating officer of Fischer Enterprises, said he views the investment in Crumbs as “a unique opportunity to work with a well-known company with a recognized brand name and established customer base.”
“We believe that joining forces with Crumbs will allow us to create opportunities that could result in a win-win situation for both Crumbs and Dippin’ Dots,” Mr. Fischer said. “The areas of operation and sales concepts for the two companies are complementary and thereby could potentially result in increased market exposure for both.”