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Associated Press
Crumbs Bake Shop partner Harley Bauer carries cupcakes during the store’s grand opening in 2007 in Beverly Hills, Calif.

Crumbs’ abrupt end a lesson

Dependence on one-item fads not good long-term plan

– Turns out, being a one-hit wonder is risky.

When Crumbs, the chain that built its business around cupcakes, shuttered all of its several dozen remaining locations Monday, it seemed like an abrupt ending for a company that opened in New York a decade ago to ride the wave of popularity of the sugary treat sparked by the TV series “Sex and the City.”

But Crumbs’ rise and fall isn’t surprising, considering the company’s dependence on a fad. It’s the latest cautionary tale for one-item restaurants and other chains that devote their entire menus to variations of a single product.

•Krispy Kreme, for instance, expanded rapidly in large part on the cultlike following of its doughnuts. But sales started declining, and the company closed several locations. Last year, restaurant industry researcher Technomic said Krispy Kreme had 249 locations, down from 338 a decade ago. The chain has broadened its menu more recently.

•A similar fate befell Mrs. Fields, known for its cookies. The chain has suffered in part because of the ubiquity of places that sell cookies. It had 230 stores last year, down from 438 a decade ago.

•TCBY had 355 stores last year, down from 1,413 a decade ago. Part of the chain’s problem is the competition, given the proliferation of frozen yogurt places.

Companies that offer only one item can fall victim to a number of risks. For one, trendy products tend to attract competition from big and small players that want to jump on the bandwagon.

For instance, Starbucks and Cold Stone Creamery have been trying to capitalize on the cupcake trend with cake pops and ice cream cupcakes, respectively.

Being beholden to a single item also makes companies more susceptible to customers’ whims and changing tastes.

There’s always a new fad. Frozen yogurt. Chopped salads. Freshly squeezed juices.

Entrepreneurs may be eager to open stores selling these products, but there’s always the danger that fickle customers will move on to the next thing.

“A cupcake shop today can’t survive on just cupcakes,” said Darren Tristano, a Technomic analyst.

To combat the risks, many chains diversify their menus. And several have prospered by moving beyond their flagship products.

Dunkin’ Donuts, for instance, has been pushing aggressively into specialty drinks and sandwiches, with a focus on boosting sales after its morning rush hour. Starbucks has introduced a range of foods and drinks in its cafes, including premium bottled juices and salad boxes, and plans to expand wine and beer offering in evenings to as many as 1,000 locations over the next several years.

Magnolia, another popular New York City cupcake shop, is credited for sparking the cupcake craze after it was featured in “Sex and the City.”

The chain, which opened in 1996, has endured while many shops that followed – including Crumbs – focused on just cupcakes. That’s in part because Magnolia, which now has seven locations, offers a variety of desserts, including cakes, pies, cookies, brownies and banana pudding.

Magnolia spokeswoman Sara Gramling said the company is learning about the dangers of focusing too heavily on one product – and expanding too quickly.

“We’ll be mindful of those lessons,” she said.

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