Crumbl Isn't a Fad! Oh no, Wait - I've Changed My Mind!

When I first wrote about Crumbl, I thought it was an exciting opportunity/interesting business model that I wanted to share with people. Then, I received more info in my Twitter DMs and I changed my mind! Read the full story below and see why I changed my mind after the information!

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My Initial Thoughts:

My buddy just opened a Crumbl franchise in Forney, TX

27k population

There was a line around the door & there will be for some time

Is this a fad? No. Why?

Because when a Crumbl opens it puts other shops out of business. It's a better product.

Also, some owners net $1m+!

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One new Crumbl near me put 3 different cookie and sweets shops out of business. Super unhealthy, but gluttony will always be a vice.

I definitely see new shops cannibalizing each other's success. Only Crumbl competes with Crumbl

Owning 10+ stabilized shops netting a couple hundred grand each isn't be a terrible living. Not my jam, though.

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My Thoughts After People Slid into My DMs:

I changed my mind. Why?

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A Crumbl insider whistleblower just slid into my DMs.

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This is JUICY info! Here you go:

“Crumbl is expanding too fast. 500 locations last year and 900+ this year.

As you pointed out, sales from stores will be cannabalized by stores that open up closer to them.

Crumbl franchisees are “flipping” their stores and using the profits to open up new ones.

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Reason?

New Crumbls in a good area do very well in their first year - to the tune of $2M+

Franchisees are using first year numbers to sell in today’s market but those stores aren’t hitting those numbers in 2nd and 3rd year.

The numbers are still above $1M…and you’re taking about 30% of that home…so about 250-300k per store is still decent profit.

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Crumbl isn’t welcoming new franchisees anymore, so the current franchisees believe they’re in a good position to keep building new locations and selling them after the first year and then rinse and repeat.

Can someone from the outside buy into Crumbl? Technically, yes, but it’s complicated and you kind of have to know someone on the inside to make it happen, but it is possible.

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Current franchisees are trying to leverage their ownership in a way where they get to sell out of their current locations to either open up new locations in the SAME territory OR buy new territories from other franchisees that are looking to get out of Crumbl completely (there were a ton of those last year).

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Current franchisees are starting to sell stores for as low as $400-500k, taking a massive hit in the process.

The labor is pricey at Crumbl - at one point they were mandating 75 people to be hired on day 1 for any new store opening!

I believe this number is down to 45 now, and this might be due to Crumbl finding ways to cut labor cost using technology.

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Back in March/April, they had postings for Mechatronics Engineers - basically, engineers that have a background in food robotics.

One of the most grueling, high turnover and labor intensive tasks at Crumbl? The mixing.

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Crumbl is actively trying to solve this problem and if they are able to employ robotics to automate this process?

It’s a game changer and can cut labor costs significantly. Crumbl also talked about selling their own pre-packaged dough. Why?

Because at the end of the night, there’s always leftover dough that they’re either going to donate or…THROW AWAY completely.

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This is another thing that Crumbl can really capitalize on IF done right.

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The reason why that TX location is going to do well is because a) it’s in a no name town where there’s no competition and b) it’s a brand new location so the buzz will be there for at least 3-6 months.

However, I would bet that the franchisee who opened that up must have the territory for that area, and he’s going to open up more in that area.

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Not because he wants to, but because he will probably be forced to because if he doesn’t - Crumbl corporate will just give that territory to someone else OR give a neighboring territory to someone else and it’ll be competition for that franchisee.

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Why does Crumbl want to build so many stores worldwide?

Because the founders are trying to sell this in the next few years - and the sale price is going to have a “B” at the end of it. $1bn. $5bn. $10bn. Who knows.

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But that’s why they want to open up as many locations as possible AND that’s also why they’re expanding globally now (they opened up in Canada and they’re launching London very soon). Unfortunately when a franchise gets this big, the goalposts change and the founders are focused on something else.

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However, the founders are clearly very smart and Crumbl is not really a cookie company - it’s a tech company. That’s why they’re banking on a billion dollar sale precisely because they have their own tech which they use for their Kitchen app, POS system, etc.”

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TL;DR?

Crumbl isn’t dying but same store sales hype dies fast

FWIW I still think it’s delicious.

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Milk Bar is overhyped!