Why Crumbl Cookies Can't Survive

The cookie industry, driven by dessert trends, has seen a boom with Crumbl Cookies, but faces challenges like market saturation and franchisee profitability. Crumbl's success is analyzed through its financials and compared to legacy cookie brands like Mrs. Fields and Insomnia Cookies, revealing Crumbl's strategy of maximizing profits through franchising fees and ingredient kickbacks, while potentially jeopardizing franchisee success and long-term sustainability. The podcast concludes with the examples of independent cookie businesses in LA who illustrate that although the industry is driven by trends, a focus on a core product and authenticity can lead to long-term success.

Dessert Trends & Cookie Industry

• 00:00:00 Dessert trends have evolved over the decades, with cookies becoming the latest obsession in the 2020s, driven by Crumbl Cookies' large, extravagant, and high-calorie offerings. This trend, like previous trends in cupcakes and frozen yogurt, leads to market saturation and consumer fatigue as copycat businesses emerge to capture the demand. The cookie industry follows a boom-and-bust cycle, with Crumbl currently at the peak of its boom.

Mrs. Fields Cookie Company

• 00:03:58 Mrs. Fields pioneered the modern cookie shop in the 1970s by offering a premium product baked on-site, contrasting with the prevalent homemade or pre-packaged options. The company experienced remarkable growth, achieving 780 stores nationwide, but struggled with debt and low earnings despite high profit margins. The 1990s recession led to store closures and a shift towards franchising and lower-cost strategies, ultimately resulting in a declining business that heavily relies on royalties and gift basket sales.

Insomnia Cookies

• 00:07:32 Insomnia Cookies capitalized on convenience and late-night student demand in the 2000s, expanding its presence on college campuses rather than focusing on product differentiation. The company enjoys strong revenue, though expansion has been slow due to a limited market. Like Mrs. Fields, it has struggled with low earnings from individual cookies and has attempted to boost sales through product diversification and limited-time offers.

Levain Bakery

• 00:08:52 Levain Bakery revolutionized cookies by offering premium, oversized, and decadent cookies, attracting a loyal customer base and achieving strong pricing power. The company maintained a New York City-centric focus for decades but has recently begun expanding under new ownership. Despite being a trendsetter, it has limited expansion due to the avoidance of franchising and concerns over brand dilution.

Crumbl Cookies

• 00:09:45 Crumbl Cookies, founded in 2017, learned from its predecessors and prioritized franchising for scalability and profit maximization. It utilizes oversized cookies, rotating flavors to drive virality, and high pricing to establish itself as a destination. However, it has been criticized for increasing franchise fees and pocketing profits from kickbacks and ingredient sales, potentially harming franchisee profitability. Despite declining store-level margins, Crumbl's company-level profits are surging, raising concerns about its long-term strategy and sustainability.