A Million Crumbs
It seems like everyone has a secret family recipe that they think will make them a million dollars. Well, Jason and Mia Bauer actually do!
Over the years, I’ve interviewed many people who have decided to switch careers and start selling the baked goods that they have been making for family and neighbors. Many build nice local businesses and a few really break out from the crowd with a runaway success.
Crumbs Bakeshop is one of the success stories.
Jason Bauer was dating a young lawyer named Mia in 2003. She used to make him wonderful baked goods for his birthday and special occasions. According to Jason, “We were both at a crossroads in our careers and looking for something different.” In 2003, while they were still dating, they decided to take the plunge and open a bakery on the Upper West Side of Manhattan, where they both lived.
The first step was figuring out how to translate the recipes that Mia had made at home into commercial proportions. They hired a food scientist, whom they had found online, to take Mia’s recipes and scale them up.
They opened with a bang: 150 different types of items to start with including cupcakes, pies, cookies, brownies, scones and more. 2003 was a big year: “We were just dating. The store opened in March and we got married in June of that same year.”
Seven years later, they are married with two children, 27 stores operating and 8 more in the works. Today, they are selling over 1 million cupcakes every month! Their goal is to have 40 stores by the end of year.
They’ve expanded beyond New York to California, Connecticut and New Jersey and will be in DC and Chicago before the end of the year.
That’s a very fast expansion for any company and even more so given the economy over the last few years. They started the company with money that they scraped together. The good news is that each store generated cash flow. They were able to take the profits from the first store and invest in second store. It seems like ancient history, but in 2004 according to Jason, “you could go to any bank and get a $50k credit line. In Manhattan, there was a bank on every corner. I signed my name, we would get $200-$250k build a store, pay it back and do it again. We did that for the first 7-8 stores.”
Then, in 2008, they finally sold a portion of company to an angel investor with a lot of retail experience.
Despite a large product line, cupcakes are still over 80% of the business.
Cupcakes became incredibly trendy thanks to Sex and the City which featured Magnolia Bakery years ago. Magnolia’s partners split up and they went off to form their own competitive bakeries. There have been cookbooks and some local expansion, but there hasn’t been a national cupcake brand until Crumbs. When I asked Jason what makes them stand out, he says: “It’s about the quality and consistency of the product. You can get anybody to try anything once but what determines a successful business is repeat sales. Making sure customer service is there, stores look good, always introducing new products.”
There’s a cost to quality control: Jason has gained 40 lbs since they started! (In a move meant either to create guilt or motivation, their latest store is located next to a large gym.)
It’s not a “Mom & Pop” business anymore. Jason and Mia have brought in management who have retail experience and now employ almost 400 people. Mia has gotten out of the kitchen and they have professional commissaries in California, Long Island City and soon DC and Chicago.
“The biggest mistake entrepreneurs make is not knowing when to bring in support or let go. Try to micromanage the business and end up hurting it, not helping it.”
So, are cupcakes a fad? Jason doesn’t think so. Cupcakes are now their own product category. And, as he says: “Are cookies and brownies going anywhere?”