The Gourmet-Cupcake Market Is Crashing

Maybe this is a sign that we are making headway in the war on obesity  ….

Cooking with Kathy Man

The icing is coming off America’s cupcake craze.

The dessert became a cultural and economic phenomenon over the last decade, with gourmet cupcake shops proliferating across the country, selling increasingly elaborate and expensive concoctions.

The craze hit a high mark in June 2011, when Crumbs Bake Shop Inc., a New York-based chain, debuted on the Nasdaq Stock Market NDAQ -1.19% under the ticker symbol CRMB. Its creations—4″ tall, with fillings such as vanilla custard, caps of butter cream cheese, and decorative flourishes like a whole cookie—can cost $4.50 each.

After trading at more than $13 a share in mid-2011, Crumbs has sunk to $1.70. It dropped 34% last Friday, in the wake of Crumbs saying that sales for the full year would be down by 22% from earlier projections, and the stock slipped further this week.

As a business, making cupcakes has a relatively low barrier to entry and the…

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