The Ongoing Challenges Facing the Crumbl Cookie Franchise

Beloved cookie franchise Crumbl has been experiencing challenges lately.

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Crumb via Facebook

Overview: Crumbl Cookies, known for its rapid growth and delicious treats, has faced some tough times recently. Let's break down what's been happening.

In December 2022, the U.S. Department of Labor found that 11 Crumbl franchisees had violated child labor laws. The violations occurred in 6 states and found violations affecting 46 workers at Crumbl Cookies’ locations in California, Minnesota, New Hampshire, Tennessee, Utah, and Washington.

The penalties were minor, but infractions included minors working longer and later shifts than child labor laws allow and having them operate "potentially dangerous" ovens and machinery.

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Fast forward to October 2023, Crumbl confirmed to the Salt Lake Tribune that it had begun layoffs. The LinkedIn posts rolled in from executives at Crumble confirming that they had been laid off. Employees claimed there had been at least 100 layoffs. Many of the purported layoffs were at the flagship location in Orem, Utah.

There was also controversy surrounding one of Crumbl's founders, Sawyer Hemsley. Social media posts showed him living a lavish lifestyle, which didn't sit well with people considering the layoffs happening within the company.

The layoffs started after a summer of legal battles for cookie behemoth, Crumbl. Dubbed the "fastest-growing dessert chain in the United States " by the New York Times, Crumbl had engaged in legal battles with competitors Dirty Dough and Crave. While they dismissed the suit against Crave, they settled with Dirty Dough in November of 2023.

A baking rack filled with cookies at Crumbl.

This year Crumbl, which has grown at an explosive pace since 2017, permanently closed stores for the first time. According to its FDD, the dessert retailer closed seven locations in 2023. Four Crumbl locations were in California, one was in Florida, Georgia, and Utah. The chain also purchased a franchised unit in California and took corporate ownership.

According to MSN, "In 2023, 571 Crumbl locations reported an average revenue of $1.16 million, making an average net profit of $122,955. Meanwhile, in 2022, 324 units generated an average revenue of $1.84 million and an average net profit of $298,319. This change marks a 37% decrease in average revenue and a 59% drop in average net profit."

When you look at the Franchise Disclosure Document, the total investment is estimated between $460,166 - $1,266,333, not including royalties and marketing fees.

With investment levels like these, what are your thoughts about Crumbl and its future?

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