Crumbl has closed at least 57 locations this year as sales for the Utah-based treat chain continue to decline, according to an analysis of local reports and the company's website. The company has also recently laid off most of its franchise support staff at its Lindon, Utah, headquarters.
Sales at the chain have declined steadily over the past two years, with a significant drop occurring this summer. In August, traffic at the company's more than 1,000 locations fell 32% year over year according to Placer.ai, while an internal company document reported sales were 70% lower than they were two years prior.
CEO Jason McGowan recently told franchisees that the company's recent efforts to introduce a line of dirty sodas failed to lift sales and instead caused sales to suffer. Despite projections that the beverages would boost sales by 20%, the initiative has faced significant criticism. In one instance, an influencer described a 32-ounce version of a drink as liquid garbage, and a physician described the beverages as a metabolic disaster.
The company is facing financial stress after finishing last year with just over $6 million in cash. While Crumbl generated $33.9 million in net income last year, it distributed $41.6 million to its owners, and cash flow declined to $6.4 million from $24.8 million the previous year.
Operational costs remain high, with general and administrative costs totaling $86.2 million last year. This includes a $60.3 million management fee paid to Crumbl Enterprises. Additionally, franchisees face high costs to open new locations, with estimated initial investments ranging from $849,000 to $1.47 million, a rise of more than 500% since 2019.
Founded in 2017 by Jason McGowan and Sawyer Hemsley, Crumbl grew from a single Utah shop to more than 1,000 locations by 2024. The brand utilizes a rotating weekly menu of six different cookies to drive social media engagement. However, the complexity of the rotating menu and the requirement for franchisees to install expensive soda equipment have created challenges for operators.
Crumbl is currently planning several strategic shifts, including the potential appointment of a new CEO and a new head of marketing and chief financial officer. The company also intends to use more technology to determine cookie popularity and may introduce protein-based desserts to attract new customers.
