Crumbl's franchisee collapse accelerating
At least 60 locations shuttered this year. One Chapter 7 filing shows the trap: operator in Kentucky opened in 2024, already has $352,780 in liabilities against $10,000 in assets (used oven equipment). They lost $17,000 operating the thing and still owe $69,000 to the landlord for 2.5 years remaining on the lease.
Republic Bank loaned them $269,109 secured against equipment worth roughly 3.7 cents per dollar of debt. This couple was in the top 25% of Crumbl locations a year ago, talking about opening a third. Now they're filing bankruptcy after burning through a location that wasn't even finished with its first year.
The entire model is imploding. Franchisees took massive loans to sell $5 cookies in a saturated market. Banks backed it anyway. Both sides are about to learn that lesson expensively.
Confirmed three more closures of Crumbl locations, which brings my count of shutdowns to at least 60 so far this year. One of those three is in Louisville, and comes along with a Chapter 7 bankruptcy filing, which gives us a partial picture of an operator's finances. The operators in this case walked away from a location that was opened in 2024 and had 2.5 years remaining on its lease. According to court documents, it has $352,780 in liabilities compared with just $10,000 in assets, all in the form of signs and cookie-making equipment. There's no other assets listed, including inventory, receivables, deposits, etc. The equipment is the collateral for a $269,109, secured loan with Republic Bank. So the collateral is worth just 3.7 cents for every $1 of secured debt. The operator also said that it lost $17,000 operating the business this year. And it owes $69,000 to the landlord for those 2.5 years remaining on the lease. At one point, this was one of the top 25% of Crumbl locations and the operators were telling @NRNonline that they wanted a third location. You can check out the original NRN article with the operators here: https://www.nrn.com/restaurant-franchising/why-this-couple-chose-to-jump-into-franchising-with-crumbl And here's our look at Crumbl: https://www.restaurantbusinessonline.com/financing/cookie-empire-starting-crumble
Source
x.com