Marcus Lemonis offers Crumbs Bake Shop (NASDAQ:CRMB) an opportunity to expand from a niche cupcake specialty store to a confectionery and baked goods outlet featuring a wide array of product. The following is a list of Lemonis' investments:
- Matt's Cookies
- Sweet Pete's
- Pie King
- Keyport Creamery
- Key west Key Lime Pie Company
- Little Miss Baker
- Wicked Good Cupcakes
- Rose's Café and Bakery
Edward Slezak, the current Crumbs CEO said in a CNBC interview in April that the cupcake is "too narrow of an assortment" to attract daily traffic. Evidently, Marcus Lemonis agrees as CNBC has quoted him saying the "cupcake business is not viable long term unless" it diversifies.
Lemonis' investments are significant because they represent brands with few physical storefronts. These are brands built on distribution channels. Lemonis has recently taken action to incorporate many of these products under one roof. In a sale filed last Wednesday Lemonis' Jax Club Property LLC bought the Seminole Club at 400 North Hogan Street, Jacksonville Florida. Lemonis has stated that Sweet Pete's will be a co-tenant with Rose's Café and Bakery, Key West Key Lime Pie Company, and Keyport Creamery, formerly known as Mr. Green Tea Ice Cream. The acquisition provides credibility to Lemonis' vision and general business plan.
Crumbs offers Lemonis access to two of his three P's (People, Process, and Product). Crumbs offers Lemonis access to approximately 165 trained employees. More importantly, they can offer him access to a process. Crumbs can continue to leverage their new supply chain management system. As detailed in the company's 10-K filed March 31, 2014, Crumbs has in place "a data warehouse and centralized automation allocation system to streamline its supply chain management and assist with placing adequate orders".
While Crumbs built a brand on oversized decadent cupcakes, the product may be the least decisive factor in Lemonis opportunistic targeting. The final P, Product, is what Lemonis can bring to Crumbs in order to solve the core variety issue plaguing the company. It is clear that Lemonis has collected an extensive list of suitable companies to pair with Crumbs. Together they can offer a suite of sweet merchandise under one roof.
Disclosure: The author has no positions in any stocks mentioned, but may initiate a long position in CRMB over the next 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.
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