It hasn’t been a sweet week for the Oklahoma City-based owners of Dippin’ Dots ice cream, which also owns a sizable chunk of the flailing cupcake chain Crumbs Bake Shop Inc.
Dippin’ Dots, had hoped to partner with Crumbs on co-branding, cross-branding and distribution of its flash-frozen ice cream pellets before the bake shop abruptly closed all of its stores on Monday.
An investment group led by Oklahoma City-based Chaparral Energy CEO Mark Fischer and son Scott Fischer purchased the Dippin’ Dots brand out of Chapter 11 bankruptcy in 2012.
The Fischers have also recently invested millions of dollars in the struggling Crumbs Bake Shop and are also majority shareholders in the company. The cupcake chain is a separate investment from Dippin’ Dots, and the Crumbs store closures will not affect the ice cream company, a spokesman for the Fischers said Tuesday.
“As a separate investment and business from Dippin’ Dots, the recent challenges at Crumbs have zero impact on Dippin’ Dots. Our Dippin’ Dot business is performing well with revenues up 22 percent in the past year,” Brent Gooden, a spokesman for Fischer Enterprises said in a statement. “Beyond noting the situation faced by Crumbs is an unfortunate development, Fischer Enterprises cannot comment further because a number of issues will need to be sorted out through a formal legal process.”
Crumbs Bake Shop notified employees this week that it would immediately close all of its remaining 48 stores in 10 states. New York City-based Crumbs’ stock was suspended by NASDAQ on July 1 for failing to maintain minimum stock listing requirements. The chain had no Oklahoma stores.
The company said in a regulatory filing Thursday that the stock suspension would cause Crumbs to default this week on $9.3 million of tranche notes and $5 million in unsecured notes.
Mark Fischer; Fischer Enterprises LLC, and Fischer Investments LLC entities controlled by Mark Fischer own 56 percent of Crumbs’ outstanding stock, according to the company’s most recent proxy filing.
The Fischers also agreed to loan the struggling Crumbs chain $5 million in January to invest in a new business plan that centered around selling Crumbs franchises and closing or co-branding unprofitable company-owned stores.
Crumbs stock price has plummeted 95 percent since January and closed at 4 cents per share Tuesday on the over-the-counter market.
In a statement issued after the Fischers agreed to loan Crumbs the $5 million earlier this year, Scott Fischer said he believed Dippin’ Dots and Crumbs could benefit by combining their marketing and sales efforts.
“We view our investment in Crumbs as a unique opportunity to work with a well-known company with a recognized brand name and established customer base,” Scott Fischer said. “We believe that joining forces with Crumbs will allow us to create opportunities that could result in a win-win situation for both Crumbs and Dippin’ Dots. The areas of operation and sales concepts for the two companies are complementary and thereby could potentially result in increased market exposure for both.”