How to Crumbl Global Value Chains
I've been saying that outsourcing to the East will soon be a thing of the past. Now, there are business models emerging that prove dynamic, insourced operations can scale effectively. The authenticity of the founders is still evident—symbolized by the weekly basket of cookies they personally present.How Crumbl Builds Resilience
Crumbl’s rapid expansion and ability to deliver a consistent product nationwide stem from several insourcing strategies:
Centralized Ingredient Sourcing: Crumbl uses approved suppliers and pre-measured ingredient packets, ensuring every location receives identical, high-quality inputs. This reduces reliance on global commodity markets and mitigates the risk of ingredient variability or shortages.
In-House Ingredient Production: When suppliers faltered during supply chain crises, Crumbl began producing some of its own ingredients, further insulating itself from external shocks.
Advance Planning and Flexibility: The company plans its menu and ingredient needs at least six months ahead, allowing it to anticipate disruptions and secure supply before market volatility hits.
Standardized On-Site Production: Rather than shipping finished goods, Crumbl equips each store to bake cookies fresh daily using standardized recipes and procedures. This decentralization ensures freshness and consistency while reducing the risk of logistics bottlenecks.
Lessons for Other Industries
The Crumbl model highlights key principles that can be adapted by companies in textiles, food, and beyond:
Localize Production: By moving more production in-house or closer to the point of sale, brands can reduce exposure to cross-border tariffs, shipping delays, and geopolitical risks.
Control Inputs: Sourcing or producing critical ingredients and materials directly allows for greater quality control and supply security, especially when global markets are volatile.
Advance Planning: Long-term forecasting and flexible product development can help companies pivot quickly when supply chains are disrupted.
Decentralize Distribution: Enabling local facilities to handle final production or assembly can mitigate the impact of transportation bottlenecks and import restrictions.
Crumbl’s commitment to fresh, in-store baking delivers quality and consistency but comes with high labor costs. Each franchise must staff bakers and customer service roles, and rising minimum wages, low unemployment, and “tipflation” have increased payroll expenses - yet the margins are still there.
Margins and Profitability
- Revenue & Profit: Average annual sales per store are about $1.2–$1.8 million, but net profit per store are around $122,955.
- Operating Margins: Store-level operating margins can range from 30% to about 10% with rising cost.
- Company Margins: At the corporate level, margins remain strong (over 30%), driven by royalties and ingredient sales to franchisees.
- Franchise Fees: Franchisees pay 8% of gross sales in royalties and 2–3.5% for marketing.
Crumbl’s insourcing strategy offers a valuable case study for brands looking to localize production and control supply chains amid trade wars. However, the model’s success depends on managing labor costs and maintaining margins as the business scales. Brands in food, textiles, and other sectors can adapt these lessons to build resilience and quality in a turbulent global market.