Crumbl has closed at least 57 locations this year, before accounting for openings. | Photo by Jonathan Maze
Jason McGowan, the CEO of Crumbl, stood up in front of franchisees at a convention center in Provo, Utah, in July 2025. Behind him was a retro-futuristic version of the Crumbl logo, in space, declaring that “The Future is Now.” On either side were balloons designed to look like space shuttles blasting off.
McGowan touted the company’s latest and biggest initiative, a line of dirty sodas tested over the previous weeks at the chain’s locations in Canada, according to franchisees in attendance. He presented data saying the sodas would boost sales 20% and would be a crucial part of the company’s strategy to get unit volumes to $2 million, from the $1.1 million they were last year.
The talk would not prove prescient. Dirty sodas have not lifted Crumbl’s sales, which have instead gone in the opposite direction. Sales at the treat chain have declined steadily over the past two years. That decline hit a freefall this summer.
August was particularly bad, with traffic at the chain’s more than 1,000 locations down 32% year over year, according to the traffic tracking firm Placer.ai. According to an internal company document provided to Restaurant Business, sales in August were 70% lower than they were two years earlier. Several franchisees said it was the worst month in company history.
Now, Crumbl stores have started to shut down. At least 57 locations of the treat chain have closed this year, according to an analysis of local reports and a location count on the company’s website. Operators warn of an insolvency crisis, and say more could close. At least 55 franchises are listed for sale on various broker websites.
There are also signs of financial stress from a company that just two years ago took an investment from the private-equity firm TSG Consumer Partners. Crumbl finished last year with just over $6 million in cash. And last week the company laid off staff at its Lindon, Utah, headquarters, including all but two employees who work directly with the chain’s franchisees, according to operators.
“Seeing some stores close and seeing the … loss of profitability and all those kinds of things have been painful for a lot of people,” McGowan, one of Crumbl’s two co-founders, said in a presentation last week to the company’s franchisees, called CEO Notes, which Restaurant Business was able to listen to along with one of the chain’s operators. “Been painful here at HQ. And at the end of the day, I’m the CEO and the buck stops with me. It’s my fault where we are today.”
Regardless, Crumbl has spent the year facing external controversy and internal turmoil, worsening a decline at a brand that, not that long ago, was one of the nation’s hottest franchises.
This story is based in conversations with numerous franchisees, who would only speak on condition of anonymity, along with company documents and messages, an analysis of Crumbl’s franchise disclosure documents, and Technomic data. We sent several requests to McGowan and Crumbl as well as TSG for comment. They have not responded.
Explosive growth
McGowan and his cousin, Sawyer Hemsley, founded Crumbl in a brown shack in Utah in 2017. The brand features a rotating menu of six different cookies every week, plus two classic flavors, Chocolate Chip and the Pink Sugar Cookie.
The cookies are large. A single Chocolate Chip Cookie has 720 calories. Some can be up to 900. Desserts, such as a Dubai Chocolate Brownie, can have more than 1,100.
McGowan, who once worked with the tech industry, gave the brand an envious technology backbone. The chain embraced third-party delivery, along with a minimalist design, highlighted by the long, pink boxes that make the cookies appear almost as if they are on display.
These displays were made perfectly for social media, which is constantly hungry for the next big thing from restaurants.
In 2021, the chain went viral as Crumbl filled a consumer need for a break coming out of the pandemic. The company boasts more than 17 million followers combined on Instagram and TikTok.
Sales took off. Average-unit volumes, already at $1.3 million, hit $1.7 million in 2021 and $1.84 million in 2022, according to the company’s franchise documents. Operators often struggled to keep pace with demand, and the busiest locations employed as many as 80 people.
Stores were profitable. Average store profit margins exceeded 21% every year from 2019 through 2021.
Crumbl’s social media virality, and its unit economics, lured franchisees in droves. Crumbl went from just 55 stores in 2019 to 327 by 2021 to more than 1,000 by 2024. In 2023, just six years into its existence, Crumbl was the largest cookie chain the country and generated more than $1 billion in system sales.
Its franchise offering was mostly sold out. That year, McGowan won the Ernst and Young Entrepreneur of the Year award.
“We have never advertised once for a franchise partner,” McGowan said in a 2022 episode of the Restaurant Business podcast A Deeper Dive. “What happens is they come to the store, they try the cookies, and they’re amazing, and they become fans and they become emotionally attached to the brand and the cookies, and then those people apply. Those are the people we want to pick from to say they should go open a store.”
But cracks began to show in 2023, when average-unit volumes fell by nearly $700,000. The company’s volumes improved the next year, to $1.4 million. But they fell back to $1.1 million in 2025, and Crumbl stopped reporting profitability numbers.
The cost of opening a Crumbl, meanwhile, has soared. The estimated initial investment for a Crumbl ranges from $849,000 to $1.47 million. That’s up more than 500% compared with the list investment in 2019.
While opening costs have risen throughout the restaurant space, a selection of similar concepts, including Nothing Bundt Cakes, Cold Stone Creamery, Smoothie King, Great American Cookies, and Tropical Smoothie, shows increases ranging from 26% to 46% over the same timeframe.
The rotating menu
Crumbl’s rotating menu has been a crucial part of its offering since shortly after the brand’s founding. But it is also a source of complexity for the chain’s franchisees. “We joke that learning somebody else’s entire brand is about as difficult [as it is] for us to learn an entire week’s worth of cookies,” one franchisee said.
The new lineup of cookies debuts every Monday. Crumbl has historically held its weekly recipes close to the vest, even from franchisees.
Operators are given a weekly ordering guide, featuring a selection of ingredients and other items they need to order, three weeks before debut of the new menu. They get their items from two primary sources: Crumbl Foods and Sysco.
Franchisees sometimes source items locally, such as fresh fruit or, more recently, liquid egg whites. One operator said they had to scour local Walmarts to buy every bottle of pistachio cream they could find for a Dubai Chocolate Brownie. More recently, according to company documents, Crumbl has struggled to source enough white chocolate chips.
Operators get the recipes for the next week on Wednesday, along with videos to help prepare the new desserts, giving them three working days to train employees on any new recipes, order more ingredients, and get the dough ready. Crumbl is closed on Sundays.
The weekly menu, while unique, can make sales volatile, because they’re dependent upon the popularity of the different cookie flavors, which are typically designed to play well on social media. But social media can be fickle. And some of the items fall flat.
@chandlersoher Worst reaction video yet!!! Crumbl cookies are always fun to try. I had high hopes for this one! MAN WHAT A SURPRISE #CRUMBL#MANGOTAJIN#review♬ original sound – Chandler✨| Louisiana Creator
That happened in June, when the company tried a Tajín-flavored cookie, a mango sugar cookie rolled in a Tajín cookie crust and topped with mango-Tajín frosting. The cookie was heavily criticized by social media reviewers, one of whom called the treat “inedible.” A Flamin’ Hot Cheetos cookie in July also performed poorly.
“The purpose of the strategy was to drive engagement with our TikTok customers and have them come back,” McGowan told franchisees. “It failed. It did not work. And all of our sales suffered for it.”
And as sales have fallen, stores have cut staff to match the lower demand, operators say. But that can also create backups when big promotions bring in a lot of customers.
That happened in early September, when Crumbl kicked off a Minecraft week just after a brutal August. Sales were much stronger, but some employees were frustrated. “I closed with one person and it was HORRIBLE,” one employee wrote in a response to a Reddit post. “I begged my GM to call two people in because it was rough.”
The Sunday Rule
As a franchise, Crumbl is unusually controlling and punitive, based on an analysis of the company’s franchise agreement, compared with more than 20 other franchises, including relatively similar concepts like Nothing Bundt Cakes and Tropical Smoothie.
Crumbl requires franchisees to buy and install camera equipment for their stores, according to the agreement. And it requires itself to monitor those cameras.
The company in its franchise agreement has “system non-compliance” fines ranging from $250 to $1,000, such as $250 for store uncleanliness or poor product quality, up to $1,000 for using “unauthorized packaging.” Crumbl, which has access to franchisee bank accounts, will either send a warning to operators violating these rules or will take the money out immediately.
There is also a broad, $250 fine for “miscellaneous noncompliance.”
That brings us to the Sunday Rule. Crumbl is closed on Sundays, following its founders’ Mormon beliefs, and to give employees and operators a break. The franchise agreement prohibits operators from working on Sundays, though there is not a fine explicitly attached to that rule.
In 2021, when the company’s sales took off, Crumbl relaxed the rule, allowing teams to go in on Sundays to make dough.
But by 2023, the company brought back the Sunday Rule, not allowing anybody to even walk in the store. If a store owner walked into their location to use the restroom on a Sunday or drop something off, or fix a problem, they may well see a fine deducted from their account on Monday, or at least a warning.
More recently, Crumbl relaxed that rule again, allowing one owner to go into the store on Sundays. Franchisees we’ve spoken with said they’d received warnings or fines for such violations as having parties for workers on Sunday or going in for paperwork along with a friend to provide assistance, after the owner had surgery.
Franchisees also face fines for running out of product.
In July, to promote “Thins Week,” Crumbl offered customers free Thin Cookies on a Monday. Franchisees said they received a week’s notice of the promotion and were responsible for giving those cookies to anybody who asked, which generated long lines of customers wanting free cookies.
Operators who ran out received violation notices and $1,000 fines, according to franchisees and documents provided to Restaurant Business.
Crumbl’s dirty sodas did not sell well since their spring introduction. | Photo by Jonathan Maze
Dirty sodas
As a Utah concept, Crumbl is located in the epicenter of the dirty soda movement. So maybe it wasn’t a surprise that the company would turn to beverages mixed with flavorings and cream.
The company, which over the years has removed ice cream from its menu and added more desserts, started selling dirty sodas in Canada last year. They’d been on the menu there for a few weeks when McGowan arrived at the company’s franchise convention last summer. Franchisees who were there said he brought bodyguards with him.
Franchisees were being asked to spend $30,000 to $50,000 to install the soda equipment for the product. Company projections, seen by Restaurant Business, suggested that operators would sell $20,000 to $70,000 worth of dirty sodas per store, per year, and could pay that equipment off in half a year to three years, based on sales.
Some operators were skeptical, and others didn’t have the funds to pay for the equipment. By April of this year, the company’s “Brand Excellence Team” sent letters of “non-compliance” to operators that did not install the equipment or sign a contract with Coca-Cola, according to documents seen by Restaurant Business.
“Please note that your failure to comply with the demands set forth herein may result in the default or termination of your franchise agreement,” the letter stated. One operator we spoke with said they had no choice but to comply, because a default would have put them in default on their lease agreement.
Crumbl has done little in the way of marketing the effort. Less than 5% of the company’s social media posts on Instagram and TikTok have featured dirty sodas since the chain rolled the product out in late March, according to a Restaurant Business analysis. The bulk of those came in the first week of August, during “Soda Week,” when Crumbl gave away free drinks.
The company also paid influencers to promote the product that week. Yet the marketing has largely disappeared since then.
What did dominate the news of the product over the summer was controversy. The influencer Itay Shechter highlighted the 32-ounce version of Crumbl’s “Crazy Cousins” drink, named after the founders’ nickname for themselves. The beverage features a full can of Red Bull mixed with Mountain Dew or Sprite, pineapple syrup and strawberry puree and topped with coconut cream.
The largest version features 186 grams of sugar and 840 calories. Shechter, who goes by the Instagram handle @gfbeef, in late May posted a video of himself walking out of a Crumbl location holding one of the chain’s pink cups, saying people would have to be “crazy” to drink something he called “liquid garbage.”
Dr. Mark Hyman, a physician, piled on. “This is a metabolic disaster and should be illegal. Please do not drink this.”
It’s fair to wonder why a chain that sells exclusively desserts should be the subject of such criticism, but mainstream media picked up on the controversy. The result: Many customers learned first about the sodas’ sugar content before they learned about the sodas themselves.
McGowan told franchisees that Soda Week was the worst week in company history.
Closures
Crumbl’s weakening sales and store-level profitability have led to accelerated closures this year. But even that comes with a price.
The treat chain requires franchisees to pay a “de-identification fee” of $10,000 when they close a store without quickly removing Crumbl’s signs, plus $500 per day, according to operators and the company’s franchise disclosure documents. Crumbl will take those funds directly out of franchisees’ accounts.
If the closure is unauthorized, Crumbl will go after the franchisee for “liquidated damages.” The company’s franchise documents give the company the right to charge operators up to three years’ of future royalties and marketing funds that would be owed on a store if it remained open.
This can total tens of thousands of dollars, according to multiple copies of such notices provided to Restaurant Business.
Franchisees looking to avoid that fate must get company approval, from a committee. Several operators said that the committee is not approving any store closures right now.
A closed Crumbl in suburban St. Paul, Minnesota.
Operators could soon start walking away regardless if their profitability doesn’t recover. Until last year, Crumbl required franchisees to sign five-year franchise agreements. Most of the chain’s more than 1,000 locations were signed under those deals, and those agreements have started to expire.
Some are already doing so. Crumbl finished 2025 with 1,101 shops. We’ve been able to identify 20 new openings. The company’s website lists 1,064 current locations, suggesting the closure of at least 54 shops.
In 2024, Crumbl franchisees formed a franchise association, the Crumbl Franchise Partner Association. The move did not sit well with McGowan. “I strongly discourage participation in the CFPA, not because of the people involved, but because the concept itself risks amplifying division and distraction without addressing real-world challenges effectively,” he said in a message to franchisees, seen by Restaurant Business.
The financials
Last year, Crumbl sold a preferred equity stake to TSG Consumer Partners, according to the FDD. Bloomberg last year reported that Blackstone and Golub Capital arranged $500 million in private credit for the treat franchise alongside that investment.
But Crumbl’s finances are showing signs of deteriorating. In recent weeks, employees have posted on various social media channels that they’d been let go. One of them is Ben Hatch, who goes by the Instagram handle @benfromcrumbl, and can be seen on some of the chain’s social posts. Much of the franchise support staff has also been let go, according to operators and company messages seen by Restaurant Business.
According to the company’s most recent FDD, Crumbl generated $33.9 million in net income last year.
But the company distributed $41.6 million to its owners last year. And cash flow declined to $6.4 million from $24.8 million the year before.
Crumbl’s biggest expense is general and administrative (G&A) costs, or corporate overhead. The company spent $86.2 million, or more than half of the $155.7 million in franchise revenues, on G&A last year.
Most of that corporate overhead was in the form of a $60.3 million management fee to Crumbl Enterprises, the parent company of Crumbl Franchising. The fee is for “management services,” according to the franchise document.
That management fee first started appearing in 2023, according to the company’s franchise documents. Crumbl has paid more than $115 million in such fees since.
Crumbl has also sent $235 million in distributions to its owners since 2022, including $100.8 million 2024, according to the FDDs.
The company’s supply chain also generates revenue. Crumbl Foods last year generated $35.6 million in revenue last year, though that was down from $41.3 million a year earlier. The supplier has generated $145 million in revenue for the company since it was established in 2021.
Is change coming?
In May of this year, McGowan and Hemsley announced plans to step down from their day-to-day roles, once they find replacements, though they will remain on the board.
“This next chapter gives the company an opportunity to focus on scale, sharpen the experience for customers and franchise partners, and continue pushing the product innovation that has always set Crumbl apart,” the two said in their announcement. “What started as an idea between cousins has turned into something much bigger than we expected. The foundation is strong, and the future is exciting.”
In July, Bryce Redd, founding chief technology officer and a board member, stepped away from that role and was replaced by Jacob Moncur. Redd’s LinkedIn page now says he is on a “career break.”
McGowan and Hemsley remain visible in Utah. Earlier this year, McGowan’s Provo, Utah, estate was featured in the Utah Valley Parade of Homes. At nearly 27,000 square feet, the home has 10 bedrooms, 14 bathrooms, an indoor sports court, an outdoor amphitheater, soccer field and a “Hobbit-themed” tree-trunk playhouse. It cost a reported $50 million to build.
Hemsley, meanwhile, in 2022 created Hemsley Ventures, an investment and operating fund that buys, restores, develops and operates properties. It features a cheesemaker, Rockhill Cheese, a pie shop called Crust Club, a ranch, a bowling alley, and a drive-in.
McGowan told franchisees that the company is on the verge of naming a new CEO. He also said that the brand has found a new head of marketing and a new chief financial officer, both of whom are expected to start in the coming weeks.
Crumbl is planning several changes in the way it decides on what cookies to offer each week. Crumbl plans more partnerships, similar to the Minecraft promotion that generated relatively strong sales.
It is also using more technology to determine what kind of cookies to run, rather than simply try to get social media attention. It is toying with protein desserts, such as Cookie Dough Protein Bites, which could help attract GLP-1 users that may have abandoned the chain in the past couple of years. And it may sell more small cookies. It plans to bring back a store testing program to determine which cookies will sell better. “We’re going to just focus on things that we feel could be home runs, and we’re going to put them in the stores through a testing program,” McGowan said.
Crumbl also appears set to cut back on the new flavors it introduces. The company’s goal, McGowan told franchisees, is to have a new flavor every week. But the chain will have a better flavor calendar, with set flavors for holidays such as the Grinch Cookie during Christmas and the Dubai Brownie with Strawberry around Valentine’s Day.
The idea is to improve transparency for franchisees, while maintaining a rotating calendar. “We believe this will result in better transparency, more excitement for our franchise partners, and then also throwing one or two new ones a week that allow [customers] to still be excited and caught off-guard from excitement,” McGowan said.
Sales did improve in September, thanks to promotions involving Minecraft, Little Debbie, and the company’s birthday. But they have slowed again more recently, according to franchisees.
The week of McGowan’s CEO Notes presentation, celebrating Crumbl’s 9th birthday, was particularly hectic. It would take until late Wednesday before Crumbl Foods was able to source enough blueberry muffin mix for a Blueberry Muffin to run the first week of October.
Late the next day, a Thursday, the company decided to extend a one-day “6 for 4” promotion, giving customers two free cookies when they bought a box of four, for another two days.
The layoffs hit franchisees hard. All but two of the company’s franchise consultants, who work with operators, were laid off this month. In a message to franchisees, Taylor Ransom, the company’s SVP of operational excellence, said that the company was working through the changes.
“As we navigate next steps and determine how best to support you going forward,” Ransom said, “general ops support will be limited in the short term.”
Restaurant Business Editor-in-Chief Jonathan Maze is a longtime industry journalist who writes about restaurant finance, mergers and acquisitions and the economy, with a particular focus on quick-service restaurants.
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