A few years ago, Crumbl was the cookie brand everyone was talking about. Pink boxes filled social media feeds, weekly flavour drops went viral, and new stores seemed to open every week. In 2026 the story looks very different. At least 57 Crumbl stores have closed so far this year, around 55 more are listed for sale by franchisees, and one Kentucky franchise owner has filed for Chapter 7 bankruptcy.
I dug into the numbers behind the headlines to explain why Crumbl stores are closing, what Chapter 7 means for a franchisee, and what anyone thinking about buying a franchise should learn from it. For more on business law and risk, browse our business legal and insurance section.
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In this article
- Crumbl Stores Closing: The Key Numbers
- The Chapter 7 Filing: What Happened in Louisville
- What Is Chapter 7 Bankruptcy for Franchise Owners?
- Why Are Crumbl Stores Closing? 5 Reasons Behind the Slump
- Is Crumbl Going Out of Business?
- 7 Lessons for Anyone Buying a Franchise
- Frequently Asked Questions
- Final Thoughts
Crumbl Stores Closing: The Key Numbers
- Network size: Crumbl, founded in Logan, Utah in 2017, reports about 1,071 locations and more than 29,000 employees.
- Closures: At least 57 stores closed in 2026 so far.
- For sale: Roughly 55 more franchise locations listed with brokers.
- Sales slide: Average unit volume fell about 16%, from around $1.35 million in 2024 to about $1.14 million in 2025.
- Foot traffic: Down 32% year over year in August 2026, according to location-analytics firm Placer.ai.
- Worst month: Some franchisees reported August 2026 sales roughly 70% below the same month two years earlier.
These figures come from TheStreet’s reporting, republished on Yahoo Finance. Crumbl had not commented in that report.
The Chapter 7 Filing: What Happened in Louisville
On 1 October 2026, Red Sheep St. Matthews LLC, the company behind the Crumbl store in St. Matthews, Louisville, filed for Chapter 7 bankruptcy in the US Bankruptcy Court for the Western District of Kentucky. The business is owned by Richard and Emily Diamond, who at one point operated up to three Crumbl locations in the Louisville area. The filing lists more than $352,000 in liabilities.
It’s important to be clear: this is a franchisee filing, not Crumbl the company. Crumbl corporate has not filed for bankruptcy. But when individual owners start liquidating, it signals real pressure inside the system.
What Is Chapter 7 Bankruptcy for Franchise Owners?
Chapter 7 is often called “liquidation bankruptcy.” Unlike Chapter 11, which lets a business restructure and keep operating, Chapter 7 shuts the business down.
- A trustee is appointed to take control of the business’s assets.
- Assets are sold, such as ovens, mixers, fixtures, and any remaining stock.
- Creditors are paid in a set order of priority from whatever the sale raises.
- The business entity is closed, and most remaining business debts go unpaid.
The US Courts Chapter 7 guide explains the process in detail.
The personal guarantee trap
Here is the part many first-time franchisees underestimate. Filing for an LLC doesn’t always protect the owners personally. Commercial leases, equipment loans, and franchise agreements often require a personal guarantee. If the LLC can’t pay, landlords and lenders can pursue the owners directly. That’s why some franchisees end up filing personal bankruptcy too. Anyone signing a franchise agreement should have a lawyer review every guarantee before signing.
Why Are Crumbl Stores Closing? 5 Reasons Behind the Slump
1. The novelty wore off
Crumbl’s rotating weekly menu and social-media buzz drove explosive early growth. But hype-driven food trends tend to fade. When customers stop treating the pink box as an event, visits drop fast.
2. Too many stores, too quickly
Growing past 1,000 locations in under a decade meant stores started competing with each other. When two outlets share one customer base, both see lower sales per store.
3. New products didn’t land
Crumbl launched a “dirty soda” line in July 2025 to bring in new customers, but it reportedly didn’t generate meaningful revenue. A later product push expected to lift sales by 20% also fell short of what owners needed.
4. Price-sensitive customers
Premium cookies are an easy treat to cut when household budgets tighten. Higher prices for ingredients and labour pushed menu prices up just as shoppers were pulling back.
5. A crowded cookie market
Several cookie brands launched around the same time and have struggled for about two years. Chip City, a New York chain with around 50 stores, closed its three Connecticut locations in September 2026, though it hasn’t filed for bankruptcy and plans further openings.
If you’re weighing a franchise purchase, independent advice before you sign can save you from costly surprises. [CLIENT_LINK: insert client anchor text and URL here] can help you review franchise agreements, leases, and personal guarantees before you commit.
Is Crumbl Going Out of Business?
Not based on what’s public. With more than 1,000 stores, 57 closures represent roughly 5% of the network. That is significant, but it’s not a collapse. What it does show is that the brand has moved from rapid growth into a consolidation phase, where weaker locations close and stronger ones survive.
For customers, the practical impact is limited: your nearest store may close, but most locations remain open. For franchisees, the outlook is tougher, with falling sales and a growing number of resale listings that make it harder to sell a store at a good price.
7 Lessons for Anyone Buying a Franchise
- Study the Franchise Disclosure Document (FDD). Look closely at unit-level financial performance, closure rates, and litigation history. The Federal Trade Commission sets the rules on what franchisors must disclose.
- Talk to existing and former franchisees. They’ll tell you what the brochure won’t.
- Beware of trend-driven concepts. Ask whether customers will still want the product when it’s no longer new.
- Check territory protection. Make sure the franchisor can’t open another store next to yours.
- Stress-test your numbers. Model what happens if sales fall 20% or 30%. Could you still cover rent, payroll, and loans?
- Limit personal guarantees. Negotiate caps or time limits where possible.
- Keep a cash reserve. Six to twelve months of operating costs can be the difference between surviving a slump and filing for bankruptcy.
For more small-business strategy, see our business news and analysis.
Frequently Asked Questions
How many Crumbl stores have closed in 2026?
At least 57 so far this year, with about 55 more listed for sale by franchisees.
Did Crumbl file for bankruptcy?
No. A franchisee, Red Sheep St. Matthews LLC in Louisville, filed for Chapter 7. Crumbl corporate had not filed.
What is the difference between Chapter 7 and Chapter 11?
Chapter 7 liquidates and closes the business. Chapter 11 lets it reorganise its debts and keep operating.
Why are Crumbl sales falling?
Fading novelty, too many stores, products that didn’t catch on, price-conscious customers, and a crowded cookie market.
Is buying a Crumbl franchise still a good idea?
That depends on location, price, and your financial cushion. Falling average sales mean any buyer should review the FDD carefully and get independent legal and financial advice. This article isn’t financial or legal advice.
Final Thoughts
Crumbl’s 2026 slump is a textbook case of what happens when a viral brand grows faster than lasting demand. The company is still large and operating, but the closures and the Chapter 7 filing are warnings every would-be franchisee should take seriously. Do the homework, understand your guarantees, and plan for the day the hype fades. Follow BusinessToMark for more franchise and small-business news.
