Traffic at Crumbl's more than 1,000 cookie shops fell 32% year over year in August, according to the tracking firm Placer.ai, and an internal company document shows August sales ran 70% below their level two years earlier. Several franchisees called it the worst month in company history. At least 57 locations have closed this year, at least 55 franchises are listed for sale on broker sites, and operators warn of a broader insolvency crisis.

The collapse marks a sharp reversal for a chain that hit $1.84 million in average-unit volumes in 2022 and generated more than $1 billion in system sales in 2023, six years after co-founders Jason McGowan and Sawyer Hemsley opened the first shop in Utah in 2017. Volumes fell by nearly $700,000 in 2023, recovered to $1.4 million in 2024, then dropped to $1.1 million in 2025 — the same year Crumbl stopped reporting profitability numbers. Average store margins had exceeded 21% every year from 2019 through 2021.

The dirty soda miscalculation

At the chain's franchise convention in Provo, Utah, in July 2025, McGowan pitched a dirty soda line tested in Canada, projecting a 20% sales lift and calling it central to reaching $2 million unit volumes. Franchisees were asked to spend $30,000 to $50,000 per store on soda equipment, with company projections of $20,000 to $70,000 in annual beverage sales per location.

Sales went the other direction. By April, Crumbl's "Brand Excellence Team" had sent non-compliance letters to operators who had not installed the equipment or signed a Coca-Cola contract, warning that failure to comply "may result in the default or termination of your franchise agreement." One operator said compliance was forced because a default would have triggered a lease default.

Marketing support was thin. Less than 5% of Crumbl's Instagram and TikTok posts since the late-March rollout featured dirty sodas, with most appearing during "Soda Week" in early August. The product instead drew national attention when influencer Itay Shechter called the 32-ounce "Crazy Cousins" — a full can of Red Bull mixed with Mountain Dew or Sprite, syrups and coconut cream, at 186 grams of sugar and 840 calories — "liquid garbage." Physician Mark Hyman called it "a metabolic disaster." McGowan told franchisees Soda Week was the worst week in company history.

A punitive franchise model

Crumbl's franchise agreement, compared against more than 20 similar systems including Nothing Bundt Cakes and Tropical Smoothie, stands out for its enforcement regime. The company requires franchisee-funded cameras it monitors itself, imposes "system non-compliance" fines from $250 for uncleanliness to $1,000 for unauthorized packaging, and has direct access to franchisee bank accounts for immediate deductions.

The "Sunday Rule" — stores closed on Sundays per the founders' Mormon beliefs — prohibits operators from even entering their own stores. Franchisees reported fines or warnings for Sunday paperwork visits, including one owner recovering from surgery. In July, during "Thins Week," operators who ran out of free giveaway cookies received $1,000 fines.

The cost of entry has compounded the pressure. Estimated initial investment now runs $849,000 to $1.47 million, up more than 500% from 2019's figure, while comparable concepts saw increases of 26% to 46% over the same period. Closing is expensive too: a $10,000 "de-identification fee" plus $500 per day, and liquidated damages of up to three years of future royalties for unauthorized closures. Operators say the approval committee is currently denying closure requests.

Corporate finances under strain

Crumbl finished last year with $6.4 million in cash, down from $24.8 million, even as it distributed $41.6 million to owners against $33.9 million in net income, according to the FDD. The company spent $86.2 million on G&A — over half its $155.7 million in franchise revenue — including a $60.3 million management fee to parent Crumbl Enterprises, a fee structure that began in 2023 and has totaled more than $115 million. Total owner distributions since 2022 exceed $235 million. TSG Consumer Partners bought a preferred equity stake last year, and Bloomberg reported Blackstone and Golub Capital arranged $500 million in private credit alongside it.

Last week Crumbl laid off staff at its Lindon, Utah, headquarters, including all but two franchise consultants. "The buck stops with me. It's my fault where we are today," McGowan told franchisees. "As we navigate next steps and determine how best to support you going forward," SVP of operational excellence Taylor Ransom wrote, "general ops support will be limited in the short term."

What's next

McGowan says a new CEO is close to being named, with a new marketing head and CFO starting within weeks. The chain plans fewer gambles like the failed Tajín and Flamin' Hot Cheetos cookies — "It failed. It did not work. And all of our sales suffered for it," McGowan said — and more data-driven menu development, brand partnerships like Minecraft, protein desserts such as Cookie Dough Protein Bites aimed at GLP-1 users, and a test-store program. September sales improved on Minecraft, Little Debbie and birthday promotions but have slowed again. With most of the chain's five-year franchise agreements now expiring, operators who cannot restore profitability may simply walk away.