Two of the operator’s stores once ranked among Crumbl’s stronger performers. The franchisee just filed for bankruptcy.
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A Crumbl franchisee has filed for Chapter 7 bankruptcy.
According to PacerMonitor, Red Sheep St. Matthews LLC, whose owners were Richard and Emily Diamond, filed its petition in the U.S. Bankruptcy Court for the Western District of Kentucky on October 1.
The owners are seeking to liquidate the company’s assets, facing more than $352,000 in liabilities. According to a report from National Restaurant News, the couple owned three different stores. Previously, two of their locations in the top 25 percent and 15 percent, respectively, for systemwide sales in 2024.
“We tend to do better when we’re located next to a weekly shopping venue. We try to get to locations near where people go for weekly occasions because then we become an added stop,” owner Richard Diamond told the outlet in 2024. “And Louisville has been very good to us.”
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The couple opened their third location on Valentine’s Day, which they said was the biggest sales day across all of their locations.
“I think there is a draw to this, kind of like a Disney World effect. It’s visual, and the company is really good at getting people’s interest through social media,” Diamond said.
Franchise fallout
The franchisee’s bankruptcy comes as Crumbl faces mounting challenges. The cookie giant has lost customer traffic and stores, despite previously being one of the fastest-growing restaurant franchises in the U.S.