CNBC Disruptor 50

Insomnia Cookies caters to late-night munchies

Drew Casey, Special to
A dream come true for late night snackers
A dream come true for late night snackers

Insomnia Cookies is taking college campuses by storm — one warm, gooey cookie at a time. And all at the oddest of hours.

Created in 2003 out of a college dorm room at the University of Pennsylvania, the late-night bakery specializes in cookies that feed the cravings of an increasing number of coeds.

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The end result is a start-up that now has more than 70 locations across 21 U.S. states, with long lines that sometimes rival more established eateries. The company has created a sensation — and earned the gratitude of legions of college students — on campuses such as the University of North Carolina, Syracuse University, and UPenn, of course.

Currently, Insomnia is looking to expand to 12 more locations, including near the University of Virginia and University of Wisconsin-Madison.

"I wouldn't even consider them [Insomnia Cookies] a start-up anymore," CNBC contributor, deal maker and entrepreneur Carol Roth said. "This is a bona fide business. They've been around for 12 years."

Many Insomnia Cookies locations are strategically positioned near colleges and universities. That's no accident.

Founded by Seth Berkowitz, the motivating idea behind Insomnia Cookies was to fill a college student's desire for a late-night delivery service with "sweet" offerings. The company that began as a student's business model has grown into something much larger.

"If you can get traction on a college campus, you have access to thousands of somewhat captive customers that are easier to reach because they are confined to certain geography and connection points," Roth said. In fact, Insomnia's college business model has been pioneered by some of the biggest names in their sector, she said.

"We've seen a lot of companies use colleges as a starting ground, whether it be Facebook, Tinder or Insomnia Cookies, to gain traction," Roth added.

'Music to a student's ears'

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Insomnia's biggest selling point is a delivery service that runs until 3 a.m.; servicing college students and accommodating their often late-night schedules was originally the main focus of the company.

"This was where the business started and with good reason," the company's senior director of marketing, Megan Bruton, said in a statement. Wee-hours delivery "is music to any college student's ears after a long night of studying, or being out until the bars close."

The company now opens its locations at 11 a.m., with delivery service beginning at noon. College students are Insomnia's biggest fans, but the company is expanding beyond that base, Bruton told CNBC.

"While we like to be near college campuses, it is not mandatory," she said. "After all, it isn't just college students who love warm, delicious cookies. As long as there is an active community that we can become a part of, then a market is potentially appealing to us as a brand."

No franchises for us, thank you

Insomnia Cookes brownie ala mode.
Source: Insomnia Cookies

Unlike Dunkin' Donuts, McDonald's or Krispy Kreme, Insomnia Cookies does not currently offer franchise opportunities. It fully controls the operation of each of its locations.

According to Roth, the decision to operate in such a way differs on a company-by-company basis.

"It really depends on the strengths [of the company], the management team and their goals," said Roth, who authored the bestseller "The Entrepreneur Equation."

She added: "When you start to franchise, you obviously give up some control and your focus becomes more related to servicing your franchisers. It would be a big change to business model and core competency."

'always warm'

Regardless of its business model, Insomnia Cookies appeal is in its tasty treats, according to some of its fans.

The cookies "are always warm," Columbia University student Stephanie Shin said, standing outside the company's Morningside Heights location in New York City. "They always taste like homemade cookies."

Columbia students, including Shin, had high praise for Insomia's cookie quality, but added that their locations could use a larger seating area and cheaper prices on some cookie selections. The company suggested it would take those suggestions seriously.

"We are always looking at ways to grow geographically as well as providing more options to our fans," Bruton said. "We have a very active fan base who are always requesting for us to come to different campuses or cities, and we take those requests very seriously."