Krispy Kreme
Russell 2000 component | |
Industry | Restaurant |
---|---|
Founded | July 13, 1937 |
Founder | Vernon Rudolph |
Headquarters | Charlotte, North Carolina, U.S. |
Number of locations | 1,400[1] |
Area served | Worldwide |
Products |
|
Revenue | US$518.714 million (2016)[2] |
US$52.098 million (2016)[2] | |
US$32.398 million (2016)[2] | |
Total assets | US$342.875 million (2016)[2] |
Total equity | US$256.140 million (2016)[2] |
Owner | JAB Holding Company (2016–2021) |
Number of employees | 21,000 (April 1, 2021) |
Website | krispykreme |
Krispy Kreme, Inc. (previously Krispy Kreme Doughnuts, Inc.) is an American multinational doughnut company and coffeehouse chain.
Krispy Kreme was founded by Vernon Rudolph (1915–1973), who bought a yeast-raised recipe from a New Orleans chef, rented a building in 1937 in what is now historic Old Salem in Winston-Salem, North Carolina, and began selling to local grocery stores.[3][4] Steady growth preceded an ambitious expansion as a public company in the period 2000 to 2016, which ultimately proved unprofitable. In 2016, the company returned to private ownership under JAB Holding Company, a private Luxembourg-based firm. In July 2021, Krispy Kreme became publicly traded again on the Nasdaq.[1]
Their name is a sensational spelling of the words "crispy cream".
History
Early years
In 1933, eighteen-year-old Vernon Rudolph, along with his brother Lewis Rudolph, began working for his uncle, Ishmael Armstrong, who owned a small general store in Paducah, Kentucky, that sold a wide variety of goods, including its very popular doughnuts.[5] While the exact origin of the doughnut recipe remains partially a mystery, it is believed that Ishmael Armstrong was inspired by an Ohio River barge cook named Joseph LeBeouf who was famous for his light and fluffy doughnuts.[5]
The store struggled during the Great Depression. In 1934, Vernon and Ishmael decided to move to the larger city of Nashville, Tennessee, where they hoped business would be better. The uncle and nephew focused solely on selling their doughnuts and opened "The Krispy Kreme Doughnut Company" in a rented store on Gallatin Road.[5] The shop did so well that Vernon's father, Plumie, also left Kentucky and moved to Nashville to help sell doughnuts. In 1937, Rudolph opened his own store, deciding on Winston-Salem, North Carolina, for the location when he learned that his favorite cigarette company, Camel Cigarettes, was headquartered in the small North Carolina city.[5] Rudolph primarily sold to convenience stores; however, he also sold hot doughnuts to individual customers who came during production time between midnight and 4 a.m.[5] The first store in North Carolina was located in a rented building at 534 South Main Street in Winston-Salem in what is now called historic Old Salem. The Krispy Kreme logo was designed by Benny Dinkins, a local architect. The first Krispy Kreme bakery outside the South opened in Akron, Ohio, in 1939.
Growth
Expansion occurred in the 1950s, including an early store in
A group of franchisees purchased the corporation back from Beatrice Foods in 1982.
Krispy Kreme began another phase of rapid expansion in the 1990s, opening stores outside the southeastern United States where most of their stores were located. In December 2001, Krispy Kreme opened its first store outside the US in Mississauga, Ontario, Canada.[6]
IPO and accounting scandals
On April 5, 2000, the corporation went
In May 2004, the company missed quarterly estimates for the first time and suffered its first loss as a public company. Chairman and CEO Scott Livengood attributed the poor results to the low-carbohydrate diet craze. This explanation was viewed with skepticism by analysts, as "blaming the Atkins diet for disappointing earnings carried a whiff of desperation",[8] and as rival donut chain, Dunkin' Donuts, has not suffered from the low-carb trend over the same compared period.[9]
By 2005, the company's stock had lost 75-80 percent of its value, amid earnings declines, as well as an SEC investigation over the company's alleged improper accounting practices.[10] A turnaround plan in December 2005 aimed to close unprofitable stores in order to avoid bankruptcy.[8][11]
Analysts suggested that Livengood had expanded the chain too rapidly after the IPO, which concentrated certain markets with too many stores.[9] While this approach initially grew revenues and profits at the parent-company level, due to royalty payments from new franchisees, this reduced the profitability of individual franchisees in the long run as they were forced to compete with one another. For the 2003-04 fiscal year, while the parent enjoyed a 15 percent increase in second-quarter revenues, same-store sales increased only a tenth of a percent. Krispy Kreme also had supermarkets and gas stations carry their donuts, which soon contributed up to half of the chain's sales, creating further market saturation as well as increasing competition to its franchisees. All this expansion devalued Krispy Kreme brand's novelty, by making the once-specialty donuts ubiquitous, particularly as the newer sales outlets required pre-made donuts as opposed to the ones made fresh in factory stores, which alienated brand devotees.[8]
Besides royalty payments from new stores, the parent company also enjoyed significant profits by requiring franchisees to purchase mix and doughnut-making equipment from the parent's Krispy Kreme Manufacturing and Distribution (KKM&D) division. KKM&D earned $152.7 million in 2003, which made up 31 percent of sales, with a reported operating margin of 20 percent or higher, but these mark-ups were largely at the expense of its franchisees. By comparison, rival chain Dunkin' Donuts generally avoids selling equipment or materials to its franchisees which "keeps company and franchisee interests aligned", as well as having a royalty stream based on same-store sales.[8]
Krispy Kreme has been accused of channel stuffing by franchisees, whose stores reportedly "received twice their regular shipments in the final weeks of a quarter so that headquarters could make its numbers".[8] The company was also dogged by questionable transactions and self-dealing accusations over the buybacks of franchisees, including those operated by company insiders.[9] A report released in August 2005 singled out then-CEO Livengood and then-COO John W. Tate to blame for the accounting scandals, although it did not find that the executives committed intentional fraud.[12]
On March 4, 2009, the SEC issued a cease and desist order against Krispy Kreme for its actions inflating their revenues and engaging in illicit activities regarding the purchasing of its own stores to prop up revenues and setting up mechanisms to guarantee that it beat earnings estimates by $0.01, which eventually resulted in Krispy Kreme reducing net income over two years by over $10.5 million. In it, the SEC proposed remedial actions for Krispy Kreme to take.[13]
Return to private ownership
In May 2016, JAB Holding Company, a German investment firm, announced that it made an offer to purchase the company for $1.35 billion over the following two months that would make the company privately owned.[14] The transaction closed on July 27, 2016. In December 2017, Krispy Kreme moved its corporate operations to Charlotte, North Carolina; while Winston-Salem will retain the World Headquarters and maintain the Krispy Kreme Support Center.[15]
Also in 2010, Krispy Kreme Express, a delivery service for businesses, began testing at the Battleground Avenue location in Greensboro, North Carolina.[16] In the early 2010s, the company began developing shops with tunnel ovens, which allow for an all-day "Hot Now" hot doughnut experience. On February 24, 2015, Krispy Kreme opened its 1,000th shop, in Kansas City, Kansas.[17]
In 2018, Krispy Kreme acquired bakery chain Insomnia Cookies, which continues to operate independently.[18]
On August 25, 2020, the first Krispy Kreme vending machine was launched in North Carolina, featuring 3-packs of donuts available 24 hours a day.[19]
Going public again
In May 2021, Krispy Kreme confidentially filed for an initial public offering to once again go public.[20] The company went public again on the Nasdaq on July 1, 2021, under the name Krispy Kreme Inc.[21][1]
International operations
The first Krispy Kreme store to open outside North America was in
In August 2011, Krispy Kreme's
On May 18, 2015, Krispy Kreme announced it has signed a development agreement with KK Doughnuts SA (Pty) Ltd., to open 31 Krispy Kreme shops in
On May 5, 2016, Krispy Kreme opened their first store in
On January 12, 2017, Krispy Kreme opened its first store in
On January 27, 2018, Krispy Kreme opened its first store in
On May 13, 2023, Krispy Kreme opened its first store in Costa Rica.[citation needed] It expanded to France in December 2023 with its first Paris store, which is expected to make 45,000 doughnuts per day. The company's menu was tweaked to appeal to French customers, including a gingerbread flavored donut.[33]
The minimum investment amount required to open a Krispy Kreme franchise is $440,500 and can go all the way up to $4,115,000.[34]
Products
On February 19, 2007, Krispy Kreme began selling the Whole Wheat Glazed doughnut in an attempt to appeal to the health conscious. The doughnut has nearly the same number of calories as the original glazed donut (180 calories vs. 190 calories) but contains more fiber (2 grams vs. 0.5 grams). As of January 2008, the trans fat content of all Krispy Kreme doughnuts was reduced to 0.5 of a gram or less. The U.S. Food and Drug Administration, in its guidelines, allows companies to round down to 0 g in its nutrition facts label even if the food contains as much as 0.5 of a gram per serving. Krispy Kreme benefited from this regulatory rule in its subsequent advertising campaign, touting its doughnuts as "trans fat-free" and having "0 grams trans fat!".[35] On July 1, 2010, Krispy Kreme introduced a doughnut that included the soft drink Cheerwine, which was to be sold in grocery stores in North and South Carolina during July.[36] The doughnuts proved so popular that the Salisbury, North Carolina, Krispy Kreme location (the town where Cheerwine is made) sold them as well.[37] After July 31, this was the only place to get them.[38] The Cheerwine Kreme doughnut returned for July 2011 and made its debut in Tennessee and Roanoke, Virginia.[39]
On May 25, 2017, Krispy Kreme donut-flavored Jelly Belly jelly beans were announced.[40]
On August 5, 2019, Krispy Kreme released two new Reese's-branded "chocolate lovers" and "peanut butter lovers" doughnuts to the public.[41]
In July 2020, Krispy Kreme launched several candy-coated donuts with Nerds, Jelly Belly jelly beans, sour gummies, and marshmallows.[42]
Krispy Kreme introduced a seasonal Pumpkin Spice Doughnut Collection in September 2020 with four flavors: 1) Pumpkin Spice Original Glazed Doughnut, 2) Pumpkin Spice Cake Doughnut, 3) Pumpkin Spice Original Filled Cheesecake Doughnut, and 4) Pumpkin Spice Cinnamon Roll Doughnut.[43]
During Veganuary in January 2021, Krispy Kreme UK launched its Original Glazed vegan doughnut.[44] In December 2021, Krispy Kreme UK launched three more vegan doughnut flavors, Fudge Brownie Bliss, Caramel Choc Delight, and Apple Custard Crumble.[45]
Promotions
Although based on informal advertising such as word-of-mouth, in 2006, Krispy Kreme moved into television and radio advertisements, beginning with its "Share the Love" campaign with heart-shaped doughnuts.
In 2014, Krispy Kreme released a $1,685 donut as part of fundraising efforts for
In March 2021, Krispy Kreme announced that they were providing a free Original Glazed doughnut every day (except
Controversies
In February 2015, a Krispy Kreme branch in
See also
References
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External links
- Media related to Krispy Kreme at Wikimedia Commons
- Official website
- Business data for Krispy Kreme, Inc.: