Introduction Type Public (NYSE: KKD) Industry Restaurant Founded 1937 Headquarters Winston- Salem, North Carolina, United States Products Doughnuts Sausage Rolls Soft drinks Hot Drinks Employees 3,700 (2011) Website krispykreme.com
• The parent company of Krispy Kreme is Krispy KremeDoughnuts, Inc. that is based in Winston-Salem, NorthCarolina, United States.• Though there are another similar companies in the marketbut Krispy Kremes signature item is a glazed doughnut thatis traditionally served warm.• Beside the store their products are sold in supermarkets,grocery stores, convenience stores, gas stations, Wal-Mart and Target stores in the United States.•The companys growth was steady prior to its initial publicoffering which was in 2000.
HistoryKey Dates1933- Vernon Rudolph and his uncle bought a Doughnut shopin Paducah, Kentucky from a French chef from New Oreanswho had developed a secret recipe for yeast-raised doughnut1935- The partners moved the operation to Nashville,Tennessee; their initial focus was selling doughnuts wholesaleto Grocery stores
1937 Doors opened on July, 13 1937Vernon rudolph bought a secrete yeast-doughnut recipe from anew Orleans French chef,rented a building in what is nowhistoric Old Salem in Winston-salem,NC, and began sellingKrispy Kreme doughnuts to local grocery stores.
40s & 50sImprovement in the process• By now there was a small chain of stores mostly familyowned. They all use the Krispy Kreme recipe, but eachstore made its doughnuts from scratch. But after some timethey developed a distribution system that delivered theperfect dry doughnut mix to each Krispy Kreme store• After some time Rudolph and his equipment engineersinvented and built Krispy Kreme‟s owen doughnut makingequipment
60s & 70s Hot-spot for gatherings• Due to its past steady growth in 60s the organization decidedto expand their business beyond its traditional boundaries.• Vernon Rudolph (founder) died in 1973, and due to this thegrowth slowed in next few years
80s & 90sFew takeovers• After few years of the death of the founder, a companycalled Beatrice Foods takeover the Krispy Kreme, but theycould not successfully run the organization. So in 1982 asmall group of Krispy Kreme‟s early franchisees boughtKrispy Kreme back• In 1996 they opened their first store in New York city• And in 1999 first store in California
TodayGrowth story• 2000- Krispy Kreme held an initial public offering of commonstock at NASDAQ• 2001- Opened the first international store in Canada, justoutside the Toronto• 2003- First store out side north America opened in Sydney,Australia and in London• Its stores have opened in Asia, Mexico, the middle east,Puerto Rico and Turkey. Its international expansion is continuingand in addition they are working on new tasty products
Latest Update“As of November 1, 2010 the entire Australian division wentinto voluntary administration, and what media says is thatthis was the result of poor sales. They have since come out of administration as ofDecember 2010, and continued trading, with fewer stores.”Krispy Kreme International is looking for its franchises inthe following countries:• India• China• Taiwan• Singapore
Q1. a) Krispy Kreme was often said to be ‘America’s most loved doughnut’. Trace the expansion of the company. b) Also discuss the company’s plans for expansion and the viability of the company’s main product in foreign markets. Ans a). Vernon Rudolph and his uncle, Ishmael Armstrong, purchased Joseph LeBeoufs donut shop on Broad Street in Paducah, Kentucky along with a secret recipe for yeast-raised doughnuts in 1933 acquired from a Buffalo NY businessman. In 1937 Rudolph open first store at Winston- Salem in North Carolina and named it “Krispy Kreme Doughnuts” In 1960 company added coffee house to its stores
In 1982 Joseph McAleer acquired the company in a $24 million leveraged buyout In 1995 krispy Kreme opened its first store in Indianapolis, Indiana. In 1996 company foray into northern american markets. In 2001, Krispy Kreme opened its first store outside the U.S. in Mississauga, Ontario, Canada. Also started looking at markets of New zealand, Britain, Spain, Japan, South korea.b) Expansion Plans Moved to north US after establishing well in southern US Paid more attention towards their Beverages by introducing new variety of coffee Started to diversify into other breakfast and snack food Planning to open their franchise in India, China, Taiwan,
Viability of the company’s main product in foreignmarkets“Krispy Kreme talks a lot about its internationalambitions, but I havent seen any evidence that peopleoutside the US and Canada will eat Doughnuts”- Mr.Greg(of an equity research firm)Consumption pattern of people of different countries isdifferent.So response of customer may not be same as in US.
Q2. a) Although Krispy Kreme did not have a well-defined advertising budget , it was one of the most well-known brands in the US. Discuss the components of the company’s marketing strategy, and how they contributed to the brand equity of Krispy Kreme. b) Also dicuss the marketing bottlenecks the company may face in the future. Ans a). Innovative Publicity Mobiles or temporary store before opening a new store Small posters in the locality announcing the opening of new store Free samples to localities Free samples to newspapers and media Displayed Krispy kreme doughnuts in tv shows & Movies
Generating Impulse Purchase by sign signalled “Hot Doughnuts Now”. The Doughnut Theatreb) Marketing Bottlenecks Selling of doughnuts through stores and supermarkets Variable taste and preferences
Q3.a) What operational strategies distinguished the company from its competitors and accelerated its growth?b) Which of the strategies have contributed to its unique success and brand equity?Ans a). Krispy Kreme focus on all age group irrespective of age, social status They highlights „secret recipe‟ as now product is perceived as something exclusive and special. Different from every other Doughnut Display of there manufacturing process Hot and fresh Doughnuts High Quality control b) Societal marketing
Q4.a) Discuss the nature of the competition faced by Krispy Kreme and how the company was positioned vis-à-vis its main competitor.b) Comment on the extension of the krispy kreme’s move to increase its emphasis on coffee and the increased emphasis being placed on doughnuts by concurrent move by Dunkin Donut to place more importance on its doughnuts.c) How in this convergence in business interests likely to affect the competitive equilibrium between the two companies?
a) Krispy Kreme Dunken’s Donuts Positioning Positioning South US. North US 285 outlets 4000 stores $608 mn revenue $3 bn revenue Strengths Strengths Strong brand name Large in size Premium brand Affordable brand
b) Krispy Kreme Dunken’s Donuts It moved to fill the gap Placed more importance in there service by to the Doughnut as a paying more attention product to the beverages & Experimented with new coffee by introducing Doughnut flavors eg. new verity of coffee & Strawberry-kiwi, passion fruit etc appointed a specialist to Opened number of new look after that side of stores business Changed its packing Acquired a coffee from a shoe-box style roasting business & cartoon to the Krispy build its new roasting Kreme style flat box factory
c) Earlier both companies had different customer segment as Dunkins were known for their coffee and break fast and krispy kreme was totally focused on doughnuts. Krispy Kreme use to generate 90% of it revenue from Doughnuts, where as Dunkin use to generate 20% from the doughnuts, 50% from coffee and 30% from its Breakfast and snakes Krispy Kreme has better brand equity and they can be the premium brand in this segment where as Dunkins Donut will remain as affordable brand This convergence in business interests (if proves to be a success) will help both the companies to bridge