You might say these sweet treats are wholly delicious. Krispy Kreme Doughnuts operates a leading chain of doughnut outlets with about 695 locations throughout the US and in about 20 other countries. The shops are popular for their glazed doughnuts that are served fresh and hot out of the fryer. In addition to its original glazed variety, Krispy Kreme serves cake and filled doughnuts, crullers, and fritters, as well as hot coffee and other beverages. The company owns and operates 90 locations and franchises the rest. Krispy Kreme also markets its doughnuts through grocery stores and supermarkets.
The company relies heavily on franchising to oversee its far-ranging chain of sweets outlets, especially in international markets where Krispy Kreme has more than 460 locations. It also focuses on the smaller satellite units as a way to penetrate markets without the expense of opening larger doughnut shops. The kiosk locations are typically supplied with fresh-made doughnuts by factory stores in the area. In addition to its doughnut outlets, Krispy Kreme distributes doughnut mix and other supplies through its distribution center in North Carolina and through third-party contractors. Its foodservice distribution business accounts for about 25% of sales.
Rather than spending on television commercials and other advertising efforts, Krispy Kreme still relies primarily on word-of-mouth marketing and brand recognition to promote its chain. However, much of the hype and mystique that typified consumer response to Krispy Kreme during its growth period in the 1990s has largely died away. It faces stiff competition from segment leader Dunkin' Donuts (owned by Dunkin' Brands), as well as a multitude of homegrown local operations. Within the larger market for coffee and baked treats, coffee shop leader Starbucks poses the biggest challenge. Krispy Kreme rolled out its own signature brand of coffee in 2011 as part of its efforts to compete.
Krispy Kreme has been focused on cutting expenses and expanding its international franchise network in response to the weak consumer spending and high unemployment that have taken a toll on many segments in the dining industry during the recession of recent years. The doughnut chain has also suffered from high costs for ingredients and other raw materials. However, the company's domestic revenue and total number of locations grew during fiscal 2011 for the first time in several years.
Mohamed Abdulmohsin Al Kharafi & Sons, a company that holds the master franchise for Krispy Kreme in the Middle East, owns about 15% of the company. – less