Type Public (NYSE: KKD)

Industry Restaurant

Founded 1937

Headquarters Winston-Salem, North Carolina, United States

Products DoughnutsSausage RollsSoft drinksHot Drinks

Employees 3,700 (2011)

Website krispykreme.com

Introduction

Products of Krispy Kreme Doughnuts

Iced Drinks

Doughnuts

Coffee & Beverages

• The parent company of Krispy Kreme is Krispy Kreme Doughnuts, Inc. that is based in Winston-Salem, North Carolina, United States.

• Though there are another similar companies in the market but Krispy Kreme's signature item is a glazed doughnut that is 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 company's growth was steady prior to its initial public offering which was in 2000.

Key Dates

1933- Vernon Rudolph and his uncle bought a Doughnut shop in Paducah, Kentucky from a French chef from New Oreans who had developed a secret recipe for yeast-raised doughnut

1935- The partners moved the operation to Nashville, Tennessee; their initial focus was selling doughnuts wholesale to Grocery stores

History

Doors opened on July, 13 1937

1937

Vernon rudolph bought a secrete yeast-doughnut recipe from a new Orleans French chef,rented a building in what is now historic Old Salem in Winston-salem,NC, and began selling Krispy Kreme doughnuts to local grocery stores.

40s & 50sImprovement in the process

• By now there was a small chain of stores mostly family owned. They all use the Krispy Kreme recipe, but each store made its doughnuts from scratch. But after some time they developed a distribution system that delivered the perfect dry doughnut mix to each Krispy Kreme store

• After some time Rudolph and his equipment engineers invented and built Krispy Kreme’s owen doughnut making equipment

60s & 70sHot-spot for gatherings

• Due to its past steady growth in 60s the organization decided to expand their business beyond its traditional boundaries.

• Vernon Rudolph (founder) died in 1973, and due to this the growth slowed in next few years

80s & 90sFew takeovers

• After few years of the death of the founder, a company called Beatrice Foods takeover the Krispy Kreme, but they could not successfully run the organization. So in 1982 a small group of Krispy Kreme’s early franchisees bought Krispy 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 common stock at NASDAQ

• 2001- Opened the first international store in Canada, just outside 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 continuing and in addition they are working on new tasty products

“As of November 1, 2010 the entire Australian division went into voluntary administration, and what media says is that this was the result of poor sales.

They have since come out of administration as of December 2010, and continued trading, with fewer stores.”

Latest Update

Krispy Kreme International is looking for its franchises in the 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 LeBeouf's 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 PlansMoved to north US after establishing well in southern

USPaid more attention towards their Beverages by

introducing new variety of coffeeStarted to diversify into other breakfast and snack foodPlanning to open their franchise in India, China,

Taiwan, Singapore

Viability of the company’s main product in foreign markets

“Krispy Kreme talks a lot about its international ambitions, but I haven't seen any evidence that people outside the US and Canada will eat Doughnuts”- Mr. Greg(of an equity research firm)

Consumption pattern of people of different countries is different.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 localitiesFree samples to newspapers and mediaDisplayed Krispy kreme doughnuts in tv shows &

MoviesThrough newsletters and a krispy Kreme lovers club

Generating Impulse Purchase by sign signalled “Hot Doughnuts Now”.

The Doughnut Theatre

b) Marketing BottlenecksSelling of doughnuts through stores and

supermarketsVariable 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 statusThey highlights ‘secret recipe’ as now product is

perceived as something exclusive and special. Different from every other Doughnut

Display of there manufacturing processHot and fresh DoughnutsHigh Quality control

b) Societal marketingCustomer Orientation

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?

Krispy Kreme Dunken’s Donuts

Positioning South US.285 outlets$608 mn revenue

StrengthsStrong brand namePremium brand

PositioningNorth US4000 stores$3 bn revenue

StrengthsLarge in sizeAffordable brand

a)

Krispy Kreme Dunken’s Donuts

It moved to fill the gap in there service by paying more attention to the beverages & coffee by introducing new verity of coffee & appointed a specialist to look after that side of business

Acquired a coffee roasting business & build its new roasting factory

Placed more importance to the Doughnut as a product

Experimented with new Doughnut flavors eg. Strawberry-kiwi, passion fruit etc

Opened number of new stores

Changed its packing from a shoe-box style cartoon to the Krispy Kreme style flat box

b)

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 the gap in between.