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Krispy Kreme Going Global

Case study
by

Serhiy Bulhakov

on 9 December 2014

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Transcript of Krispy Kreme Going Global

Krispy Kreme
Going Global
Going global
Thanks for Your attention
What is a doughnut?
Type of american confectionery
Born in 1847
Krispy Kreme Doughnuts
Founded: July 13, 1937
Headquarters: Winston-Salem, NC, US
CEO: James Morgan
Products:
Doughnuts
Soft drinks
Hot Drinks
Revenue: 362 million USD
Net income: 7,6 million USD
Australia: 18
Bahrein: 2
Canada: 6
China: 2
India: 1
Indonesia: 11
Japan: 42
Kuwait: 13
Lebanon: 8
Malaysia: 8
Mexico: 91
Philippines: 41
Puerto Rico: 5
Qatar: 2
Saudi Arabia: 95
South Korea:67
Thailand:8
Turkey: 15
UK: 55
USA: 239
Dominican Republic: 3
Krispy Kreme Store location
Channels of distribution
Everyone is treated as a President
Russia: 3
Company's Stores
Hotlight
Coffee Bar
Kiosk
Cabinet
Krispy Kreme's growth
1990s: aggressive expansion strategy in the U.S.
2001: first store outside the U.S. in Canada
2004: almost 100 stores in Mexico
Strengths of the Company
Weaknesses of the Company
2000
2004
Franchising
doughnut mix
doughnut-making equipment
coffee
other supplies
2005: decline
Revenue: 2000 to 2004: +202%
Revenue: Q4 2005 to Q3 2006: -15%
Lost 80% of value
30 stores closed
excellent doughnuts
good customer service
lots of promotional activities
diverse sales locations
not enough nutritional information in the store
only six Canadian locations
low flexibility
bad relations with franchisees (cost of equipment, packaging, ingredients)
Reasons
Scott Livengood: low-carbohydrate diet craze
Analysts:
too rapid expansion after the IPO
emphasis on a parent-company level
franchisees were forced to compete with one another
expensive equipment for franchisees
extra distribution spots
market was oversaturated
channel stuffing

What happened next?
New CEO: Stephen Cooper
A turnaround plan in 2005 aimed to close unprofitable stores in order to avoid bankruptcy.
The company continued penetrating foreign markets
The first Krispy Kreme store outside of North America opened in Australia in 2007
Questi
ns
America
Asia
Australia
1. Where should Krispy Kreme go next?
Europe
UK
Germany
France
Italy
Spain
Netherlands
Sweden
Poland
Belgium
Austria
Denmark
Turkey
What is company's approach to marketing its franchises?
Company doesn't pay enough attention to marketing its franchises
VS
No information stated
No requirements stated
Contact form only
Friendly design
Relevant information
Step-by-step plan
3.1 How might Japan be different from the United States when it comes to doughnut demand?
Demand determinants:
Higher population density
Gross National Income
Less direct competition
Tastes and Preferences
Adaptation to local tastes (not as sweet)
Japan's collectivist culture

Demand determinants:
Higher population density
Gross National Income
Less direct competition
Tastes and Preferences
3.2 How might London differ from Southern California?
Full transcript