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Kkd Case Study BACKGROUND OF KRISPY KREME DOUGHNUTS Krispy Kreme Dougnuts was founded on July 13, 1937 in Winston-Salem, North Carolina, United States by Vemon Rudolph. The company became a publicly-traded company in April 2000. Krispy Kreme Doughnuts produces approximately 5.5 million doughnuts a day consisting of 20 varieties. Krispy Kreme Doughnuts serves customers in 395 stores where 40 stores are in the United States and the rest are in 10 foreign countries namely Australia, Canada, Hong Kong, Indonesia, Japan, Kuwait, Mexico, the Philippines, South Korea and the United Kingdom. 282 stores are owned by franchisees while 113 stores owned by the corporation. THE VISION OF KRISPY KREME DOUGHNUTS Our vision guides every aspect of our business by describing what we need to accomplish in order to continue achieving sustainable growth. 1) People: Being a great place to work where people are inspired to be the best they can be. 2) Portfolio: Bringing to the world a portfolio of quality doughnuts brand that anticipate and satisfy people's desires and needs. 3) Partners: Nurturing a winning network of customers and suppliers, together we create mutual, enduring value.

4) Planet: Being a responsible citizen that makes a difference by helping build and support sustainable communities. 5) Profit: Maximizing long-term return to shareowners while being mindful of our overall responsibilities. THE MISSION OF KRISPY KREME DOUGHNUTS Our mission declares our purpose as a company. It serves as the standard against which we weigh our actions and decisions. It is the foundation of our Manifesto. 1) To make people happy while enjoying our products. 2) To inspire moments of optimism through our brand and our actions. 3) To create value and make a difference everywhere we engage.

Team Andres KKD Case Analysis BUSN 6200 Fall I 2009 Business 6200: Strategy and Competition KKD Case Analysis Prepared By Team Andrews: Tim Fish Brad White

Christina Vance Stephanie Bogan Anthony Vatterott Submitted To: Professor Mazen Badra October 15, 2009Team Andrews KKD Case Analysis TABLE OF CONTENTS I. Introduction .................................................................... 1 II. SWOT Analysis ................................................................ 2 III. Industry Analysis ............................................................. 5 IV. Recommended Strategy ................................................. 10 List of Figures A. Figure 1: Porters Five Forces Model...................................... 6 B. Figure 2: Business Strategies ............................................... 9 BUSN 6200 i Fall I 2009 Team Andrews KKD Case Analysis I. INTRODUCTION Krispy Kreme Doughnuts, Inc. (KKD) is a unique brand offering doughnuts, beverages, collectibles, and franchise opportunities. Pioneered as a small bakery in Winston Salem, North Carolina on July 13, 1937; KKD has evolved into a publicly traded firm boasting 395 retail stores and over four million dollars in sales (second quarter fiscal year 2008). So, why did the firms president and chief executive officer

Daryl Brewster (pictured right) say After several quarters of progress on our turnaround, second quarter results [fiscal year 2008] did not meet our expectations.? His statement is largely due to the significant losses the firm has experienced since fiscal year 2005. KKDs total revenues sunk from the five million dollar range at the close of fiscal year 2006 to the four million dollar range at the close of fiscal year 2007. The sharp decline in sales is accompanied by a system wide decrease in retail stores. KKDs retail operation shrunk from 433 stores at the close of fiscal year 2005 to 395 stores at the close of fiscal year 2007. Nonetheless, the quick-service restaurant (QSR) industry that KKD competes in has experienced everincreasing growth during the last two decades, and the trend is expected to continue as a greater percentage of Americans work more and enjoy less home cooked meals. KKD executives, namely the aforementioned president and chief executive officer, believe the key to improving the firms performance and capitalizing on industry growth is to increase the percentage of stores operated by franchisees.

Is this the best strategy for the firm to pursue? To answer this question we must identify where the QSR industry is positioned according to the industry life cycle framework; assess the attractiveness of the QSR industry based on Porters Five Forces Model, and reveal KKDs strengths, weaknesses, opportunities, and threats. The information presented will determine if KKD should continue with their current strategy of increasing franchisees or an alternative strategy. We will begin with an assessment of KKDs strengths, weaknesses, opportunities, and threats. 1. BUSN 6200 1 Fall I 2009 Team Andrews KKD Case Analysis II. SWOT ANALYSIS The following SWOT analysis is intended to examine KKDs internal strengths and weaknesses and link them to external opportunities and threats with the aim of selecting a strategy to pursue. STRENGTHS As a global firm, KKD has established itself as a consumer brand with a consistent customer base in the United States and abroad. KKD has branched into grocery and convenience stores so accessibility to the doughnut brand is readily available. The company sells over 20 different varieties of doughnuts and

other menu items include coffee and bakery items. They also have a collectable memorabilia for sell such as mugs, hats, and toys. KKD is a vertically integrated company with three business units: company store operations, franchise operations, and KK supply chain operations. Their supply chain manufacturing uses an accelerated approach that allows for high volume of production and output in a cost effective manner. They use specialized doughnut-making equipment and specific doughnut mixes that each store, whether franchise or company owned, are required to purchase. This gives each store the capacity to produce from 4,000 to 10,000 doughnuts daily. KKD offers a product that is second to none, with regards to taste, freshness, and the finest ingredients. The original glazed doughnut is their signature doughnut. It remains the top seller amongst other pastries in its category. They have a loyal customer base in the U.S. market. That said, KKD continues to introduce their brand to the international markets such as Europe, Australia, and Asia. Leadership is a strength for KKD over the last few years. After its vamping increase in sales in the early 2000s KKD went through a series of managers from

2005 - 2007 to find a way to make the company profitable again. The door has stopped rotating as the business strategy is fundamentally more stable in todays environment. WEAKNESSES According to Porters framework, weaknesses refer to any limitations that a firm faces in developing or implementing a strategy. Weaknesses should be considered from the customer and the corporate perspective. KKD has the following weaknesses relative to the QSR industry environment:

1. BUSN 6200 2 Fall I 2009 Team Andrews KKD Case Analysis Starbucks menu selections ed non-breakfast menu items

01/2007 -snack food items

OPPORTUNITIES International expansion promises better returns than to expand domestically. Asia and the Middle East both offer KKD favorable population demographics,

relatively high levels of consumer sweet goods consumption and the popularity of Western brands in these markets. During the past two decades, an ever-increasing percentage of U.S. food dollars has gone to eating out. With a greater percentage of Americans working, there has been less time available for at-home food preparation. KKD believes this trend along with growth in two-income households will increase snack-food consumption and further growth of doughnut sales. Most internationally located stores purchase their ingredients from local merchants rather than KK Supply Chain. If KKD can find a cost effective way to provide these ingredients, they can capitalize on supply chain efficiencies to make a profit. The introduction of a new beverage program is expected to be implemented in the next few months. This program, if executed successfully, will allow for healthy competition in the hot drinks market and a challenge to both Starbucks and McDonalds offerings in the hot beverages market. THREATS Over the past two decades competition in the fast-food market has increased. With both spouses working in todays environment less and less time in being spent in the household kitchen. It is more common, and convenient, to grab a

quick meal than the traditional home cooked meal. Therefore, it comes with no surprise that substitute products enter the casual-dining sector to gain market share of the fast-food chains. In the doughnut and pastry shop industry this is no different. Price wars are generated in attempts to take away revenue from other restaurants and sustain growth. Therefore, KKD must constant be aware of substitute products from many different areas of the market place. Such substitutes demanded today include healthier menu items include zero trans fats in all products. Going organic or using 100% natural ingredient items to favor 1. BUSN 6200 3 Fall I 2009 Team Andrews KKD Case Analysis comparable products. Therefore, companies in this industry must remain focused on substitute products from many different areas of the marketplace. 1. BUSN 6200 4 Fall I 2009 Team Andrews KKD Case Analysis III. INDUSTRY ANALYSIS In this section we will determine where the QSR industry is positioned according to the industry life cycle framework and assess the attractiveness of the QSR industry based on Porters five forces model. Industry Life Cycle: Business industries are not static. Generally, industries evolve from an

introduction stage to a decline stage experiencing growth and maturity along the way. It is important to understand the evolution of the QSR industry that KKD competes in to accurately assess the strengths, weaknesses, opportunities, and threats impending or enabling the firms growth.

The introduction stage is dominated by the marketing of an innovation for the first time. Competition is minimal (if any) and returns are negative as most present in the market must recover R&D, marketing, and manufacturing costs. The growth stage is characterized by high profits, product reliability, and competition. During this stage firms will begin to differentiate based on value and quality. The maturity stage boasts high sales accompanied by significant price pressures. Profit margins are often compromised as consumers perceive the firms products as homogeneous positioning price as the key buying criteria. The decline stage is marked by sinking profits and many firms will decide to remain in the industry or exit and utilize their resources on more profitable business segments. Stock share prices in the QSR industry are on the rise following a recent drop caused by aggressive price cuts by industry leaders, namely McDonalds and Burger King. Stable same-store sales growth and positive operating conditions

have also contributed to the surge in casual dining industry stocks. The casual dining sector is expected to gain share from fast food chains as more mature and financially elite consumers dine in full service restaurants. Many competitors in the QSR industry are lowering prices and slowing expansion in the overstored fast food market to focus on creating healthy menu items. Based on these key factors, we believe the QSR industry is in the maturity stage of the industry life cycle. This is due to a low level of innovation, fluctuating profit margins, and global expansion. 1. BUSN 6200 5 Fall I 2009 Team Andrews KKD Case Analysis 1. BUSN 6200 6 Fall I 2009 PORTERS FIVE FORCES MODEL Porters Five Forces Model is a framework for industry analysis and business strategy development pioneered by Michael E. Porter of the Harvard Business School in 1980. The framework is rooted in Industrial Organization and strives to identify the mitigating factors related to five forces that determine the competitive intensity and overall attractiveness of an industry. In this section we apply the framework to identify KKDs competitive position within the QSR industry. Potential Entrants

ching Cost Degree of Rivalry

differentiation Suppliers

substitute inputs Buyers

buyers

suppliers

Substitutes

Figure 1: Porter's Five Forces Model Team Andrews KKD Case Analysis Potential Entrants During the maturity stage of the industry life cycle, the threat of potential entrants is minimal. Majority of the firms present in the industry have developed economies of scale providing a cost advantage over new entrants. KKD is positioned as follows in terms of potential entrants: st advantage-KKD and KK Supply Chain manufacture their own doughnut-making equipment and produce doughnut mixes -entirely automated, the doughnut making process is very efficient -KKD sells directly to the customer via KKD stores with counters and drive-through windows. As well as, off-premises through grocery and convenience stores -KKD is known for their "Hot Doughnuts Now" signs as well as "doughnut-making theaters" where customers can watch the doughnut making process through glass windows Bargaining Power of Suppliers The bargaining power of both KKD suppliers and the KK supply chain for franchisees is significant. Both franchise stores and company stores are required to purchase all supplies from KK Supply Chain which provides all supplies including foodstuffs, equipment, signage, and uniforms. The KK Supply Chain

unit buys and processes all ingredients used in the doughnut mixes and manufactures the doughnut-making equipment that all stores are required to purchase. KK Supply Chain also includes the coffee roasting operations and also ships all food ingredients, juices, display cases, uniforms, and other items to KKD locations on a weekly basis by common carrier. This allows for maximized leverage when negotiating costs for staples such as potato flour and sugar, by volume, and gives the supplier added bargaining power. This also allows KKD to maintain control over the price of goods supplied to the vendors, keeping operations costs lower for the franchisee while still allowing a healthy profit margin. KKD also manages contracts to outsource the making of donuts for grocery distribution, and the reach of KKD allows for a price-making position. If those suppliers do not deliver goods on time, KKD cannot supply its company and franchise stores and they would lose valuable revenue. Bargaining Power of Buyers The QSR industry offers many substitutes for KKD products and the cost of switching is low. In fact many consumers prefer diversity in their diet and with an increasingly health conscious market place the consumption of sweets like doughnuts is limited. Combine this with the high promotion budgets of market

1. BUSN 6200 7 Fall I 2009 Team Andrews KKD Case Analysis 1. BUSN 6200 8 Fall I 2009 leaders like McDonalds, Burger King, and Dunkin Donuts consumers are enticed on a daily basis to exercise their right to switch. Thus, buyers have significant bargaining power. Threat of Substitutes Over the past two decades competition in the fast-food market has been everexpanding. With both spouses working in todays environment less and less time is being spent in the household kitchen. It is more common, and convenient, to grab a quick meal than the traditional home cooked meal. Therefore, it comes with no surprise that substitute products enter the casual-dining sector to gain market share of the fast-food chains. In the doughnut and pastry shop industry this is no different. Price wars are generated in attempts to take away revenue from other restaurants and sustain growth. Therefore, KKD must constant be aware of substitute products from many different areas of the market place. Such substitutes demanded today include healthier menu items include zero trans fats in all products. Going organic or using 100% natural ingredient items to favor comparable products. Therefore, companies in this industry must remain focused on substitute products from many different areas of the marketplace.

Degree of Rivalry The QSR industry boasts a variety of firms/products including KKDs indirect competitors McDonalds and Burger King. KKDs direct competitors are Dunkin Donuts, Starbucks Corporation, and Tim Hortons. The large number of direct and indirect competitors in the QSR industry signifies a significant degree of rivalry. KKD strives to differentiate its product offerings to remain competitive. Team Andrews KKD Case Analysis V. RECOMMENDED STRATEGY Team Andrews recommends KKD focus on business level strategies to remain competitive within the QSR industry and increase profitability. Porters Five Forces Model, as discussed in the previous section, provides a foundational matrix for identifying how firms can achieve advantage within an industry. The matrix identifies two primary sources by which firms can achieve an advantage: (1) cost and (2) uniqueness. The matrix appears below in figure 2: Competitive Advantage Cost Uniqueness Broad Target Cost Leadership Differentiation Competitive Scope Narrow Target

Focused Low Cost Focused Differentiation Figure 2: Adapted from Strategic Management for the Capstone Business Simulation and Comp XM: Analysis and Assessment Considering that KKD serves a broad (international) target market the firm should focus on cost leadership and differentiation. Cost leadership is based on high volume sales of low margin products/services. To that end, KKD must focus on increasing their sales across all three sectors of the business, not just franchisees. This should be done by first identifying and adhering to each segment of their target markets key buying criteria at the lowest possible cost to the firm. Then KKD should decrease their prices and adjust marketing/sales budgets and R&D expenditures to create a significant and sustainable cost gap, relative to competitors, by leveraging economies of scale (complete automation of the doughnut making process, added capacity, and TQM). KKD does manufacture and sell some high margin products/services across all three sectors. We recommend in addition to focusing on cost leadership with their low margin products/services that KKD strive to further differentiate their

high margin products/services. This may be achieved through creative branding, improving the customer experience, introducing a new product, or entering exclusive partnerships with suppliers/distributors. We believe that if KKD executives embrace the cost leadership differentiation business level strategy the firm will see increased revenues, retail operations, and interest in the brand. 1. BUSN 6200 9 Fall I 2009

CASE FORMAT KRISPY KREME DOUGHNUTS, INC. --- 2004 1. Title Page a. Case title b. Group Members c. Class schedule d. Term and school year e. Date submitted 2. Content a. 1-page Case Summary b. Proposed Vision and Mission Statement for KKD c. External Audit --- EFE Matrix d. Competitors Analysis --- CPM e. Financial Ratio Analyses f. Internal Audit --- IFE Matrix aveA Case Study on Krispy Kreme Doughnuts, Inc A Case Study on Krispy Kreme Doughnuts, Inc ________________________________________ 1. A Case Study on Krispy Kreme Doughnuts, Inc Company Overview Krispy Kreme is a company that despite its history dating back to 1937, has only started to experience rapidly increasing sales, expansion, and customer awareness in the last few years. Recently, however, the company has gotten into financial and legal trouble and is struggling to survive. This case is an evaluation of Krispy Kremes past and present business performance, internally and with regard to the external environment it is operating within. The study will conclude with both insights and recommendations Krispy Kreme should implement based on these evaluations and our SWOT Analysis.

Mission & Vision One of Krispy Kremes main weaknesses is that it lacks a clear mission and vision statement. The only stated objective was to have a successful Krispy Kreme in every town in the United States. As a result, Krispy Kreme has suffered financial difficulties. Krispy Kreme tried to expand too rapidly and is now paying for it financially. Krispy Kreme made a good decision to shift its focus back to retail business rather than selling solely to wholesalers. Company Structure Krispy Kreme was originally a partnership, but now is a corporation. As a corporation, Krispy Kreme has limited liability, the ability to obtain finances for expansion, and a perpetual life. In addition, it has easily changeable ownership, attractiveness to potential employees, and the ability to obtain finances from outside sources other than management. An autocratic leadership style is used. Two-thirds of Krispy Kreme stores are franchises. The franchisees pay up to a $40,000 fee for each store they open and pay royalty fees. Marketing Although Krispy Kreme has no mission statement, its actions indicate its strategy is to differentiate themselves in the retail doughnut/coffee industry based on its experience in selling quality coffee and doughnuts. In the beginning, Krispy Kreme Doughnuts had the total product offer. The value package consists of delicious, hot doughnuts that are ready to buy. Krispy Kreme prides themselves in having speedy service, and ready to sell, hot doughnuts right off of the oven rack. The image created by all of the free publicity caused many people to come and experience the Krispy Kreme Phenomenon. Stores have a custom design appeal and some are open twenty-four hours a day making efficient use of all available time. Product Differentiation & Product Line Krispy Kreme differentiates themselves with signature stores that have a green roof and open glass windows which allow customers to see

doughnuts being made (Thompson et al, 2004). The facility layout of the stores allows for a unique customer experience, separating Krispy Kreme from such competitors as Dunkin Donuts, Tim Hortons and Winchells Donut House. Krispy Kremes product line already consists of over twenty-five different varieties of doughnuts. A major push to sell coffee was made in hopes of keeping potential customers from going to Dunkin Donuts. In 2001, Krispy Kreme purchased Digital Java, Inc., in an effort to compete with other doughnut retailers beverage sales. Krispy Kreme increased its sales by 40% because it was able to expand its product offering and its quality (Thompson et al, 2004). Krispy Kremes coffee and beverage sales became more profitable, but did not produce as much sales as the competition did in the beverage area. Although, Krispy Kreme has started selling coffee, its primary focus has always been on selling doughnuts. Nothing was done to promote the coffee and other beverages, customers were expected to buy them when they saw they were available and to tell their friends about the new products. One of Krispy Kremes downfalls in recent years is its inability to differentiate themselves from the product line of Dunkin Donuts and other competition. Doughnuts sold to wholesalers were no longer hot out of the oven and were not any different than any other doughnut. Krispy Kremes failure to separate themselves from what the competitors were selling caused the consumer to lose interest in the companys products. Krispy Kremes competitors such as Dunkin Donuts and Starbucks have been successful because they are able to offer not just one product, but a number of things that attract both new and old customers while still bringing in a steady profit. After the consumer had the Hot Doughnut experience, they were left with nothing to come back for. Marketing Mix Product & Price Krispy Kremes marketing mix concentrates on its product. The Hot

Doughnut Now concept intrigues customers. All the doughnut mix and equipment used in Krispy Kreme stores was manufactured and supplied by the company in order to ensure consistent recipe quality and doughnut making throughout the chain during the production process (Thompson et al, 2004). These doughnuts were sweeter, bigger and at a slightly lower price than most of its competitors, depending on the variety of doughnut. Place The companys choice of locations has been highly debated. A marketing analyst stated that Krispy Kreme expanded too rapidly and never altered its product line to differentiate themselves from their competitors. Also, the same analyst argues that the places where the older buildings where placed are bad locations for retail sales (Barnes 2004). Promotion Mix Personal Selling, Product, Sales Promotion The promotion mix was great going into the 21st century. There is not much personal selling in Krispy Kreme. Instead, customers come in with the brand awareness of the doughnuts. The store emphasizes its original glazed doughnuts but other than that not much personal selling goes on. Product giveaways are held at grand openings to improve knowledge of Krispy Kreme products. On certain occasions Krispy Kreme sells a special flavored doughnut for a limited period of time. Currently, Krispy Kreme is offering a strawberry shortcake doughnut. Advertising Promotion was highly done by the word of mouth advertising of past customers. The media also contributed to this type of promotion. Krispy Kreme spends very little, if anything, on advertising (Thompson et al, 2004). Krispy Kreme strongly believes that the buzz created from public relations, at a store opening, is enough to bring the customers to its doughnut shops. This hurts them in the long run because as soon as a stores grand opening is over, Krispy Kreme is old news. Customers lose the hype over the doughnuts and do not

come back. Also, grand openings of Krispy Kremes have promoted doughnut awareness through media relations. This has helped increase sales of competitors. Something must be done to keep those customers from going to competitors. Public Relations Krispy Kreme obtains excellent public relations when a store opens. An Austin, Texas store opening was covered live by five TV crews and four radio stations, and at a San Diego opening, five more TV crews and radio stations covering the lines outside the stores waiting for the store to open (Thompson et al, 2004). Sales were at a peak during those openings. Gradually, without advertising to keep Krispy Kreme fresh and new in the public eye, sales declined. Financial Analysis On paper, Krispy Kreme seems to be a company in which there is no end in sight. When it comes to making a hefty profit based solely on the idea of selling hot, delicious doughnuts, Krispy Kreme is excellent. Since this case was written, Krispy Kremes net income has increased from $14.5 million to $57.09 million in just three years (www.krispykreme.com). However, there seems to be evidence that Krispy Kremes financial future may be in jeopardy. Recently, the companys first losses were reported. The quarter that ended October 31 produced a $3 million net loss, compared to a $14.5 million profit a year earlier (Barnes 2004). The stock was once at a high of $50, but nowadays the stock price is around $7.59 (www.krispykreme.com). To make matters worse, Krispy Kremes shareholders have filed classaction lawsuits claiming that they were deliberately misled about the companys financial position. Financial Ratios After examining Krispy Kremes financial ratios, and what they indicate, Krispy Kreme appears to be doing quite well. Financial Speculation Publicity, centered on Krispy Kremes current financial issues, has negatively affected the companys image among investors and customers. This shows the downside to free publicity. Krispy Kreme

has gotten into legal trouble with lawsuits being filed against the company and the United States Securities and Exchange Commission (SEC) looking into its accounting methods. Demonstrating that Krispy Kreme is not as well-off as some people might have believed. When Krispy Kreme repurchased one of its franchises, it did so in a way that avoids the need to deduct their value gradually from future earnings (Barnes 2004). Krispy Kreme was trying to make its profits seem greater than they actually were because they were not taking into account the fact that the value of those stores would decrease every year; which would therefore decrease its profits. Stockholders were misled into believing that Krispy Kreme was more financially sound then it actually was, causing more people to invest then actually would have if they had more accurate information. Krispy Kreme violated its legal and ethical responsibilities to its stockholders and as a result, stockholders have filed lawsuits against the company. Financial Future Even if the company manages to battle the lawsuit and the SEC investigation, its name has been brought down because of these situations and its stock price may continue to decline for a long time. The company is not built for long-term success since it depends on a single product line. Since every field of business encounters fierce competition, Krispy Kreme might not be able to keep up with Dunkin Donuts and Starbucks. Krispy Kreme has been unable to effectively offer the complete value package. All in all, the company seems to be heading into rocky waters and may not be able to get themselves back to where they were in the beginning. Human Resources Since Krispy Kreme is a fast-food restaurant, employees will probably tend to be motivated only by extrinsic rewards. There is very little, if any, intrinsic rewards. Typically employees in the fast food industry do not require a lot of education, knowledge, or expertise of any kind. Krispy Kreme provides full-time employees with very good benefits. The one benefit, which seems unusual for the fast-food industry, is to give employees a Profit Sharing Stock Ownership Plan. It is

questionable as to how many of the employees are eligible for benefits and how many of those eligible actually take advantage of the benefits available to them. In a typical Krispy Kreme store there are about 125 employees, of which 65 are usually full-time employees. This means that 48% of the store employees are probably not eligible for those benefits. Employee Management On the positive side, Krispy Kreme seems to have a good management program for it employees. Krispy Kreme calls the management program Management 101. The management course motivates employees and builds a sense of trust with store managers and employees. Marketing Environment Sociocultural Factors In 2003, Krispy Kreme was quoted as saying they do not believe the growing awareness of nutrition and health was affecting its sales. Now, in 2005, major marketers are suggesting that health awareness is affecting Krispy Kremes sales and Krispy Kreme has blamed its financial problems on it (Barnes 2004). Social Responsibility Krispy Kreme recently ran a promotion where customers could buy a paper balloon for $1. The money for the balloons was donated to the Childrens Miracle Network (www.krispykreme.com). Technological & Global Factors Technologically, Krispy Kreme does have its own website where customers can get all of the information they need regarding the companys background, nutritious values, and special promotions. Globally, the company has entered the international atmosphere. Krispy Kremes can be found in the United States, Canada, Mexico, Australia, Korea and the United Kingdom (www.krispykreme.com). Economic Factors

According to company research, Krispy Kreme targeted all demographics, including age and income. This proved to be a significant weakness. They did not know specifically who its customers where and what they wanted. Stores were opened in high traffic areas, but not much other research was done to determine the best locations. Customers in America were consuming ten to twelve billion doughnuts annually (Thompson et al, 2004). Individuals willingness to buy doughnuts allowed for Krispy Kremes success early on. Recommendations Krispy Kreme has gotten itself into a lot of trouble. If they can escape the lawsuits and SEC investigation without going out of business, some changes need to be made. [O]fficials are too concerned with staying out of jail and need to come up with a clear plan for the company (Barnes 2004). A mission, vision, plan for expansion, as well as longterm and short-term goals need to be established. The mission, vision, and objectives need to be clearly stated, precise, and to the point. The information should be easily accessible to both employees and customers. Stores that are not successful need to be shut down to reduce unnecessary expenses. The focus should be on making stores in the U.S. successful before worrying about stores in other countries. An advertising campaign needs to be established to promote and maintain awareness of the Krispy Kreme products. It is fine to sell products other than doughnuts, but people need to know that they are available. Major Competitors of Krispy Kreme Doughnuts, Inc. Panera Bread Starbucks Dunkin Donuts (owned by Allied Domecq) to develop, manufacture, market and distribute fresh doughnuts made from quality ingredients that enhance their freshness.