This action might not be possible to undo. Are you sure you want to continue?
Anthony D. Davis, Sr. Keiser University MBA 532 Dr. John Fitzgerald
and if a person is not aware of all that is required to maintain the wealth a series of events could cause the wealth or notoriety to vanish. only to find out on Thursday morning that they have hit all the numbers and suddenly they go from foreclosure to financial freedom. It became a success in the late 1950’s and they opened 29 shops in 12 states and were able to produce 500 dozen doughnuts and hour. Initially. Krispy Kreme grew from less than $1 million revenue in 1954 to over $58 million by the time Harding retired in 1974. This sudden rise to wealth has both a positive and a negative side. Yet on the other hand. Sudden wealth brings with it a host of responsibilities. . The company was bought from Beatrice by Joseph McAleer. In 1960 business began to take on a standardized look and thus creating the Krispy Kreme trademark. They buy a set of numbers on Wednesday. Also Vernon Rudolph brought on partner Mike Harding. lock stock and barrel. it will appear that all the problems that one could have gone and that the road ahead is rosy and full of positive outcomes. In 1937 the first Krispy Kreme doughnuts opened up in WinstonSalem. Harding became the chief executive officer. From its inception until this time. and wake up rich. One of the ways this happens is when people play the lottery. to help them build the business. when Rudolph died. In 1973. history has shown us that things that come quickly can also leave quickly. In 1976 Beatrice foods bought Krispy Kreme and started making changes to bring about a more modern look for the company in 1982. 2010 America is the land of opportunity because only in America can you go to sleep a poor man. for $22 million. NC.2 August 5. Krispy Kreme doughnuts had its humble beginnings in 1933 after Vernon Rudolph bought the namesake doughnut shop that had belonged to Joe LeBeau.
The second part of their strategy was to increase the number of stores both retail and franchise in establishing a square footage that was suited to the company's new position. he realized that the focus of the markets in the southeastern US were not taking advantage of the growth market. The company brought in Scott Livengood as President and COO. Krispy Kreme began a new initiative and strategy to reposition itself. After he came on. It was going from wholesale bakery to specialty retail company. Krispy Kreme was now operating corporate stores as well as franchises with royalties being paid to the corporate office.3 The new owners brought back the original recipe that had been changed by Beatrice foods and with that sales rebounded. By the 2000s. He also realized that the large 7000+ foot stores were essentially too big to bring in a significant profit. Krispy Kreme had grown substantially to 33 franchise stores and had committed to opening another 130 stores in the next few years. They were also operating 61 stores from the corporate headquarters in broad revenues to over $220 million with profits at a record $6 million. in 1992 Livengood realized that the company’s model of selling wholesale was not bringing out the best in the company as there was no focus on the brand. Revenues have grown 117 million dollars in 1989 and remained stagnant through the early 1990’s. From 2000 to 2004 the number of Krispy Kreme stores grew from 144 to 357 and posted donut sales from an average of three median to 7. This new company went public in 2000 with an initial public offering or IPO of 3. Livengood had joined Krispy Kreme in1978. Additionally. In 1996.4 5 million shares.5 mean they were . They increase the donor sizes and began to emphasize the “hot donut”.
and they produced and built all of the machinery that was placed in corporate and franchised stores. In such a relatively short period of time they were essentially one-dimensional. From practical purposes. they were the golden child of the donut industry. which resulted in a $2 million loss. By all measures Krispy Kreme had done all that was necessary to become successful. Krispy Kreme had gone from a simple company bought in 1933 to the winning ticket. and Tim Horton’s. Krispy Kreme had become an overnight sensation. Canada. They came in the form of competitors like Dunkin' Doughnuts.4% they had in 2002.7 million but had expenses of 8.7 million. With the purchase.4 now in the process of growing internationally.000 the first couple of weeks after the store opened. the Montana Mills brand generated $6. In 2004 they had an astonishing 30. By all measures. Continuing on their buying spree Krispy Kreme purchased Montana Mills bread Co. the Krispy Kreme franchise was growing and new franchises across the nation were setting a sales record at new stores. At the time it was seen as a natural outgrowth for the company. their coffee sales had increased 40%. in 2003. Krispy Kreme had its detractors. The cost of a new store was about $2 million in weekly sales at stores could range anywhere from $100. They were in charge of their own distribution. During the same years. They were all viable competitor’s who had corporate shops and franchises located in the United States. Two others of importance were Winchell’s Donut House and LeMar’s Doughnuts. they sold . Yet in 2004.6% of the market for packaged donut sales compared to the 6.000-$500. No sooner than new stores open crowds would line up just to taste Krispy Kreme doughnuts. Krispy Kreme purchased digital Java small Chicago-based coffee company. One of the problems the Krispy Kreme had was in growing so fast. In 2001. and abroad.
Everything they Krispy Kreme put together from manufacturing to training. all centered on the production of doughnuts. somebody should have recognized and seen that the polls of America was shifting to becoming more health-conscious. This less Krispy Kreme as a great donut retail establishment. And even though they entered the Java market. and therefore became a deficit instead of an asset. and subsequently the bread market. did little to add to the Krispy Kreme name or its bottom line. When you look at a company like Dunkin' Doughnuts. their purchase of the bread company. so delicious. Secondly. Additionally. And although they had acquired a coffee company. they also have a full line of breakfast products and are not limited to just selling doughnuts. This came at a time when the company was already receiving backlash for serving doughnuts that had an extremely high fat content in a world that was becoming more diet conscious. hot and melted in your mouth could suddenly be seen as an artery blocking heart attack causing treat. was the inquiry on accounting practices from the repurchase of a delinquent franchise and the effects they would have on public trust. Tim Horton's has a small cult following from their Canadian hockey hero.5 doughnuts. but it also showed that against the competition they did not have a plan B. it was not established enough to be a standalone product like the many coffee products of a Starbucks. they did not do so with the same care and strategic prowess as they had in establishing themselves as a brand donut company. although they specialized in doughnuts. unknown to anyone. Krispy Kreme never saw their golden child having an Achilles' heel. . Not to mention they also have a full list of products to include sandwiches. . bagels and muffins and croissants. Who would have thought something so tasty. The bottom line is.
a company that had record sales and great domestic and international growth that their operation was not enough to sustain people’s loyalty. There are number of actions that Krispy Kreme doughnuts could have taken..6 It became apparent to Krispy Kreme. and filled. they should have used that opportunity to introduce other sustaining products bolster their product line and could have taken time to determine if the acquisition of coffee and bread was going to be enough to grow the business and if it was done at the right time. Lastly. . coffee and breads. and coated. It was not prepared for the wind to be knocked out of his sails. and did not ensure its foundation was strong enough to sustain a blowback. Krispy Kreme became wrapped up in its success and growth. there should have been some other checks and balances to ensure that part of the business was handled through an outside agency or at a minimum audited. Regarding the financial irregularities. So. everyone can enjoy a Krispy Kreme donut.e. glazed. only an assumption that that extending their beverage line would broaden the audience. That would have been the opportunity for them to introduce low-fat doughnuts and other type of donut treats. While they were on top. it was still seen as one product. The first action that could have been taken was to realize that their success was rolled up in one product and although the product came in different kinds i. There was no insight in the coffee purchase. Another possible solution was for Krispy Kreme to proactively educate the public about the nutritional value of their product and how through moderation. they should have taken the opportunity to tell America why they love Krispy Kreme doughnuts and invite America to become part of the donut craze by introducing ideas or plans to make doughnuts accessible to everyone from every walk of life. as they became successful.
It was obvious all their competitors had a larger product line and so Krispy Kreme needed to have more than a niche product. it was a one legged table that was balancing well. Krispy Kreme doughnuts as a single product brand. because it's planning was bad. the company has suffered. I would have done studies to find out the history of single product companies. they apparently failed to revisit and refocus efforts on their core business. There was a lot going on. doing the early 2000’s and if there was going to be an acquisition. but the company must find a way to ensure their product can go from one with high fat content to one that's healthy. a number of things happened quickly for the company and instead of being a three-legged table. . Krispy Kreme doughnuts will find prominence again. however. looking at what worked and didn't work for them. The company was spending so much time trying to keep up with opening new stores. There comes a point to much of anything is not good for you. for a while. While designees of the company were responsible for licensing and franchising. while keeping the same taste and no doubt. and it's a good brand and good product. they should have looked for one that could have immediately added to their overall portfolio. The company hasn't suffered because its product was bad. Growth is good but out-of-control growth can be dangerous.7 I would have recommended to Krispy Kreme. People love Krispy Kreme doughnuts and will continue to love Krispy Kreme doughnuts. that when the public began to take hold of their product and bring their company from obscurity to notoriety that they began to study their competition and take note of what worked for them. the CEO and the board of directors needed to continue to study the model and tweak their short and long-range plans outside of the franchising activities.
.8 Reference: Thompson A & Shah A (2005) Krispy Kreme Doughnuts in 2005: Are the Glory Days Over? Taken from: Peter J & Donnelly J. (2009). Marketing Management: knowledge and skills. McGraw-Hill Irwin. 9th Ed. p 688.
This action might not be possible to undo. Are you sure you want to continue?
We've moved you to where you read on your other device.
Get the full title to continue listening from where you left off, or restart the preview.