CASE STUDY ON KRISPY KREME DOUGHNUTS.

(KKD-2009)

GROUP MEMBERS

Mohit Sharma (B26) Q2203 Ruchika Gaba (B27) Q2203 Shreya Sharma(B28) Q2203

Introduction

1937- Vernon Rudolph bought secret recipe from his uncle. Expanded from local store to nation wide chain of stores Headquartered in Winston Salem, North Carolina 1940s Small chain of stores, family owned. Development of first distribution system. 1950s Improving and automating the doughnut making equipment. 1960s Steady growth throughout the Southeast. Consistent store designs. 1973 Founder Vemon Rudolph dies.

Introduction (cont)

In 2000, krispy kreme was very successful in raising sufficient capital with I.P.O. In 2001, krispy kreme has been listed in new york stock exchange. In 2004, company operating stores in australia. The year 2004, began a period of steep decline for krispy kreme. And also In 2009, the end of last fiscal year,the company was operating 523 stores.

Mission

We create the tastes for good times and warm memories for everyone, everywhere. With our Original Glazed doughnut as our signature and standard, we will continually improve our customer's experience through: Innovative ideas Highest quality, and Caring service

VISION AND VALUES

VISION-To be global leader in doughnuts and complementary product while creating magic moments worldwide. VALUES Consumer are our lifehood,the center of doughnut. There is no substitute for quality. We must produce a collaborative team efforts. We never settle for Second Best.

Case Study: Krispy Kreme Doughnuts

Established in 1937. Today has more than 290 doughnut stores (companyowned plus franchised) throughout the U.S. Serves more than 7.5 million doughnuts every day. Strong earnings and consistent sales growth.

Business Operations
We generate revenues from three distinct sources. Company Stores.

On-premises sales. Off-premises sales.

Franchise. KK Supply Chain.

Mix manufacturing. Equipment. Distribution.

Types Of Stores.

THERE ARE 2 TYPES OF STORE.

> Factory/ Retail store. > Satellite store.

Store Layout/Design

Freestanding: Most free-standing Krispy Kreme stores are constructed with a long window between the customer area and the kitchen, allowing customers to watch the operation of the doughnut-making machines. Smaller Stores: Most of the smaller stores get their donuts from other locations rather than producing them on-site.

cont

Atmosphere: Very welcoming, with bright lighting. Seating is limited but available. Factory tends to pull curious customers inside.

WAYS TO RAISE FUNDS

Company Store: on premises sales Franchise and royalties Vertical integrated supply chain

4 BUSINESS UNITS.

Mix Manufacturing. Equipments. Beverage program.

Distribution centers.

Organization Analysis

Strategy is focused on revenue. organizational structure. In 2001, cash flow return on equity investment for franchises was at 91%. In 2003, the companys business strategy was to add enough new stores. strategies do not appear to be capable of maintaining a competitive advantage. July 2004 launching an inquiry into the companys accounting practices. December 2004, they announced still more accounting errors.

S.W.O.T Analysis
Strengths Affordable, high-quality doughnuts with strong visual appeal and "one-of-a-kind" taste. Vertical integration helps ensure high quality product. Consistent expansion; now in 16 countries. Product sold at thousands of supermarkets, convenience stores, and retail outlets through U.S.

Weaknesses

Shareholders have not received dividends recently, and are not expected to in near future; stock price in state of flux Closing stores when stores should be opening globally at steady rate to keep up with competitors' growth Product line slow to expand with nothing outside "sweet treats" to draw in health-conscious customers Advertising not aggressive enough to appeal to areas outside southeast of U.S. where most stores are Revenues down, net losses in each of past three years

Opportunities

Development into diversified product markets Detection of the problem occurring in the management of the business and thus the fall in business and profitability Reaching the market to really know what the customers want and then to develop the marketing and strategic policy in accordance to that. Starbucks lacks a diversified and distinctive pastry line Dunkin' Donuts does not have hot doughnuts to sell

Threats

Tough competition and increasing global recognition of Starbucks and Dunkin Donuts. Global presence of the competitors More health conscious customer base Starbucks has approximately 25 times the amount of stores worldwide that Krispy Kreme Donut has
Shareholders may sell KKD stock for lack of returns and dividends compared to other similar firms in the industry

Competitors

Dunkin Donuts- Privately owned

Claims to be the worlds largest coffee and baked goods chain. Serving 2.7 million customers per day 5,769 U.S. locations 20 countries

Starbucks-World premier roaster and retailer of specialty coffee coffee shop with 8,800 worldwide locations

Over expanded- downsizing and consolidating Current products are too expensive for consumers

Conclusion

The food industry has been affected by a recent trend toward quick eating habits. Krispy Kreme has capitalized on this trend by positioning doughnuts as a popular, on-thego food. Krispy Kremes success has hinged on consistency throughout its locations and by delivering a high quality product.Future growth opportunities include expanding franchises as well as penetrating alternate distribution channels. As Krispy Kreme analyzes potential growth opportunities within alternate distribution channels such as convenience stores and grocery chains, it must determine whether doing so will sacrifice brand equity and product quality.

Can Krispy Kreme Survive? What Should be turn around stratergy?

1- Develop stronger relations and control of

franchisees. Implement Franchise Support Systems Communication between corporate and franchisees Support training, advertising Implement Marketing Strategies Advertising hot doughnuts now. Marketing research R&D

Strengthen Competitive Advantage Strengthen Competitive Advantage through differentiation in products and services. Continue to utilize hot doughnuts now Expand product line Reduce operating expenses To allow individual stores to decrease in size, thus lowering per store operating costs to a more appropriate level for sales volume Increased efficiency-Inventory