ANALYSIS AND RECOMMENDATIONS Krispy Kreme Doughnuts, Inc. 370 Knoll wood Street Suite 500 Winston-Salem, North Carolina 27103 PURPOSE: The purpose of this study is to issue my recommendations to the CEO and Board of directions of Krispy Kreme. This corporation is on a downward spiral and changes must be made at a rapid pace in order for any hopes of survival. It is struggling financially and struggling to remain a valued member of the New York Stock Exchange. My first recommendation was to release top management and put the company in the hands of an industry specialist experienced with financial reconstruction and public trust renewal. The KKD Directors chose Stephen Cooper to lead their corporation and I will be working directly with him and his firm, Kroll, Zolo, Cooper, LLC.

MISSION STATEMENT: In 2004, Krispy Kreme had plans to develop a mission statement, but I was unable to locate one. Due to the current problems that KKD is experiencing, I would suggest that a mission statement should be constructed. There is a logical way of conducting business in accordance with the facts and circumstances of the industry, however, the concept should incorporate the strategic 'vision' of KKD. Precise and concise, I would enter a suggestion of the following: Krispy Kreme's strategy is to develop, manufacture, market and distribute fresh doughnuts made from quality ingredients that enhance their freshness. We will concentrate on high quality and assure that equality will be apparent in all geographic markets, company stores and franchises.

We will target geographic markets with high growth potential where we can develop a competitive advantage. We will focus to provide efficient distribution outside of our stores to be able to offer Krispy Kreme doughnuts to a large market area. We will strive to become a recognized, market leader. BACKGROUND: Vernon Rudolph founded this company in 1937 and it was a family-run business until Rudolph's death in 1973. After reorganization, Krispy Kreme was sold to Beatrice Foods in 1976.

In 1982 early franchisees got together and purchased it back from Beatrice Foods. Stores were spreading across the country. Krispy Kreme opened its first franchise in New York in 1996 and expanded to the West Coast in 1999. In 2001, they opened their first international franchise in Canada. Krispy Kreme's reputation for excellent doughnuts was memorialized by the Smithsonian Institution's National Museum of American History request of artifacts since they considered Krispy Kreme a 20th Century American icon. An initial public offering in April, 2000 brought Krispy Kreme to Wall Street.

Today, this specialty retailer owns company-run stores and franchises referred as Krispy Kreme Manufacturing and Distribution (KKD&D). As of 2004, Krispy Kreme has 357 factory stores of which 19 are internationally located. During 2004 they acquired the balance of 33% ownership of Golden Gate Doughnuts LLC which gave them 100% ownership of the company. However, with excellent brand name recognition and top ranking in taste tests, KKD is in financial trouble.