New Krispy Kreme Store example essay topic

Case Discussion Reflection 1 KKD seeks to appeal to everyone in their mission to slowly take on the fresh pastry market. Krispy Kreme is not one to limit a target of the public. According to Holland (2003), the company is equally loved by 5-year-olds and 75-year-olds alike. They are also enjoyed by whites, blacks, Asians, and Hispanics. New Englanders and Southerners love them as well as Californians and New Yorkers.

Race is definitely not an issue. Only three types of people claim that they do not like Krispy Kreme: nutritionists, Dunkin' Donuts franchisees, and compulsive liars. Stan Parker, senior VP-marketing, says "no one looks at Krispy Kreme as a replacement for lunch or dinner. It's a complement" (MacArthur, 2003).

Krispy Kreme wishes not to be a fast food business or another doughnut store. President and Chief Executive of Kreme Ko, insures the public that they think long and hard before the considering expansion. He said, "Krispy Kreme doughnuts won't suddenly become available everywhere because we don't think that's appropriate for the brand at this juncture in its evolution in the marketplace" (Krispy Kreme Steps up Wholesale Business in Canada, 2003, ) Reflection 2 KKD openly shows it audit procedure online in a PDF. Form which shows great ethical poise. No company is void of legal woes whether casualty or accused. According to a Forbes Magazine article, KKD has been cleared in any wrong doings in regards to engaging in intentional misconduct related to the company's acquisition of a Michigan franchise.

Krispy Kreme did not wait to get independent legal parties involved with the issue and allowed the SEC to review any sought impropriety. According to the Forbes report, KKB halted turning in its Q 10 statement until all is settled but had to close a $4.6 million doughnut plant in northeast Ohio due to oversupply problems. Socially, KKB has done its part to open a store or fill a convenience store with its product which appeals to all who seek a tasty pastry. They have offered free donuts to masses of people including EMS, police personnel, military troops overseas which I would bet boosts morale. On there website, they support the Children's Miracle Network which is a great benefit to society. Reflection 3 Taking into consideration all KKD's publics, it is no shocker that Krispy Kreme continues to grow.

For the first time, it successfully expanded nationally during the late 1990's in California (Saltzman). A main point of Krispy Kreme's continued financial success has been their expansion into international markets. Markets such as Mexico, Canada, the United Kingdom, Australia, New Zealand, Japan, South Korea, and Spain. Each time KKD expands, they are met with much eagerness. Growth for Krispy Kreme comes after careful consideration of location and timing. The company will spend countless hours investigating international markets (Krispy Kreme Awards Development Rights to Australia and New Zealand, 2003).

For example, when Krispy Kreme decided to expand into the UK, the company decided the best location would be a Harrods store in London. Research showed that Brits eat about 1/25th of Europe's sugar products and almost 1/3rd of its chocolate (Krispy Kreme doughnuts to open branch in Harrods, 2003). Dunkin' Donuts decidedly pulled out of the UK recently, but Krispy Kreme is confident they will not fail. (Ealing, 2003) KKD said that they have a different model than Dunkin' Donuts, focusing only on doughnuts. Krispy Kreme considers the same factors when looking to expand either domestically or internationally.

Fundamental to the company's expansion strategy is aligning itself with highly competent, well-capitalized and experienced food vendors (Krispy Kreme Continues Expansion through New Area Developer Agreements and New Store Openings, 2002). After their initial success outside of North America, Krispy Kreme became confident that its doughnuts would be well received throughout the globe. In regards to long-term future growth, executives say that they are confident foreign taste-buds will acquire a craving for the sugary pastries when the company expands into Australia, New Zealand, Britain, Japan, and South Korea (Shook, 2002). Krispy Kreme has taken its time finding the right corporate partner in each of those markets and CEO Livengood agrees. "We decided to target those countries based on the popularity of American products in those markets-as well as the ease of doing business".

(Shook 2002) After Krispy Kreme determines where to expand, they choose the type store. Reflection 43 Major Competitors of KKD o Starbucks o Dunkin' Donuts Panera Bread Stated in Krispy Kreme's 10-K Report from 2003, Krispy Kreme competes with various well-established food services. At the retail level, the company competes with other doughnut vendors and bakeries, specialty coffee retailers, bagel shops, fast-food restaurants, delicatessens, take-out food service companies, supermarkets, and convenience stores. At the wholesale echelon, KKD competes mostly with grocery store bakeries, packaged snack foods, and vending machine dispensers of snack foods. Many Krispy Kreme's competitors offer customers a broader range of products.

They have greater financial clout and other resources that allow them to respond to changes in pricing, marketing and the quick service restaurant better than Krispy Kreme can (Krispy Kreme Doughnuts, Inc.) KKD CEO Scott Livengood compares Krispy Kreme's experiences and position in the marketplace to Starbucks Coffee, Inc. Livengood says that they are both specialty retailers, and they both took a product that had been around a long time and redefined and repositioned it with strong results (Shook, 2002). It seems there is a Starbucks on every street corner and local coffee shops are feeling the effects adversely. Similarly, local pastry shop owners grow weary about Krispy Kreme putting them out of business.

The small business owners complain: "They " re a big shark. We are a small fry" ("Local Donut Shop Owner Worried by Krispy Kreme Opening in Beaverton, Ore. ", 2003). Small business owners think that Krispy Kreme is taking away the sense of people's regionalism. Research shows that each time KKD enters a new market; the company increases sales for other doughnut shops. Due to the publicity and buzz generated by a new Krispy Kreme store, people in general are eating more doughnuts.

Krispy Kreme new stores rarely hurt competitors in my opinion. (Krispy Kreme to Open Western Canadian Store, 2003) Krispy Kreme spokeswoman said, "Typically, our competitors large and small tend to see a positive impact when we arrive in a new market" Reflection 5 Since the 16% drop event from KKD sales, investors have been hard pressed to eagerly invest. The market has changed with the "No Carb / Low Carb revolution", which has brought some havoc to the pastry industry has a whole. Robert Burgoyne of Burgoyne Investment Services is skeptical of Krispy Kreme on the stock market-he says that the stock if full of hot air.

He thinks that it is a great company but that the stock is overvalued (Shook, 2002). He questions the company's pricing power; how much is the public willing to pay for a dozen doughnuts? Other skeptical analysts do not see much proven demand for Krispy Kreme outside of North America. "I'm not aware of other markets outside of North America where the reception to doughnuts would be a big hit. It's a North American treat", said Greg Schroeder, Fulcrum Global partner's analyst. COO John Tate strongly disagrees with Schroeder.

Tate said that Krispy Kreme is not looking at any countries where nobody has eaten a doughnut. Krispy Kreme would not go to a place where there is no demand, and a chain called Mr. Doughnut operates 11,000 stores in Japan (French, 2002). One writer for the Morningstar Column (2003) adamantly disagrees that Krispy Kreme is a viable stock. The unattributed writer thinks that the last thing one should want to do is buy a stock just because they like the store brand. Problems are brought about investing in any sort of retail. Krispy Kreme, a retail shop, is criticized in light of its valuation because there is little chance that KKD will ever be worth more than $28 per share (based on the discounted value of its future cash flows).

Another issue for KKD is the fact that unique products do not remain unique eternally. The analyst said that some other company, notably Dunkin' Donuts or Starbucks, could put out an imitation of Krispy Kreme and the magical power of the doughnut would be diminished (Morningstar Column, 2003). Conclusion Affects have been seen in the food industry by the recent trend toward healthier consumption habits. Replicating this trend has been a wish by many to indulge in unhealthy foods. Krispy Kreme has cashed in on this trend by marketing doughnuts as a trendy, convenient snack food.

Krispy Kreme's achievement has held on steadiness throughout its placements and by providing a simple but great product. Post growth opportunities will be expanding franchises as well as advancing upon alternate avenues. As Krispy Kreme studies on its inherent growth opportunities within other delivery avenues such as neighborhood stores and large food chains, it must decide whether sacrifices will come of brand steadiness and product perception. Moving beyond its own stores will require the marketing of the doughnut cold. Research has shown, KKD success has come from scenarios other than the serving degree of the product. I think that Krispy Kreme can be successful in reaching new markets without bringing about new locations.

Other ways of delivery will help bring the Krispy Kreme product to countless old and new customers who have yet to taste America's leading doughnut producer.

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