Krispy Kreme Doughnut Inc Case Study

Introduction:

Krispy Kreme Doughnut Inc. was founded on 13th July, 1937 by Vernon Rudolph. It's forst store was opened in Winston-Salem, North Carolina, United States and the company's base still exist there. As of January 31, 2010, there were 224 Krispy Kreme stores operated domestically in 37 U.S. states and in the District of Columbia, and 358 shops in other countries around the world Of the 582 total stores, 268 were factory stores and 314 were satellites stores. The Company comprises of three segments: Company Stores, Franchise and KK Supply Chain.

Company Overview:

Krispy Kreme makes and sells over 20 varieties of doughnuts, including the Original Glazed doughnut. Sales of doughnuts comprise approximately 88% of total retail sales, with the balance comprised principally of beverage sales.

In fiscal 2009, Krispy Kreme began initial testing of a new soft serve menu of traditional cones, shakes and sundaes paired with a variety of toppings. In fiscal 2010, Krispy Kreme expanded the testing of the concept, called Kool Kreme soft serve, into all four new Company shops and into most existing shops in the markets in which the new shops are located. The company has also begun limited in-store testing of baked goods, including sweet rolls, pecan rolls, muffins and bagels.

Krispy Kreme's beverage program includes drip coffees, both coffee-based and noncoffee-based frozen drinks, juices, sodas, milks, water and packaged and fountain beverages. In addition, many of the company's stores offer a complete line of espresso-based coffees. Sales of beverages comprise approximately 11% of Krispy Kreme's total retail sales.

Business Segments:

Company Stores

The Company Stores segment is comprised of the doughnut shops operated by the Company. These stores sell doughnuts and complementary products through the on-premises and off-premises sales channels and come in two formats: factory stores and satellite stores. Factory stores have a doughnut-making production line, and many of them sell products through both on-premises and off-premises sales channels to more fully utilize production capacity. Satellite stores, which serve only on-premises customers, are smaller than most factory stores, and include the hot shop and fresh shop formats. As of January 31, 2010, there were 83 Company stores in 18 states and the District of Columbia, including 69 factory and 14 satellite stores.

Domestic Franchise Stores:

The Domestic Franchise segment consists of the Company's domestic store franchise operations. Domestic franchise stores sell doughnuts and complementary products through the on-premise and off-premise sales channels in the same way and using the same store