The Rise, The Fall and The Rise of The Krispy Kreme Brand

March 26, 2013 — Leave a comment

The essential “secret” of a Krispy Kreme doughnut is to eat it hot. It is formed from dough extruded by air pressure to form a perfect doughnut shape. Technically, there isn’t such a thing as a doughnut hole at Krispy Kreme. For over 75 years, Krispy Kreme has been known for its melt-in-your-mouth original glazed doughnuts and a memorable store experience. When Krispy Kreme doughnuts are hot, there is no other donut like it. The joy of eating one hot is hard to over-estimate. They are famous for their “hot light” which signaled to customers that a fresh batch was coming out. An appealing piece of the in-store experience is that consumers could watch the automated making of donuts. This experience was mesmerizing for many. My first experience with Krispy Kreme was in Wilmington, Delaware and I was captivated by the live doughnut making. Soon there were Krispy Kreme stores popping up everywhere. President Bill Clinton had them delivered to the White House and Krispy Kreme Doughnuts were showing up on TV shows such as “Rosie O’Donnell”, “Friends” and “Sex in the City”.

KK-hot-sign

Krispy Kreme is a brand with strong Southern roots. It is a brand that was built by word of mouth. It was founded in Winston-Salem, North Carolina by Vernon Rudolph who had bought the recipe from a New Orleans chef. The original business model was a bakery on the edge of town with trucks delivering doughnuts to local grocery stores and convenience chains. It was a great business model.

So, what happened? The brand expanded too fast. There was an overabundance of belief in the franchise model. The company tried to be a manufacturing site in a retail setting. That required 5,000 square foot spaces to make the doughnuts in a place where people were wandering in for breakfast. The economics of the retail model didn’t work. Stores opened with much fanfare but you needed to sell a lot of doughnuts to pay the rent. A trend to healthier living and intense competition from Dunkin’ Donuts and Starbucks took a toll. More than 240 stores closed between 2004 and 2009. An accounting scandal also hurt the company.

Krispy Kreme, however, is beginning to stage a comeback. The brand still has a loyal cult like following. The brand is now focused on its mission “To touch and enhance lives through the joy that is Krispy Kreme”. Krispy Kreme believes that its best marketing tools are its friendly employees. Krispy Kreme has 4.6 million fans on Facebook. Another element of their marketing is to integrate the stores into the community through its commitment to cause marketing. In the past 55 years it has helped to raise funds by donating doughnuts to local events.

Krispy Kreme has returned to profitability and has begun to open a few new stores. Let’s hope that this expansion stays true to the brand. It is a great product and experience.

Have you tried a Krispy Kreme Doughnut?

 
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