Krispy Kreme Doughnuts, Inc.

Introduction

The research proposal begins with an overview of Krispy Kreme’s functioning industries as well as current trends within them. The document progresses by describing the corporate structure of Krispy Kreme, specifically outlining company values and philosophies. To help develop the research, various store formats are discussed, followed by an in-depth analysis of Krispy Kreme’s financial situation. The following pages also place Krispy Kreme in the context of today’s market and illustrate the brand image and different products. The document attempts to combine research, analysis and recommendations to determine if a so called cold doughnut will allow Krispy Kreme to expand globally.

Industry Information

Krispy Creme Doughnuts, Inc. competes with several industries, to include:

Ш Baked Goods Industry

Ш Food Industry

Ш Restaurant (Eating Places) Industry

Ш Cakes and Pastries

According to the National Restaurant Association, Americans will spend about $354 billion at the nation’s more than 815,000 eating and drinking establishments. “Statistics indicate that restaurants have become an increasingly important part of American lifestyle over the past few decades” (Bread, Cake, and Related Products, 2003, ¶4).

When evaluating the restaurant industry, fast-food type restaurants like Krispy Kreme have led way, and the growth of franchising since the 1970s has also propelled the growth (franchises have almost tripled their share of the market). However, starting in the late 1990s, competition decreased in mature markets because they were becoming saturated with fast-food restaurants. During this time, the restaurant industry began to see an influx of themed-eating places trying to redefine their images. For example, T.G.I. Friday’s began mostly as a single’s bar, but evolved to a family-oriented dining place.

Another trend in the restaurant industry started in the mid-1990s when restaurants and supermarkets began to prepare foods for carry-out (commonly referred to as “home meal replacements”). Today, restaurants report that over 50 percent of their revenues come from carryout sales (Restaurants, 2003).

Despite the economic downturn in 2001 due to September 11th, the restaurant industry recently began to pick up momentum. In Western Europe, the fast food part of the restaurant industry has seen growth as well (Restaurants, 2003).

One trend in the restaurant industry is the increased use of computer and telecommunications technology to provide greater convenience and speed. These technologies include vibrating paging systems, wearable computers, and alarms (Restaurants, 2003). The bread, cake, and related products industry also researched new technology to find new methods to extend shelf life and preserve product freshness (Bread, Cake, and Related Products, 2003).

Experts in the United States continue to predict that the demand for restaurants and prepared foods will continue to increase because more women are working and people, in general, are pressed for time and seek convenient and economical alternatives to home meal preparation. This trend carries across the borders of the European Union where Nation’s Restaurant News reports that American fast foods are changing the way Europeans eat (Restaurants, 2003).

According to Market Share Reporter, 27 of the top 30 international restaurant chains are based in America. This is a clear sign that the American presence overseas is prominent and growing (Bread, Cake, and Related Products, 2003).

According to Ed Wood, a researcher of the history of bread making, 75 percent of the bread consumed in industrialized nations is produced by large commercial bakeries. It