Krispy Kreme Dougli Headquartered in Winston-Salem, North Carolina, Krispy Kreme
ID: 359340 • Letter: K
Question
Krispy Kreme Dougli Headquartered in Winston-Salem, North Carolina, Krispy Kreme Dough serves doughnuts and coffee as well as other snack items. The compan in 23 different countries. Many Krispy Kreme shops are factory shops wheoo There is no sa We must pro We must nev www.krispykreme.com, KKD (K tores are responsible for servicing local grocery stores and convenience stores acto Supply Chain provides raw materials for both franchise and compan doughnut-making process. Krispy Kreme storeowners must purchase al KK Supply Chain. Krispy Kreme reported total revenues in fiscal year end Feo of e can watch doughnuts being made and purchase fresh hot doughnuts as well. Th -owned stores in We must coa materials from $490 million (up from $460 million the prior year) with about 90 derived from the United States Walmart, and Ta of ver-year to $132.5 million, driven almost entirely by a 17.3 percent increase in Krisp Kreme's store count. For that quarter, the company's domestic same-store sales row Service Stations Tesco supermar stations Moto, has locations in Puerto Rico, T the United Aral For the fiscal first quarter (Q1) of 2015, Krispy Kreme's revenue rose 9 percent Supermarkets, 2 percent, but its international franchise same-store sales declined 1.7 percent. Overall fe mpany's EPS number was up at least by the KKD buying back 391,300 shares of its stock Q1 of 2015, the company's adjusted net income was S16.6 million, or $0.24 per share. The for $7.4 million. Copyright by Fred David Books LLC. www.strategyclub.com (Written by Forest R. David) Organizati As illustrated i company does or Chief Strate not structured than divisiona History Krispy Kreme traces its roots back to 1933 when Vernon Rudolph bought a doughnut shopin Paducah, Kentucky. After selling doughnuts in Kentucky, Tennessee, and West Virginia, the store known today as Krispy Kreme was moved to Winston-Salem. Krispy Kreme doughnuts were sold to grocery stores at first, but became so popular with customers that they requested the option to buy the doughnuts fresh and hot from the store, thus launching the doughnut facwory retail store and selling directly to the public EXHIBIT 1 Krispy Kreme grew quickly over the next four decades before being sold to Beatrice Fo Company in 1976. Shortly after the purchase by Beatrice, in 1982, several Krispy Kreme fr chisees purchased the company back from Beatrice Foods and quickly established the cure Doughnut Theater style of factory stores where by customers can watch doughnuts be It was not until 1996 that KKD finally expanded outside the Southeast by opening a store n e York City, followed in 2001 by opening its first store outside the United States, in company went public with its IPO launch in April 2000. ing In the United Kingdom, KKD just concocted a single, gigantic box that holds 2.400 uts. The box (11.4 feet by 3 feet) was filled with doughnuts and required eight KKD to deliver it to 360 Resourcing Solutions. The box w Occasions" division that customizes doughnut offerings for corporate evenot cial events or even personalized doughnuts with customized, chocolate nameplates logos. The company has no plans to create another box, but it is happy to sell 100 double-dozen boxes for about $2,600 ach as weddings and other celebrations. The division sells doughnut "towerspr as part of a promotion for the new corporate events or or Chief total of 25 planned, as the first South American country for the company. In late opened its first store in Taipei, Taiwan. In 2014, KKD opened its first shop in southern India. Krispy Kreme opened its first store in India in 2013 in Bangalore, Karnataka are seven in that city. Also in 2013, KKD began opening stores in Colombu3,Explanation / Answer
MISSION – sell doughnuts and beverages at our own stores; sell the doughnut mix and equipment, sell franchises – have 3 different income statements for each part of the business – provide a “HOT DOUGHNUT” experience
· VISION – no clear vision statement – make recommendation
Objectives :-
want to be in several cities (geographic expansion)
o Broaden distribution – not only have their product available in stores but also other places o 20% annual revenue growth
o Mid-single digit comparable store-sales growth o 25% annual growth in earnings per share
o National expansion (grow the business) – 25 more stores in England, Ireland etc.
o Grow revenues in 2 ways – open more stores or sell more in your existing stores
o Increase beverage sales to 20% of store revenue o Remodel old stores and clear debt
o Open different stores in smaller towns o Open 77 stores next year
SWOT Analysis:-
Strengths:-
o Affordable donuts o Highly effective system for distribution
o Customer Loyalty
o Cash - $32M
o High volume
o Customer loyalty – don’t need to spend much on advertising
Weaknesses:-
o Don’t have big product variety
o Small geographic spread
o Environmental concerns
Opportunities:-
o Increase sales outside (offsite sales)
o International opportunities
o Expanding product line
Threats:-
o Trend toward making healthier choices
o Competition is everywhere
o Model of doughnut factory in the store might not translate into international markets
o Product itself may not translate well in international markets
Recommendations:-
Necessary to expand product line – in the long run, must sell more than just donuts, address convenience – so open more stores (want to open 77 stores next year)
– must address this issue – should the firms do this? With current stores, the company is already producing more donuts than Dunkin Donuts
– can’t ignore any of the competitors because they all have growth plans
Need to figure out a way to keep sales consistent – invest in
Consistently franchise stores underperform than company owned stores
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