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Krispy Kreme to now increase focus on coffee in attempt to turnaround slump

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X

XiaNaphryz

LATIN, MATRIPEDICABUS, DO YOU SPEAK IT
http://www.bloomberg.com/news/artic...-into-starbucks-turf-with-new-focus-on-coffee

Krispy Kreme Doughnuts Inc., facing slower sales growth and more demanding customers, is pushing deeper into Starbucks Corp.’s territory.

The company is doing more to promote its coffee, which for years was an afterthought at the doughnut chain. At a test location in Clemmons, North Carolina, workers are grinding beans and using a manual espresso machine to make lattes and cappuccinos. They’re even referring to themselves as baristas, and employees are taking customers’ names with orders -- an approach made famous by Starbucks.

Depending on how the effort goes, coffee could make up 10 percent of restaurant sales in the U.S., up from just 5 percent now, Chief Executive Officer Tony Thompson said in an interview. The company posted about $660 million in systemwide sales from its company-owned and franchised domestic stores in the last fiscal year.

The coffee shift would have a significant impact on profit since the product carries a much higher margin than baked goods, Thompson said. Krispy Kreme could use the boost: Earnings have missed analysts’ estimates in six of the past eight quarters.

“We’ve kind of lost ground on coffee over time,” Thompson said. “It’s kind of passed us up.”

At the test store, open for just about two months now, customers are noticing the changes, he said. It has free Wi-Fi and a large mural of coffee behind the register, along with a chalkboard sign that says “Know Your Coffee.”

“They’re coming in for doughnuts, but all of a sudden they see: Wow, they’re pretty serious about coffee,” he said.

Price Problems

Krispy Kreme is trying to bounce back from a few setbacks. The company has cut back on discounts over the past year, driving away some price-conscious customers. It’s also struggled with softer sales of its doughnuts at grocery and convenience stores. The stock has lost 24 percent in 2015, compared with a 0.7 percent gain for the Standard & Poor’s 500 Index.

“Getting the price right has been one of the bigger issues this year,” said Michael Halen, an analyst at Bloomberg Intelligence. Krispy Kreme pulled back on promotions, and that really hurt traffic, he said.

The 78-year-old chain got its start selling yeast-raised doughnuts to grocery stores in Winston-Salem, North Carolina, where the company is still based. By 1973, Krispy Kreme had built its own fleet of shops to 60 locations. But by the early 2000s, it had expanded too fast and started closing some locations.

The chain introduced a new line of coffee blends in 2011, and it gradually added espresso-based drinks to the menu too. Thompson, a former Papa John’s International Inc. executive, became CEO in June 2014.

Krispy Kreme’s bid to get more serious about java echoes a strategy used by Dunkin’ Brands Group Inc., which gained a reputation for iced coffees and other drinks after starting with doughnuts.

Kripsy Kreme may have a tougher time. The industry is crowded: Starbucks and Dunkin’ Donuts have thousands of locations across the country. Krispy Kreme has fewer than 300 U.S. stores, and many aren’t in commuter-friendly areas, Halen said.

“People love the brand,” he said. “But they’ve got to get the sites right because convenience is part of the reason why Dunkin’ Donuts is so strong.”
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P

PeakPointMatrix

Member
Slump!?

Every damn time I go to one, there is nearly a line out the door. Not to mention the drive-thru has cars spilling out of their parking lot into the main road in the mall near my apartment. I love Krispy Kreme, but if they find a way to pack it full of more people, I'm gone.
 
T

TheXfactor

Member
Crud said:
I just can't eat their food anymore. I gave up on KK along time ago.

Never going back.
Click to expand...
well alrighty then

so its not doing bad, just slower growth, and they have a large growth in coffee. I honestly never had their coffee so i dont know if its a good decision or not, their donuts are heaven though
 
H

Heavy_D206

Member
They mention Dunkin Doughnuts being strong. Is that really true?

I'm in Seattle and we have a few Krispy Kreme's but I've never even seen a Dunkin Doughtnuts anywhere around here.
 
R

redmetal86

Member
PeakPointMatrix said:
Slump!?

Every damn time I go to one, there is nearly a line out the door. Not to mention the drive-thru has cars spilling out of their parking lot into the main road in the mall near my apartment. I love Krispy Kreme, but if they find a way to pack it full of more people, I'm gone.
Click to expand...

I second this. That line is no joke.
 
X

XiaNaphryz

LATIN, MATRIPEDICABUS, DO YOU SPEAK IT
Heavy_D206 said:
They mention Dunkin Doughnuts being strong. Is that really true?

I'm in Seattle and we have a few Krispy Kreme's but I've never even seen a Dunkin Doughtnuts anywhere around here.
Click to expand...

Dunkin Donuts is primarily east coast and somewhat in the central/midwest, only recently have a couple started popping up out west in California. Don't think any are up in Washington yet.
 
D

devilhawk

Member
Heavy_D206 said:
They mention Dunkin Doughnuts being strong. Is that really true?

I'm in Seattle and we have a few Krispy Kreme's but I've never even seen a Dunkin Doughtnuts anywhere around here.
Click to expand...
I live in Seattle but miss Dunkin from my days in the midwest.

The coffee is the same but the food blows Starbucks out of the water.
 
L

LostMyNarbles

Member
PeakPointMatrix said:
Incidentally, are there Krispy Kremes on the East Coast? I never saw one until I moved out west.
Click to expand...
Just checked Google Maps in South Jersey. There are a ton near the Philly area and one in the shore, but other than those there isn't a single store close to my area. That's compared to Dunkin Donuts with over 15 stores in a 20 mile radius.
 
N

neogaffer1

Banned
always boggled my mind how dunkin has always done well while kk has struggled so many times.

even more confusing is how some people prefer dunkin to kk. like, kk is straight up great, and so much better than dunkin, whose doughnuts are basically the same you can get anywhere. kk on the other hand has doughnuts that only they are able to make.

also, the dunkin near me costs like $1.50 for a single doughnut (2 for $3) and the last time I went to a KK, it was $1 each or $10 for a dozen (iirc).
 
J

jimwhat

Member
Tainted Giraffe said:
Just checked Google Maps in South Jersey. There are a ton near the Philly area and one in the shore, but other than those there isn't a single store close to my area. That's compared to Dunkin Donuts with over 15 stores in a 20 mile radius.
Click to expand...

That's my problem too. Love Krispy Kreme, but I don't want to drive 40 minutes round trip for some donuts.
 
J

jwhit28

Member
Where I live it's still worth it to go out of the way to a Krispy Kreme if you want a doughnut. I grew up in New Hampshire and loved Dunkin Doughnuts but I live in North Carolina now and I don't know if it is my particular Dunkin Doughnuts or the fact that they don't get as much traffic as ones in New England but the doughnuts are never fresh. They are always out of munchkins too.
 
K

Kozak

Banned
If they had good coffee and paired it with a free original glaze in the morning Id definitely switch up.
 
J

JeffZero

Purple Drazi
neogaffer1 said:
always boggled my mind how dunkin has always done well while kk has struggled so many times.

even more confusing is how some people prefer dunkin to kk. like, kk is straight up great, and so much better than dunkin, whose doughnuts are basically the same you can get anywhere. kk on the other hand has doughnuts that only they are able to make.

also, the dunkin near me costs like $1.50 for a single doughnut (2 for $3) and the last time I went to a KK, it was $1 each or $10 for a dozen (iirc).
Click to expand...

I'm not a donut fan and Krispy Kreme's coffee is terrible so there's just nothing there that appeals to me. With DD, I can grab coffee I enjoy and a muffin or chicken salad croissant or a few other menu items.

Plus I have a ton of nostalgia for DD. Only fast food chain I can say that about, that's for sure. My mother worked for them up in NYC when I was a kid. I spent many, many days there.
 
O

oni_saru

Member
They recently opened up one again in Houston. We used to have like three but they all closed down.

New one has had long lines since it's opening. When i finally went when it looked sort of empty, i realized why. Their damn machine isn't working well. Half the donuts that came out were dumped cuz they weren't cooked properly.

Also i ordered a mocha and it tasted bad. They want their coffee to succeed they better try harder.
 
N

neogaffer1

Banned
JeffZero said:
I'm not a donut fan and Krispy Kreme's coffee is terrible so there's just nothing there that appeals to me. With DD, I can grab coffee I enjoy and a muffin or chicken salad croissant or a few other menu items.

Plus I have a ton of nostalgia for DD. Only fast food chain I can say that about, that's for sure. My mother worked for them up in NYC when I was a kid. I spent many, many days there.
Click to expand...

the few times i've had DD's breakfast food it was overpriced and only slightly better quality than you would get at any other normally priced fast food chain.

in fact i'm pretty sure dunkin only really exists anymore because its breakfast is as easy and quick to get as fast food but isn't as low quality, even if it costs way more than it should.
 
Ambition

Ambition

Member
oni_saru said:
They recently opened up one again in Houston. We used to have like three but they all closed down.

New one has had long lines since it's opening. When i finally went when it looked sort of empty, i realized why. Their damn machine isn't working well. Half the donuts that came out were dumped cuz they weren't cooked properly.

Also i ordered a mocha and it tasted bad. They want their coffee to succeed they better try harder.
Click to expand...

The one next to a Chik fil a? I really wanna go but the lines are absolutely insane
 
D

D-Pad

Member
neogaffer1 said:
always boggled my mind how dunkin has always done well while kk has struggled so many times.

even more confusing is how some people prefer dunkin to kk. like, kk is straight up great, and so much better than dunkin, whose doughnuts are basically the same you can get anywhere. kk on the other hand has doughnuts that only they are able to make.
Click to expand...

Good, cause they're gross. :p Only time worth getting KK is when the hot sign is on (and then that's just for the original glazed).

All of their stores around me closed some years ago. We only have Dunkin' now, and on damn near every block. Which is fine by me, but I wish we'd get a mom n' pop donut shop.

That said, I had a reeses donut from DD and oh my god it was heaven.
 
M

Miles Quaritch

Member
A Dunkin' Donuts opened near work recently and the doughnuts were awful.

I was expecting next level shit but they were no better than what I'd find in any supermarket.
 
N

neogaffer1

Banned
Miles Quaritch said:
A Dunkin' Donuts opened near work recently and the doughnuts were awful.

I was expecting next level shit but they were no better than what I'd find in any supermarket.
Click to expand...

exactly! why the hell are they so popular, they're overpriced grocery store bakery level doughnuts.

i just don't get it.

and i just remembered, the new cheescake squares they introduced recently--i had the oreo one and, surprise surprise, it wasn't very good.
 
U

unknownstranger

Member
Heavy_D206 said:
They mention Dunkin Doughnuts being strong. Is that really true?

I'm in Seattle and we have a few Krispy Kreme's but I've never even seen a Dunkin Doughtnuts anywhere around here.
Click to expand...

One opened here in my town east of the mountains about 12 years ago next to our high school. Pretty sure they're still open, although I haven't been there in a really long time.

Haven't been to Krispy Kreme in about the same amount of time since when I go to Seattle or Spokane I barely go through them.
 
W

Wreav

Banned
Maybe they should make better donuts. That's the core reason I never visit, they all have a super weird taste about them.
 
N

nephilimdj

Member
Isnt it funny how Australia is the opposite for whats happening in USA for fast food?

McDonalds is thiving
Krispy Creams have lineups 24/7 in most Aus stores
Starbucks is failing, they dont even have a store in some states after store closures
 
S

Skyrim

Banned
When I see Krispy Kreme doughnuts it reminds me of grocery donuts

Those Blueberry donuts from Dunkin mmmmmm
 
V

Vanillalite

Ask me about the GAF Notebook
Basically they want to be Dunkin which has blown up big especially up East not on their Donuts, but on their coffee.

I'm honestly surprised they didn't pivot sooner. They need to be coffee with a side of donuts vs donuts with a side of coffee.
 
N

NealMcCauley

Member
It seems like grocery stores in my area are making more donuts in the bakery and doing well. KK boxes that are delivered look like they've never been touched.
 
C

ccbfan

Member
KK has one good doughnut, honey glaze, and it has an extremely short time period of being good. I mean if you get it fresh of the belt its amazing but few hours later? Its stale and hard which is how all their other doughnuts taste.

I can buy a dozen DK doughnuts and it'll still be good few hours later.
 
M

Moonkeis

Member
I pretty much just need one fresh glazed right off the belt and my visit is complete. If by coffee they mean fresh beans not blended drinks crammed with sugar, I'm all for it.
 
R

Randolph Freelander

Member
PeakPointMatrix said:
Incidentally, are there Krispy Kremes on the East Coast? I never saw one until I moved out west.
Click to expand...

Krispy Kreme started and is still headquartered in Winston-Salem, NC. Their presence out west is courtesy of an expansion strategy a few years back.

Personally, I know nothing about anything, but I think Krispy Kreme could afford to have a few more stores in its own backyard. Here in Charlotte, there are Dunkin Donuts everywhere, you almost can't throw a rock without hitting one. (And by rock, I mean one of their stale, trucked-in doughnuts.) But there's only one KK within city limits, and a couple more just outside of limits, and they're all on the south or southeast side of the city. That's not enough stores to serve the metro area.
 
C

captive

Joe Six-Pack: posting for the common man
maybe they should work on their donuts not tasting like shit first. Just a thought, since it is their primary item they make.


They've tried to take over Houston and Ausitn, and Shipley's kicked their asses, they tucked tail and folded up shop. They've since re-opened one in Houston, I'm curious to how long it fails again.
 
C

CapitalismSucks DonkeyBalls

Banned
I know one of the reasons they're losing profits. In NC, you can get a dozen original for 3.99 on Mondays if the Carolina Panthers win their football game.

They've been doing this for 14 straight weeks now. Every Monday, our local KK is lined out the door with people buying a dozen for half price.
 
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