This post is written as part of AOL Money & Finance's Best & Worst 2006. If you're a doughnut lover rooting for Krispy Kreme's comeback, cast your vote for it.
Poor Krispy Kreme. People once stood in line for store openings to get their free doughnuts, and the company and brand were the darling of markets and growing well. Who doesn't love a doughnut?
But Krispy Kreme (NYSE:KKD) has fallen from its perch and been dunked in the hot oil of reality: over the past few years the growth of the low-carb awareness -- in the form of Atkins, South Beach, Sugar Busters, and other diets that caused people to cut simple carbohydrates down or out of their diets -- was widespread. Even bread companies complained about the dip in sales.
Then the doughnut company got hit by a second health punch in the form of health awareness about trans fatty acids.
You want to tell customers that they should have realized well before all this that doughnuts obviously aren't good for you? Did anyone seriously think eating doughnuts was somehow not going be a dietary no-no? Were doughnut-eating customers so naive that when they were told these things were unhealthy they suddenly gave them up? If so, it might be a victory for public health awareness, but you have to wonder what kind of a rock Krispy Kreme's previous customers were under.
You want to root for Krispy Kreme to make a comeback, because really, we all like doughnuts. Sure they're not good for us, but neither is anything else that's truly fun in the world. Many of us secret doughnut lovers will be happy to put in some extra treadmill time if Krispy Kreme can come to grips with its deserters and continue to give us a standard glazed doughnut. Hang in there guys!
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Reader Comments (Page 1 of 1)
12-11-2006 @ 7:52PM
john smith said...
KK can rebound! More donuts are being consumed today than ever before. Ask Dunkin Brands!
It wasnt doughnuts that caused the problem, they have a great product! It was poor marketing strategy, unrealistic growth projections, bad franchisee programs and too costly manufacturing facilities. Above all it was poor/bad management.
The fact is, KK should have remained a locally based organization, catering to their original customer base. Now they are too deep into the cooking oil to get out gracefully. The turnaround team (ex Kraft) have to think small to produce big. Americans love donuts, the question is, how much of the pie does KK need to keep its head above the trans fatty acids?
12-12-2006 @ 1:38PM
Michael Schneider said...
John Smith is correct here- there are many companies selling food that isn't good for you and consumers can't get enough. Tim Horton's, a Canadian doughnut chain spinoff from Wendy's is doing fine. The Atkins diet has lost adherents. Perhaps better management can bring Krispy Kreme stock up a little.
12-13-2006 @ 3:40PM
T Telli said...
Lots of what you said applied to cigarettes. I never thought they would be sued so much. My parents always told me that cigarettes were bad. Even a doctor sued them saying he didn't know they were dangerous! Perhaps KK needs to have a big reserve for legal expenses. I've always wanted the cigarette companies to make a safe cigarette and believe that KK could make a "safe" donut. They need to work with P&G to use olestra to make fat free donuts. I love the "Wow" brand potatoe chips and have never had a problem with them -- even after pigging out on a whole bag at one time.
12-13-2006 @ 6:20PM
Vin Melito said...
The biggest problem KKD faced was it's poor management. On three occasions, I wrote to KKD with suggestions concerning the company. Asked for a response to the email... never a follow up!
Hope the new team is more open to its stockholders so that this company can get back in the game... KKD has a good product. Needs model modification, good public relations, effective advertisements and wider range of product. Competitors have proven that they can sell their product on a larger scale. There is no reason KKD cannot do the same.
12-17-2006 @ 6:36PM
Ronald Kangas said...
Krispy Kreme is just to sugary. To much sugar glaze for me. I don't see how people can eat them with all that sugar glaze.
12-18-2006 @ 3:11PM
Judy Jones said...
You have to remember that with Dunkin the sales are 80% coffee, whereas KKD is 80% donuts. I have been a long term suffering shareholder and still love the product. It is the sugar glaze that make the donut special, and the chocolate covered white filled bombs OMG!!
12-28-2006 @ 8:19AM
Gary Fleisher said...
One of the biggest problems with KK is that they now peddle their donuts to every supermarket and convenience store in the country and then let them sit on the shelves until they get dried out and wrinkled. Anybody that has stood in line for a hot KK just cringes and swears that the boxed KK in the supermarkets are not the real thing. Get back to selling in your own stores and recreate the image of the hot KK again. Lower sales, more profits.