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Krispy Kreme Makes A Comeback

[ 0 ] Mar. 14, 2013 | SBO Editor

Krispy Kreme still has only 2.1 percent of the U.S. coffee and snack shop market, compared with Starbucks’s  36 percent and Dunkin’s 25 percent, according to market-research firm IbisWorld, but the company is making a comeback. In the three years following Krispy Kreme Doughnuts’  initial public offering in 2000, its shares soared 840 percent, despite a bear market. The Winston-Salem (N.C.) doughnut maker was on a roll. But then Dunkin’ reinvented itself as a top destination for coffee and the hot-glazed trend peaked as people became more diet aware. The stock tanked at $1.08.

Krispy now trades for $13.25 a share, up more than 60 percent from a year earlier. New management has returned the company to profitability after 14 quarters of losses. International franchises kicked in $4.3 million in operating income in Krispy’s latest quarter; in the U.S., where the company owns many of its stores, franchises contributed just $1.2 million. An appreciation for fried dough, it seems, transcends cultural barriers, with appetite for Krispy Kreme’s flagship product particularly strong in Asia and the Middle East. Backed by a 12 percent equity investment from Kuwait’s Al Kharafi family, the company last year set a target to increase franchises abroad to 900 stores by 2017 from 506 now. At home, the chain hopes to grow to 400 U.S. stores from 240 over the same period.

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Category: Features