Article
Krispy Kreme retail shops give brand a boost
The smaller stores can fit in almost any location, offering more convenience and more opportunities for growth.
November 5, 2009
*Click here for a slideshow of the new retail concept store.
Earlier this week, Krispy Kreme opened its sixth smaller retail concept store, this one in Clarksville, Ind. No big news for most 500-plus unit chains. For Krispy Kreme Doughnuts Inc., it's an affirmation of the company's rebirth.
The company faltered in the late 1990s due to overzealous growth and some management missteps.
Under CEO Jim Morgan's leadership, the brand has fought its way back, including developing the retail model, which is much less costly to build and operate than the chain's signature large doughnut factories.
But the new model has done more than simply help the company find a way to save costs. Morgan said that the stores have instilled a new spirit the brand.
"We believe it's symbolic of what's happened corporately that we've gone from shrinking to growing again," he said in an interview at the company-owned store's grand opening. "You can feel the energy in the store."
Back-of-house operations
The staff certainly did exude excitement during the grand opening. The back of house was full of managers from other retail concept stores that have opened this year who came to this opening to help out.
They pitched in, pushing out batch after batch of hot donuts to the eager crowds. Some unloaded donuts delivered from the nearby Louisville, Ky., doughnut factory. Others mixed glaze, while still more ran the donuts through the tunnel oven to heat and coat them.
Up front, different managers led the employees in cheers — starting with the 5 a.m. opening and continuing throughout the day.
Krispy Kreme's Louisville-area market manager Jason Swegman was at the store well before it opened, encouraging employees and making sure the donut delivery was on time.
He said the Clarksville opening is a sign of growth not only for the company but for the local market as well. The new store brings the area total to three and is the first opening in the market in 44 years and the market's first on that side of the Ohio River.
"The Louisville area has always been a good market for us," Swegman said. "Now that we have the smaller concept store it makes our expansion into the Louisville metro area possible."
A sign of growth
Cindy Bay, senior vice president of company store operations for Krispy Kreme, also attended the grand opening. Like Morgan, she is excited about the possibilities the new store model offers.
Whereas the larger doughnut factories have a "if you built it they will come" mentality, the smaller design can fit into just about any location.
The brand can now get closer to where customers live and offer more convenience than in those larger units, Bay said. The newest store is an endcap with a drive-thru in a thriving retail corridor, with stores from Target, Walmart and Best Buy as well as several casual dining and quick-serve restaurants.
Bay said the company also is pleased with how well the Kool Kreme soft serve product line is doing under test in the new retail store models. With the latest store opening, the test is expanding into a new market.
Results for the soft serve test are encouraging, with sales being boosted in otherwise underutilized dayparts, Bay said.
Bay also expressed excitement about the possibilities ahead for Krispy Kreme, which has plans add 10 or more new stores with the new design next year.
"It's good to be growing again," she said.
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