News

Krispy Kreme signs distribution deal with Sysco

March 23, 2011

Winston-Salem, N.C.-based Krispy Kreme Doughnuts Inc. plans to enter into a supply chain distribution agreement with Sysco Corporation, which operates 180 facilities throughout the world.

Under the proposed agreement, Sygma, a Sysco subsidiary, will distribute proprietary doughnut mixes, other ingredients and supplies to Krispy Kreme franchise and company shops in the eastern United States.

Sysco subsidiary IFG will be responsible for the export of Krispy Kreme goods to the 20 foreign countries in which the company's international franchisees operate.

"Partnering with Sysco allows us to benefit from their buying power and the size and reach of their distribution network," said Brad Wall, senior vice president of supply chain and off-premises operations for Krispy Kreme. "By completing the outsourcing of delivery of doughnut mixes, ingredients and supplies, we expect to further simplify our supply chain operations and add capabilities and services for our franchisees."

The proposed agreement is not expected to have a material effect on the company's consolidated revenues or balance sheet.

However, it has already had an effect on 25 employees at the Krispy Kreme manufacturing facility in Winston-Salem who have been laid off as a result of the outsourcing. The employees are being offered job search assistance and will be considered for positions at other company-owned locations.

Krispy Kreme outsourced distribution to shops in the western United States in 2008.  The anticipated transition to Sysco in the eastern U.S. and internationally is expected to take place in the second and third quarters of calendar year 2011.

Upon completion of the transition, the company will have outsourced all of its domestic and international distribution operations.