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Business Strategy and Marketing Strategy General Information and Key Figures Krispy Kreme Doughnuts, Inc. (KKD), 370 Knolwood St. , Ste. 500 Wilson-Salem, NC 27103. Krispy Kreme Doughnuts, Inc. was created in 1937, when its founder Vernon Rudolph purchased a secret recipe of doughnut from a French chief cook. Nowadays Krispy Kreme doughnuts is a chain of coffee-shops dedicated to consistently providing high customer satisfaction by rendering quality doughnuts cooked in 100 % vegetable oil, coffee roasting and providing customers with excellent service. Krispy Kreme offers quality coffee roasting at significant discounts because of direct buying channels and unique know-how recipes, new improved coffee and new Hot Doughnut Machine technologies. As of January 29, 2006, there were 402 Krispy Kreme stores operated systemwide in 43 United States, Australia, Canada, Mexico, South Korea and the United Kingdom (MSN Website, web) Key Figures (According to Hoovers.
com website, web) Company Type
Public (NYSE: KKD)
Fiscal Year-End
January
2005 Sales (mil. )
$ 707. 8
1 -Year Sales Growth
6. 3 %
2005 Net Income (mil. )
($ 198. 4)
2005 Employees
5, 733
1 -Year Employee Growth
(17. 9 %) Mission Statement Krispy Kreme Doughnuts, Inc. is to create a competitive advantage for its shops. The company strives to be the premiere chain of shops in the country they operate in. The companys goal is to be a step ahead of competition. Major products and services Krispy Kreme will offer wide range of products and services that include: Hot Original Glazed doughnut (Krispy Kreme's signature, a yeast-raised doughnut made in accordance with a secret recipe originally bought from a French chief in 1937 (Doughnut Varieties n. p. ) Chocolate Iced doughnut Chocolate Iced doughnut with colorful candy sprinkles Chocolate Iced doughnut shell hand filled by Bavarian custard Original Glazed Doughnut with raspberry filling Chocolate Iced doughnut shell hand filled by smooth white milk cream Original Glazed Doughnut granulated sugar coated Cinnamon apple filled doughnut reminding of home-made mums pie Blueberry Classic Cake Doughnut Coffee drinks Frozen blends Snack foods, to mention a few In addition to traditional services, Krispy Kreme sells snack foods, real fruit pies, cinnamon buns and mini-doughnuts to wholesale outlets, such as convenience stores and supermarkets (Krispy Kreme 2004 press kit 4) Competitors Dunkin Brands, Inc (privately held), Starbucks Corp. , Tim Hortons Inc are direct Krispy Kreme Doughnuts, Inc.
competitors. Direct Competitor Comparison (Yahoo! Finance, web)
KKD
Pvt 1
SBUX
THI
Industry
Market Cap:
N/A
N/A
25. 51 B
4. 73 B
N/A
Employees:
N/A
9531
115, 000
1, 400
N/A
Qty Rev Growth (yoy):
N/A
N/A
24. 20 %
15. 20 %
N/A
Revenue (ttm):
N/A
517. 00 M 1
7. 08 B
1. 36 B
N/A
Gross Margin (ttm):
N/A
N/A
59. 50 %
27. 76 %
N/A
EBITDA (ttm):
N/A
N/A
1. 26 B
354. 32 M
N/A
Oper Margins (ttm):
N/A
N/A
11. 17 %
20. 58 %
N/A
Net Income (ttm):
N/A
N/A
550. 80 M
183. 54 M
N/A
EPS (ttm):
N/A
N/A
0. 690
0. 933
N/A
P/E (ttm):
N/A
N/A
48. 17
26. 25
N/A
PEG (5 yr expected):
N/A
N/A
1. 99
1. 45
N/A
P/S (ttm):
N/A
N/A
3. 71
3. 54
N/A
Pvt 1 = Dunkin' Brands, Inc. (privately held)
SBUX = Starbucks Corp.
THI = Tim Hortons Inc
1 = As of 2005 As far as Krispy Kreme and its competitors operate in a fast-food industry, they compete in several positions such as: an easily accessible location for their customers; a high range of services and quality products at moderate prices; All of them pursue such long and short term goals as To increase revenues from new customers; To establish condition sufficient to support planned growth of the shops through profitability To maintain tight control of quality and operations To develop and market doughnut / fast food and coffee services Specialty Eateries/ Bakery Products Industry According to Hoovers. com, Leisure- Restaurants and Cafes Specialty Eateries is the primary industry for Krispy Kreme Doughnuts, Inc.
Food Grains Bakery Products is the secondary industry. According to Yahoo! Finance (web), there are about 8 million restaurants in the world and some 300, 000 restaurant companies. The industry is a classic mature market and actually divides into fast-food and full-service restaurants. Full-service restaurants include family restaurants, grill / buffet type small restaurants and dinner houses. The fast-food sub-sector of industry consists of fast-food sandwich shops (serving Mexican food and hamburgers, as well as pizza / chicken joints).
Overall restaurant sales have been rising just over 5 % annually. (Yahoo! Finance n. p. ) Krispy Kreme Doughnuts, Inc. position related to competitors Amy Cao claims that Krispy Kreme Doughnuts, Inc. has succeeded in building a strong brand identity among its customers throughout several decades of business (n. p. ).
However, Krispy Kreme's position is quite weak (if to compare it with Starbucks or other huge chain of eateries): Top Specialty Eateries Companies by Market Cap (web) Company
Symbol
Price
Change
Market Cap
P/E
Starbucks Corp.
SBUX
33. 24
2. 92 %
25. 51 B
48. 17
Tim Hortons Inc
THI
24. 47
1. 37 %
4. 73 B
26. 23
Panera Bread Co.
PNRA
58. 47
3. 69 %
1. 83 B
34. 91
Caribou Coffee Company, Inc.
CBOU
6. 50
0. 00 %
125. 31 M
N/A
Flanigan's Enterprises Inc.
BDL
11. 35
0. 53 %
21. 50 M
14. 61
Diedrich Coffee Inc.
DDRX
3. 637
1. 59 %
19. 30 M
N/A
As we can see, Starbucks Corp. enjoys the leading position with 25. 52 B Market Cap. Krispy Kreme doesnt enter the list of top specialty eateries. Krispy Kreme competes with other specialty eateries and focuses attention on two main attributes: price and quality. The company realizes that fast food industry will always be in demand.
For that reason, the company is introducing changes in its marketing and business strategy already, one of which includes the slogan excellent quality for reasonable price. Such approach demonstrates how Krispy Kreme is starting to reduce industry competitiveness through introducing innovations to its already existing profitable food products. Krispy Kreme is determined to introduce a new way to experience quality through reasonable prices by serving the customers with mid- and low income. Target market major customer groups and key customers: due to their reasonable prices Krispy Kreme serves customers with mid and annual low income (approx. 60 % of the customers).
The customers base is growing. Krispy Kreme believes that by conducting fair business it will not only maximize the companys profitability, responsiveness and innovation, but also improve supply chain management and possible acquire new partnerships. Krispy Kreme builds its internal chain infrastructure around its services and products by handling numerous marketing promotions. Krispy Kreme's desire is to research and invent new doughnut recipes is driven by an incentive to take over the customers by winning their loyalty. The company also realizes that the customer becomes more demanding, generating more reasons for new products to enter a competitive industry of specialty restaurants. Krispy Kreme tries to reduce input costs, constantly improving technology of baking and serving, and providing exceptional customer service.
The company focuses attention on its performance, excellent service, quality, delivery, technology, availability, and goals. Such approach to business portrays Krispy Kreme's understanding of Michael Porters five forces of industry attractiveness. Bibliography Amy Cao Krispy Kreme Doughnuts, Inc. (NYSE: KKD): An Analysis. Retrieved July 18, 2006. web Hoovers. com website.
Key Figures. Retrieved July 18, 2006. web Krispy Kreme 2004 Press Kit. Retrieved July 18, 2006. web Krispy Kreme Website. Doughnut Varieties.
Retrieved July 18, 2006. web Yahoo! Finance, Competitor Comparison web Yahoo! Finance, Specialty Eateries/ Bakery Products Industry. Retrieved July 18, 2006. web
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