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spy Kreme (pronounced crispy cream) is adoughnutcompany founded
in July 13, 1937. Krispy Kreme
founderVernon Rudolphbought a secret yeast-raised recipe from a
New Orleans chef, rented a building
in what is now historic Old Salem inWinston-Salem, NC, and began
selling to local grocery stores.[2]
Products are sold in Krispy Kreme stores, grocery stores,
convenience stores, gas stations, Wal-
MartandTargetstores in the United States.
Internationally,Loblawssupermarkets andPetro-Canadagas stations in
Canada along withBPService Stations and BP Travel Centres and Seven
Eleven
in Australia carry Krispy Kreme. In the United
KingdomTescosupermarkets, Tesco Extra and
mostservice stationscarry Krispy Kreme products.[3]
The company's growth was steady prior to its initial
public offeringbut profits have decreased in recent
quarters.
Contents
[hide]
1 History
o 1.1 Growth
o 1.2 IPO and accounting scandals
o 1.3 Management shuffle
o 1.4 New offerings
o 1.5 International operations
2 References
3 External links
History [edit]
This section needs additional citations for verification. Please
helpimprove
this articlebyadding citations to reliable sources. Unsourced
material may
bechallengedandremoved.(March 2007)
Krispy Kreme delivery truck, circa 1939
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Krispy Kreme Doughnuts
Krispy Kreme's founderVernon Rudolphand his uncle purchased
Joseph LeBeouf's donut shop on Broad
Street inPaducah, Kentuckyalong with a secret recipe for
yeast-raised doughnuts in 1933 acquired from
aNew OrleansFrench Chef. Rudolph began selling the yeast
doughnuts in Paducah and delivered them
on his bicycle. The operation was moved toNashville,
Tennesseeand other family members joined to
meet the customer demand. Rudolph sold his interest in the
Nashville store in 1937 and opened adoughnut shop in Winston-Salem,
North Carolina selling to grocery stores and then directly to
individual
customers. The first store in North Carolina was located in a
rented building on South Main Street in
Winston-Salem in what is now called historicOld Salem. The
Krispy Kreme logo was designed by Benny
Dinkins, a local architect.
Expansion occurred in the 1950s, including an early store in
Savannah, Georgia. By the 1960s, Krispy
Kreme was known throughout theSoutheast, and it began to expand
into other areas. In 1976, Krispy
Kreme Doughnut Corporation became a wholly
ownedsubsidiaryofBeatrice FoodsofChicago,Illinois.
The headquarters for Krispy Kreme remained in Winston-Salem.
A group offranchiseespurchased the corporation back from
Beatrice Foods in 1982.
An assortment of doughnuts on display in a shop in Washington,
D.C.
Growth [edit]
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Krispy Kreme donuts being prepared (high quality)
Krispy Kreme began another phase of rapid expansion in the
1990s, opening stores outside the
southeastern United States where most of their stores were
located. Then, in December 2001, Krispy
Kreme opened its first store outside the U.S.
inMississauga,Ontario, Canada, just
outsideToronto.[4]Since 2004, Krispy Kreme has rapidly expanded
its international operations.
IPO and accounting scandals [edit]
On April 5, 2000, the corporation wentpublicon theNASDAQat $21
using theticker symbolKREM.[5]On
May 17, 2001, Krispy Kreme switched to theNew York Stock
Exchange, with the ticker symbol KKD,
which is its current symbol. The stock reached what would be its
all-time high of $50 on the New York
Stock Exchange in August 2003, a gain of 235 percent from its
IPO price. For the fiscal year ended in
February 2004, the company reported sales of $665.6 million and
operating profits of $94.7 million from
almost 400 stores (including international locations). The
market initially considered the company as
having "solid fundamentals, adding stores at a rapid clip and
showing steadily increasing sales and
earnings."[6]
Since then it had lost 75-80% of its value by 2005, amid
earnings declines, as well as an
SEC investigation over the company's alleged improper accounting
practices.[7]
In May 2004, the company missed quarterly estimates for the
first time and suffered its first loss as apublic company. Chairman
and CEOScott Livengoodattributed the poor results to
thelow-carbohydrate
dietcraze. This explanation was viewed with skepticism by
analysts, as "blaming the Atkins diet for
disappointing earnings carried a whiff of desperation",[6]and as
rival donut chainDunkin' Donutshas not
suffered from the low-carb trend over the same compared
period.[8]
Analysts suggested that Livengood had expanded the chain too
rapidly after the IPO, which concentrated
certain markets with too many stores.[8]While this approach
initially grew revenues and profits at the
parent-company level, due to royalty payments from new
franchisees, which also increased sales, this
reduced the profitability of individual franchisees in the long
run as they were forced to compete with one
another. For the 2003-04 fiscal year, while the parent enjoyed a
15 percent increase in second-quarter
revenues, same-store sales increased only a tenth of a percent
during that time. By
contrast,McDonald'sfocused on profitability atthe franchise
level. Krispy Kreme also had supermarkets
and gas stations carry their donuts, which soon contributed up
to half of the chain's sales, creating further
market saturation as well as increasing competition to its
franchisees. All this expansion devalued Krispy
Kreme brand's novelty, by making the once-specialty donuts
ubiquitous, particularly as the newer sales
outlets required pre-made donuts as opposed to the o
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