Is Krispy Kreme Kracking?

Discussion
Sep 16, 2003
George Anderson

By George Anderson


Today’s Wall Street Journal includes a report, which suggests sales at new Krispy Kreme stores are as soft as the chain’s doughnuts straight out of the oven.


According to the report, Krispy Kreme’s biggest franchisee, Great Circle Family Foods LLC with 22 stores in Southern California, had a decline of 10 percent in same-store sales last quarter.


Krispy Kreme cautioned investors not to read too much into the numbers in the WSJ article. It said the numbers were from a small fragment of stores and overall Krispy Kreme’s results have been outstanding with “an average 63% quarterly growth in operating earnings over the past 10 quarters.”


Moderator’s Comment: What are your thoughts on the lower same-store sales for Krispy Kreme reported in the WSJ article?


Our concern with Krispy Kreme has always been that it would lose much, if not most, of its cult-like appeal if product became ubiquitous in the market.
Twenty-two stores in California may be an indicator of things to come for the company and its franchisees, although we certainly hope that is not the case.
[George
Anderson – Moderator
]

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