Krispy Kreme Microeconomic Analysis: Dozen Glazed Donuts Elizabeth Reel GM 545 Ben Gruszczyk Introduction Krispy Kreme's glazed donuts are a tasty treat especially hot out of the oven. Thousands of people enjoy this delectable delight every day. Knowing this I will attempt to analyze the microeconomics of a dozen glazed donuts at a weekly basis. I will be covering terminal course objectives A through D. The TCOs are as follows: TCO A- Illustrate how the price mechanism, in response to changes in other demand or supply factors leads to a new market equilibrium price and level of output. TCO B- Given appropriate marketing data, including price elasticity coefficients, demonstrate how to use this information in product pricing …show more content…
There is no TR test for the elasticity of supply, price and TR always move together. Marginal Analysis Total Quantity TFC TVC TC ATC MC TR (price=$4.40) Profit or Loss 260,000 $150,000 $150,000 $300,000 $1.15 $.71 $1,170,000 870,000 190,000 150,000 100,000 250,000 1.32 .1 855,000 605,000 120,000 150,000 93,000 243,000 2.03 .73 540,000 297,000 75,000 150,000 60,000 210,000 2.8 1.4 337,500 127,500 50,000 150,000 25,000 175,000 3.5 .5 225,000 50,000 0 150,000 0 150,000 0 (150,000) From the above information (which is fictional data), we can assume that the breakeven point is somewhere between 75,000 and 120,000 dozen donuts produced, and the more they produce the more profit they will have. That is if they have a set price of $4.50 per dozen. In evaluating this data, I think that Krispy Kreme should and will stay in business due to the fact that the profit potential is very high. Competitive Market This last TCO asks us to discuss optimal output levels for a competitive firm versus an imperfectly competitive firm. I do not think that this applies to this particular firm due to the fact that there are so many producers of glazed donuts in all competitive markets. There are no donut monopolies and I doubt that any antitrust laws will be broken by Krispy Kreme now or in the near future. NOTE: With the exception of the current selling
4) For each article describe causes of changed price and the effects of the changed price.
Krispy Kreme executives no longer rush to implement new plans before the time is right. They carefully study each geographical location to make sure its market will support a full-scale doughnut operation. Also, management spends time checking out sites for individual stores. Potential franchisee and employees are required to maintain certain standards and are thoroughly screened.
d. Calculate the price elasticity of demand in each market and discuss these in relation to the prices to be charged in each market.
availability of substitutes, and justify how you determine the price elasticity of demand for your firm’s product. b) Explain the factors that affect consumer responsiveness to price changes for this product, using the concept of price
Krispy Kreme is a branded specialty retailer and manufacturer of premium quality doughnuts. Its principal business is to own and franchise Krispy Kreme doughnut stores in the U.S. and internationally. The main product is the Hot Original Glazed, a one-of-a-kind doughnut with an established brand. Each outlet also sells over 20 other varieties of doughnuts and coffee products. Product quality and consistency has provided the Company with a very loyal customer base.3
What happens to the equilibrium price and quantity after these changes are put into effect? Do they go up, down or stay the same?P:_____down_____________Q:_____down__________________
Research showed that 54% of the Americans over the age of 18 drink coffee everyday and 62% of the regular coffee was purchased from a coffee shop, rather than homemade. For corporation coffee house chain, Dunkin’ Donuts is developing very well in home base country and has its chains everywhere including Asia. That is why it is chosen to study within this industry for its financial performance.
KRISPY KREME, one of the successful companies in the food-service industry, began as a single doughnut shop in the early 20ths. The rapid expansion of its business scale made the corporation suffer its first economic crisis by the early 1980s. A group of franchisees later took charge of the heavily-debt company bringing new management ideas which helped the KRISPY KREME find way back to the game and become the role model in the industry. KK generated revenues through four primary sources: on-premises retail sales, off-premises sales, product mix and
As Wall Street Journal stated, Krispy Kreme grew too quickly and diluted its cult status by selling its doughnut in too many outlets. They could not anticipate when the demand decreased due to low-carbohydrate diet trend issues. It can be seen clearly that interest expenses also increased for the year ended Feb 2, 2003 to the year ended Feb 1, 2004 as the debt increased.
Dunkin’ Donuts was established by Bill Rosenberg in 1950 in Quincy, MA. Dunkin’ Donuts started license franchises in 1955. It is the world’s leading baked goods and coffee chains serving more than 3 million customers per day. Dunkin’ Donut sells 52 varieties of donuts and more than a dozen coffee beverages as well as an array of bagels, breakfast sandwiches, and baked goods. At the end of 2010, there were 9,760 franchises all over the
Strengths: Dunkin’ Donuts is very popular in its industry and has established a powerful brand and image through its efficient operations, low prices and the wide range of high quality products it offers. Moreover, the company experiences economies of scale as it has many operations worldwide. In addition they have significant bargaining power against their suppliers due to the experience they obtained and the support they acquire from Allied Domecq, one of the strongest companies in the market.
In order to conduct the strategic analysis of the external environment of Dunking Donuts we will use some of the tools from among the nine commonly used strategic analysis
Problem is Thai people interest with Krispy Kreme lower than the beginning period, so male Krispy Kreme no more long queues although Krispy Kreme launch more favors, but not attraction customer like beginning period. Now Krispy Kreme has not yet opens a new branch although I think Krispy Kreme must to open new branch.
A shift in consumer demand to want healthier fast-food options has hit the industry hard. Dunkin’ Donuts and Starbucks have combated this shift by offering healthier menu items, something Krispy Kreme has failed to do. Dunkin’ Donuts offers healthy breakfast sandwiches and
Krispy Kreme Doughnuts was a successful privately owned business since 1937. In 1982 a group of franchises bought back the company from Beatrice Foods for $24 million, and reintroduced the old recipe of doughnuts and their “hot doughnuts now” system. In 1998 Scott Livengood became Krispy Kreme’s new