Essay on Krispy Kreme

Good Essays

Krispy Kreme Doughnuts, Inc.

Professor XXX XXXX
Month xx, xxxx

History Krispy Kreme was founded by Vernon Rudolph after he purchased the famous secret recipe of yeast-raised doughnuts in 1937 from a French chef in New Orleans. Rudolph began to sell these doughnuts wholesale to supermarkets. The demand for his doughnuts grew quickly, and by cutting a hole in the wall of the factory to sell directly to customers the concept of Krispy Kreme retail stores was born. The retail concept for Krispy Kreme doughnuts allowed Rudolph to grow his factory stores to 29 shops in 12 states by the late 1950’s. When Rudolph died in 973 Beatrice Foods bought his company and expanded it to more than 100 locations and expanded the menu to …show more content…

“Testimony by a former sales manager at a Krispy Kreme outlet in Ohio, said a regional manager ordered that retail store customers be sent double orders on the last Friday and Saturday of the 2004 fiscal year, explaining "that Krispy Kreme wanted to boost the sales for the fiscal year in order to meet Wall Street projections." The witness said the manager explained that the doughnuts would be returned for credit the following week - once fiscal 2005 was under way” (Chin, 2005). It seems pretty clear that Krispy Kreme was using questionable methods to inflate profits.
Investors also later found out that Scott Livengood (CEO), the former COO John W. Tate, and the former CFO Randy Casstevens, “unloaded more than 475,000 shares of Krispy Kreme stock for proceeds of $19.8 Million”, (Chin, 2005) while they were fully aware sales were declining since January of 2003. During this investigation, Scott Livengood, Krispy Kreme’s CEO announced his retirement.
It would seem to me that there may be some deeper issues with Krispy Kreme and if I were a shareholder I would want out, or to be certain that Krispy Kreme’s accounting mess was cleaned up.
The chart below shows Krispy Kreme’s performance during the years

Get Access
Get Access