The Kreme Of Krispy Kreme

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.

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

1. What can the historical income statements (case Exhibit 1) and balance sheets (case Exhibit 2) tell you about the financial health and current condition of Krispy Kreme Doughnuts, Inc.?

Dough’s Doughnuts opened in 2010 the owner Fany Gerson grew up in Mexico City. She studied at the culinary institute of America after should moved upstate New York. She later worked as a pastry chef in NY until she was giving the opportunity to open her very own business. The trendy and popular first shop is located on Franklin Ave in Bedford-Stuyvesant Brooklyn New York and has recently opened a flagship store in the Flat Iron district on 19th street. The donuts at Dough’s are made fresh and daily the employees shape and cut the hole out of the donuts and put them to the side to fry using single trays and hand frosted and decorated one by one.

In March of 2009, the SEC filed a cease-and-desist order to Krispy Kreme Doughnuts Inc., for their actions in prior years. The corporation had purposely inflated their earnings throughout 2003 and 2004 in an attempt to meet Wall Street expectations and retain their investors. With the over inflation of their actual earnings, Krispy Kreme was able to present a higher earnings per share (EPS) to the public and therefore become more favorable among investors. In this case there are three primary transactions known as “round-trip” transactions that occur. This meaning that the company was paying set amounts to franchisee’s and then expecting them to return the payments in a prearranged manner. In doing so, this would allow Krispy Kreme to record extra pretax income and therefore inflate their profits. There were also reports of channel stuffing that surfaced from former employees once the SEC began investigating Krispy Kreme. According to the reports Krispy Kreme would send double orders at the end of the year in order to boost their sales and meet expectations. Those orders would then be returned and credited at the beginning of the next fiscal year. Price-Waterhouse-Coopers were the auditors at the time and would then face serious questioning as to why they never noticed the increased shipments at the end of each year followed by the credits when the orders were returned the next year.

As at 2013, there were 10,858 Dunkin' Donuts retail locations, including 7,677 in the United States and 3,181 in 33 different countries. Most of Dunkin' Donuts are operating by franchisees and it is a very successful business model that generates much of its revenues. It is continuing to grow more franchisees in the United States and international market. In July 2013, Dunkin' Donuts

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

Krispy Kreme has experienced dramatic growth over the past 5 years based on their income statement. Every line on the income statement has grown rather impressively. Revenues have grown from $220M to $666M and net income has grown from $6M to $57M. Based on the income statement, Krispy Kreme is doing very well.

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

Dunkin’ Donuts was first established in 1950, in Quincy, Massachusetts, by William Rosenberg. Over the years the company expanded and now is the largest coffee and baked goods chain in the world. They serve over 5,500 retail outlets; selling more than 4 million doughnuts and 2.7 million cups of coffee daily!

The company under analysis in this report is Dunkin Donuts. The brand of Dunkin Donuts originated in 1950 when Bill Rosenberg opened the very first outlet in Massachusetts, USA. Today Dunkin' Donuts is the world's leading baked goods and coffee chain, serving more than 3 million customers per day worldwide. It sells about 52 varieties of donuts and more than a dozen coffee beverages as well as an array of bagels, breakfast, sandwiches, subs and other baked goods. Dunkin Donuts is a subsidiary company of Dunkin Brands Inc that owns companies like Dunkin Donuts, Baskin Robins etc. Dunkin Donuts is a multinational company with its presence in more than 32 nations. By the end of 2011, there were 10,083 Dunkin' Donuts stores worldwide that included 7,015 franchised restaurants in the United States of America and 3,068 international outlets in more than 32 countries across the globe employing more than 9000 people. According to the financial report published by Dunkin Brands Inc, the parent company of Dunkin Donuts the net sales worldwide totaled up to $8.77 billion, up 5.2 percent from the previous year and the Net income for the year was $108.3 million, up 214.5 percent as reported by the company.

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.

KKD's business model provides the company three sources of revenue: (1) Sales at company-owned stores; (2) Royalties from franchised stores and franchise fees from new stores; and (3) Sales of doughnut mixes, customized doughnut-making equipment, and coffees to franchised stores.

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