KRISPY KREME HAS GONE OUT OF KONTROL

New York Post ^ | 11/23/04 | Richard Wilner

[kattracks]

Carb-conscious Americans continued to flatten Krispy Kreme Doughnuts, as the onetime Wall Street darling yesterday posted a loss of $3 million in the third quarter.

That bad news sent the stock reeling 16 percent — or to just above the $7 price of a dozen assorted sweet things.

The struggling doughnut chain has lost more than 75 percent of its market value since last year as people have suddenly stayed away from the glazed treats in droves, and opted for healthier snacks.

As a result, each Krispy Kreme store has seen $10,000 a week in revenue waddle out the door, a drop of some 16 percent.

[Labyrinthos]

They grew too fast, they spent too much on new stores instead of covering their butts.

I suspect that a large portion of KK's revenue stream has come from the sale of franchises and not from the product itself. There are only a finite number of people willing to eat that crap and therefore, as the number of franchises grows, the sales per store must diminish. Boston Market suffered the same problem several years ago and it had greater product diversity.

[Dissident Aggressor]

I saw a display of KK donuts at Walmart the other day and couldn't believe what they were priced at. I don't get it...it's just a freakin' donut. Now if they were as a good as the Shipley's sausage and jalapeno kolaches I could understand. Those are worth every cent.

[Katya]

Do they push ocffee in their retail locations? I'm not a donut eater, but I go to Dunkin Donuts for cappucino and latte's, since they're at least a buck cheaper than Starbucks. They always seem busy...but they also offer croissant and bagel breakfast sandwiches.

[RGSpincich]

Atkins shmatkins. Krispy Kreme was a passing fad that a few got rich on.

[Doe Eyes]

Me thinks that once this current 'low carb' fad diet runs its course, Krispy's stock will climb at a consistent rate.

For me, its not just to lose weight, but a health thing. I think high carb foods put a strain on the body that can eventually lead to diabetes.

[TXBSAFH]

KK makes a good dounut, but so does a half a dozen other places I know. These places are also about 10% to 20 % cheaper then kk. Guess where I buy my fat pills.

[cb]

No kidding....

I still remember Spudnuts....donuts made from potato flour. These I really like. Thinking of next wave of fads I did a search. A couple of stores still in business as independents,nothing about the franchise. Enterprise, anyone?

[Coop]

these donuts were always overrated in my opinion

BLASPHEMY!!!

[bert]

You are of course, very wrong.

[the invisib1e hand]

in my business we knew kk was a creme-filled pipe dream when it went public.

[HamiltonJay]

Exactly, they took their eye off the ball, became a franchising corporation instead of a doughnut company. Wendy's did the same thing in the 80s. Expanded too quickly and focused on that instead of their core business and it hurt them too.

KK needs to focus back on its product, and stop worrying about putting an outlet next to every starbucks.

[JesseHousman]

They'd never sell in muslim countries.

[HamiltonJay]

Agreed, Bagels generally have more calories than even a KK glazed doughnut.... Not much more however, and are definately more filling. Of course by the time you slab on the cream cheese you could have probably eaten 2 to 3 of those bad doughnuts for the same calories.

Biggest problem with KK is simply they are smaller and over priced, and once they are cool they are nothing more than another doughnut. The thing that makes KK unique and distinct is when you get them fresh and warm.... that's when you have a product that nothing else out there compairs too.

[Judith Anne]

I make cake doughnuts. The grandkids made them with me a couple of times, they have an amazing flavor. A local motel used to buy them from me, fresh, to set out for the tourists, they went over pretty good.

Also sold the holes, lol.

[robjna]

biggest no move of my life, i kept spouting i was going to short this stock as its numbers made no sense, i touted this as the best short on the board and never pulled the trigger!!!!!

i am such a schmuck!!!!!

[xp38]

In Canada this is the name for doughnuts

However As of June 2004, there are over 228 Tim Hortons locations in the United States. These are situated in Michigan, Ohio, New York, West Virginia, Kentucky, Maine, Rhode Island, Connecticut, and Massachusetts. The chain is owned by Wendys. Dave Thomas decided to buy it a few years before he passed away.

[toddlintown]

Their low-carb argument is a red herring. Over expansion, too much...too quick, and bad financials is what's killing them. Their coffee also taste like #10 diesel fuel.

You don't hear Dunkin Donuts crying about low-carb.

[TASMANIANRED]

I thought a Krispie Creme franchise would have been Nirvana at one point. Boy am I glad I didn't sell the farm to invest.

[WashingtonSource]

"When you need one."

The cop or the donut?

[Aquinasfan]

The struggling doughnut chain has lost more than 75 percent of its market value since last year

Buy low. There will always be a market for tasty donuts.

[toddlintown]

I'm starting an organic donut chain that sells road apples, filled with wild oats. I've got a franchise opening in Boulder. Looking for investors.

[Aquinasfan]

Krispy Kreme donuts are the best! It's impossible to overrate them.

A little too sweet for me. I prefer Dunkin's. But then, I'm a New Englander.

[TC Rider]

these donuts were always overrated in my opinion

You are so wrong. Here in the KK homeland, that "HOT NOW" neon sign lit up in the window would send myself and fellow citizens into Pavlovian fits.

(haven't had one in years, but boy do I miss 'em)

[green iguana]

A super airy glazed donut

I think if you pack it down real tight, you can cram one into a thimble.

[NCSteve]

Hah!

Here's some inside scoop for you: I live near Winston-Salem, home of Krispy Kreme. The donuts are the best in the world, but the company is run by a bunch of liberal Democrats.

Pretty typical, don't you think? Democrats always blame their own failures on everyone else. Please note that Baskin-Robbins, Carvell, Dunkin' Donuts, and other sugar-and-fat-laden enterprises don't seem to be taking a public tumble because of the increase in low-carb dieters.

Local investment managers have advised a lot of us for quite some time to stay away from Krispy Kreme (the stock, not the donuts) because it was way over-valued.

[balk]

In addition, they did not research adequately before placing their locations. Most that I've seen in Toronto are stand-alone buildings next to Home Depots or in large grocery stores - low volume areas. They haven't penetrated to the core or catered to transit commuters. Their primary competitor, Tim Horton's, outdoes them in many respects, and they are highly diversified (decent coffee, lunch, etc.)
Tim's has smaller, low-cost locations. Much of their inventory is outsourced as well.

[Tread]

Are you series?

[LittleMoe]

mmmmm why is Dunkin Donuts doing sooo well?

[AmericanChef]

They sure did.

Plus they've over-saturated the market. They should've considered that an initial sales surge in previously unserved markets would settle down and plateau, but then nobody asked me.

[Tread]

How about a bacon, egg, and sausage donut? Mmmm....

or... for those fat-fasting, Atkins-lovers, the cream cheese and butter donut... Mmmm.

[DTA]

In my opinion, Krispy Kreme made a mistake by offering their donuts in gas stations and conveinence stores.

Second that. Sure will enter marketing books along Sony's decision to charge royalty for Betamax format from hardware manufacturers.

Short time gain that sinks product/company in the long run

[kevkrom]

Does anyone even make a donut with Splenda yet?

I would think the white flour would be at least as bad as the sugar -- and I can't see a soy flour donut tasting any good at all...

[RockinRight]

I still like 'em.

[RockinRight]

There's some validity to low carb. However, the key to a healthy weight is moderation. So many people (me included) are accustomed and used to huge portions. I know it's my downfall. I'm trying to shed 25 pounds and the hardest part isn't what I eat, but how much since my body needs so much to feel full after 27 years of pigging out. Eating slower, and more often seems to help. It's been 2 weeks and I've lost 2 pounds, not much, but it's a start.

[JohnnyZ]

KKK donuts are disgusting. They're getting competition from DD and they're getting beat down.

KK is nasty.

[mvpel]

Compared to Dunkin' Donuts' usually-nearly-stale offerings, they were indeed warm, delicious manna from heaven. I miss them here in New Hampshire.

[uncitizen]

You can be put in jail for eating a donut here in California.

[tallhappy]

The struggling doughnut chain has lost more than 75 percent of its market value since last year as people have suddenly stayed away from the glazed treats in droves, and opted for healthier snacks.

It's market value was probably two fild over estimated at least.

[JohnnyZ]

The whole allure of the Krispy Kreme donut was to experience how delicious a fresh, hot donut could be.

Then maybe they should have more than one or two locations in a city. There are only TWO LOCATIONS in the whole of Charlotte.

[tob2]

Splenda is not good. Can cause SEVERE diarrhea! Wish there were some way have to have low cal donuts. Seriously, we have become a nation which chooses horrible "food" to eat and now our taste buds like it. All this low cal, low fat, low carb "junk food" is as bad for all of us as the original versions are.

[discostu]

I think as long as they keep blaming it on the low carb thing they'll keep losing. Long before Atkins achieved supremacy people were wondering if Krispy Kreme was expanding too far too fast. How big is the donut market really? And in the modern age how much better is one brand of donut than any other?

[exile]

You're on the money on this one. The Atkins thing is a scapegoat. According to the WSJ, they overinflated revenue a few years ago by recording sales of equipment as revenue.

[discostu]

McDonald's salads have consistently been a loser for them, it's one of the reasons they keep re-inventing them. They keep salads on the menu to shut-up the whiners that say they make nothing but unhealthy food but they don't sell.

[raccoonradio]

I haven't been there lately but I noticed a lot of donut shops up in Canada--maybe what with the cold weather they love their coffee and some donuts to go with it. "Country
Style", "Coffee Time", and "Tim Horton's". There are even some Tim Horton's in the US (NY, OH, CT for example...
southeast Mass., too)--I was staying in Rochester, NY and there was a Tim Horton's
next to the motel. Mmm! They even have their own version of "Dunkin Donuts Munchkins" called "Timbits".
I guess Mr. Horton was a famous hockey player.

[raccoonradio]

>>A little too sweet for me. I prefer Dunkin's. But then, I'm a New Englander.

Yes--and we have some other chains like Honey Dew, or
local places.
I suggest renaming DD in honor of Ted Kennedy:
DRUNKEN DONUTS :)

[ArmedNReady]

Sorry, but their donuts are just not as good as they were 40 years ago.

[OKIEDOC]

No wonder the liberals are so out of sorts the last few years. If I spent all my time eating tasteless food I would be angry at any one whipping my dirty butt in an election.

It is no wonder liberals are looked upon as tasteless individuals with no personalities. These are people who have no clear direction. They are like rats drawn to the garbage can of a life of low cal, low carb tasteless treats like carob candy.

These liberals are typical of Bush hater's. They are lovers of all things porn but have yet to experience true love. They want to corrupt all those around them and then wonder why others trample on their domain. Donut's give me lots of donuts.

[discostu]

Eat less and exercise more is a slow diet, but it lasts longer. The trick is getting your stomach to shrink, that lowers your appetite and at that point it stops being a diet (except for avoiding pigouts, don't want to re-expand). The stomach shrink week is the worst though, stomaches don't want to shrink and you'll be miserably hungry, tough it out though and you'll love the results. Dropped 45 this summer.

[sevry]

these donuts were always overrated in my opinion

I wonder if we'll hear from all the screaming fans of the franchise who gushed at the prospect of a new franchise store in their area, just a few years ago. I remember that sort.

Myself, I like the 'doughnuts', if warm off the line. They do melt in your mouth. But, however, they are SWEETER than SWEET, and have glaze dumped on them so that adults almost can't eat them - they are so sweet. The cake doughnuts, from other stores, are much better.

[BigSkyFreeper]

I tried Krispy Kreme Originals for the first time in my life this past Summer by purchasing a "bakers dozen" of the delights at the Mall Of America. WOW!!! They were great!!!

Of course I bought a cup of the dark roast coffee to go with the donuts, in a stainless steel mug. :)