University Center “César Ritz“

Krispy Kreme Doughnuts – case study

Submitted on

11th March 2009

by:

Bojan Goljevscek (183 545)

Maria Richkin (178 519)

Wen Wen Zhang (183 550)

Miron Kern (182 531)

Samantha Rios Morales (181 510)

Word count:

3490

Submitted to:

Mr. Magnus Josefsson

HTM 210

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 Executive summary

Krispy Kreme Doughnuts is one of the most known doughnut producer and seller.

Popular in the southern states of the U.S.A., the problems started when the company

decided to spread its business in the northern states of the U.S. and in some countries

abroad. From one of the hottest companies to invest in, it became one of the biggest

failures do to problems with franchising, marketing and development plans. Some of

the possible solutions have been analysed in the following report; as the products

development, a new marketing strategy and the company development. KK faces

competition from its major competitors Dunkin Donuts and Starbucks, which are

fighting for the same market share. KK features some competitive advantage over

them but cannot face the challenge without those changes. If implemented those

changes could put the company back on track and make it successful once again.

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 Table of contents
Executive summary .............................................................................................................3
Krispy Kreme Doughnuts is one of the most known doughnut producer and seller.
Popular in the southern states of the U.S.A., the problems started when the company
decided to spread its business in the northern states of the U.S. and in some countries
abroad. From one of the hottest companies to invest in, it became one of the biggest
failures do to problems with franchising, marketing and development plans. Some of the
possible solutions have been analysed in the following report; as the products
development, a new marketing strategy and the company development. KK faces
competition from its major competitors Dunkin Donuts and Starbucks, which are fighting
for the same market share. KK features some competitive advantage over them but
cannot face the challenge without those changes. If implemented those changes could put
the company back on track and make it successful once again. .........................................3
Table of contents..................................................................................................................4
1.0 Introduction....................................................................................................................5
2.0 PESTEL analysis ..........................................................................................................5
3.0 SWOT analysis..............................................................................................................5
4.0 Products of Krispy Kreme.............................................................................................6
5.0 Marketing strategy.........................................................................................................8
6.0 Markets..........................................................................................................................9
7.0 Actual financial position of Krispy Kreme Doughnuts...............................................11
8.0 Comparison to competitors..........................................................................................12
9.0 Future development of Krispy Kreme Doughnuts.......................................................16
10.0 Conclusion.................................................................................................................16
Firm to assist Krispy Kreme with international marketing. (February 20, 2009). Retrieved
on the 29th February 2009, from Winston-Salem journal website:
http://www2.journalnow.com/content/2009/feb/20/firm-to-assist-krispy-kreme-with-
international-mar/..............................................................................................................17
Harris, C. (February 1, 2008). Top Pot Doughnuts goes nationwide. Retrieved from the
Seattle pi web page: http://seattlepi.nwsource.com/business/349616_toppot01.html......17

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1.0 Introduction

Krispy Kreme Doughnuts was regarded as one of the most prominent companies on the

market. Since its start in the 1930s as a small doughnuts producer in the southern states of

the U.S., its popularity and market share increased slowly throughout the years. In the

1990s the Krispy Kreme “boom” took place; the company started to open new stores in

the northern states and expand abroad. In the last years Krispy Kreme faced a decrease in

profit and market share. This report will evaluate the reasons that lead to the current

situation and will present some future recommendations to solve those problems.

2.0 PESTEL analysis

The PESTEL analysis shows that Krispy Kreme struggles with its international stores.

Currency changes and legal restrictions challenge the business successful operation. The

PESTEL analysis also shows how KK is trying to adapt to new technology trends and

socio-cultural factors. Overall, the PESTEL analysis shows that the environmental and

political factors have a great impact on the company’s operations. Krispy Kreme should

focus more on the environmental factors and adapt better to the local market. Overall, this

analysis gives a summary of all the external factors which have an influence on Krispy

Kreme’s success (Refer to appendix 1).

3.0 SWOT analysis

The SWOT analysis proves that Krispy Kreme has the potential to become a successful

business. When looking at the strengths we can see that Krispy Kreme provides a unique

product and a unique service. It can be seen that there are some serious weaknesses, but

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when comparing it with the opportunities it is obvious that Krispy Kreme’s has the

potential to change those weaknesses into strengths. It is crucial for KK to prevent the

threats to become reality. Overall, the analysis shows that Krispy Kreme has the potential

to increase its strengths and neutralise the threats. KK should implement a successful

business strategy that would include all the factors mentioned and make KK a successful

company. (Refer to appendix 2).

4.0 Products of Krispy Kreme

When people were asked, “What do you think about Krispy Kreme?” Most of them

answered “Hot doughnuts”. While asking them about Dunkin’ Donuts, they were more

likely to answer “Coffee”. Different from Dunkin’ Donuts, Krispy Kreme’s main

competitor, whose doughnuts are accounted for 20 percent of its sales; Krispy Kreme on

the other hand generates 90 percent of sales from doughnuts.

The original glazed doughnut is without any doubt Krispy Kreme’s most famous product,

the costumer can even experience the doughnuts making process which triggers impulse

purchasing; this is one of Krispy Kreme’s most effective marketing tools which brings

Krispy Kreme huge profit. The Krispy Kreme doughnut making theatre is a great part of

the KK experience; costumers can witness the whole doughnut making process, which is

what costumers are after nowadays. Krispy Kreme’s doughnuts are a prime quality

product which gives the company a competitive advantage over other competitors. KK

widened the variety of doughnuts they offer which differ in size, flavour and shape. KK

started to make some effort to customize doughnuts according to the local taste

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(customization), as for example KK in Australia offers doughnuts that are pineapple

glazed, lime spice, etc (“Krispy”, 2009).

Although KK’s doughnuts are a quality product that attracts many costumers, new food

products should be added to widen the offer. Restaurants with a wide range of products

are more responsive to the costumer changing taste and it allows restaurants to charge

higher prices for unique items as for example its delicious doughnuts. With widening the

offer of food Krispy Kreme could move from defensive marketing, retaining the already

created guests, to a stage of offensive marketing in which new costumers would come

due to the new products but also because of the delicious doughnuts. Those costumers

spread as well a positive word of mouth which is another useful marketing tool. KK is as

well promoted through the selling of side products such as mugs, sweaters, caps and

many more, all featuring the KK logo on them which is a good marketing and advertising

tool.

At first Krispy Kreme did not pay much attention to the beverages served in its stores.

However, the company soon realized there was a demand for good coffee and moved to

fill the gap (“Krispy Kreme Doughnuts”, 2003). They introduced new varieties of coffee

and a few chillers. KK moved one step further and now it owns its own coffee-roasting

factory from which they provide all of the KK stores with prime roasted coffee. Their

coffee beans textures differ in variety, from smooth, rich, bold to robust and decaf. This

is a good step forward but a lot more in means of market research should be done in order

to satisfy all of the costumer expectations and lower guest sacrifice due to lack of coffee

and drinks variety. As it can be seen on their website, KK has a new program of coffee

named ‘Warm Up with Our Signature Coffees’. This promotion emphasizes their passion

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and obsession with coffee, the same they have for their doughnuts. KK offers a small

selection of “Starbucks” inspired espresso drinks as “Mocha” or “Kaffe Kreme”,

although a good addition to the actual menu it could have a better impact on customers if

the choice would be widened and adapted/customized to the customer taste.

Nowadays people are paying more and more attention to their health. Having realized the

health concerns of their customers, Krispy Kreme proposed 0 Grams Trans-Fat

Doughnuts. Trans-fat is made when manufacturers add hydrogen to vegetable oil--a

process called hydrogenation (“Revealing”, 2005). “The initiative to change the entire

menu to zero grams trans-fat demonstrates Krispy Kreme’s commitment to its customers”

(“Krispy”, 2008). However, the doughnuts are not really trans-fat free. Under FDA (Food

and Drug Administration) guideline, if a product has less than 0.5 grams of trans-fat per

serving, they can be labelled as 0 grams of trans-fat.

From all what Krispy Kreme is doing, we can see that they are focusing more and more

on the diversity of products than before in order to meet the increasing costumer demands

and expectations, without having to sacrifice. However, as the markets are changing and

developing, they also need to pay more attention to their marketing strategies.

5.0 Marketing strategy

The marketing strategy presented till now by Krispy Kreme had some good points, but

still needs some improvements. The KK marketing strategy was based on an innovative

marketing practice of giving free doughnuts to the media in order to advertise and feature

stories about KK. Krispy Kreme gave as well free doughnuts to customers at new store

openings in order to create returning customers in the future (Regani & Dutta, 2003).

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Those ideas were very innovative and created a great number of returning customers, but

were not appropriate for the development speed that KK set. KK set itself a very high

goal of increasing the number of stores it operates and foreign markets it is present on by

each year. This cannot be performed without setting an advertisement budget and a clear

marketing strategy, all things that Krispy Kreme never did. Krispy Kreme should develop

an advertisement strategy made of TV commercials, billboards, radio ads and print ads

which could appeal to a part of the market that never heard of Krispy Kreme before and

would like to try their products. The company recognized the need for advertisement and

not long time ago, on the 20th February 2009 signed a contract with an advertisement

company to help them develop an international advertisement strategy and developed a

few TV commercials (“Firm”, 2009). Krispy Kreme should have a look on what other

coffee and fast food companies did concerning advertisement issues, as for example Mc

Donald’s or Starbucks which spent a conspicuous sum of money on advertisement. The

money spent on advertisement paid back very fast with a great number of new and

returning costumers. If Krispy Kreme wants to advance to its set point of development it

needs to implement as fast as possible a commercial campaign which will promote

Krispy Kreme and its products to all the markets and stimulate customer awareness.

6.0 Markets

Krispy Kreme’s base market is the southeast of the U.S., towards the end of the 90’s and

beginning of 2000, KK started to move to other states in the U.S.A. such as New York or

even the District of Columbia and now has its stores in 37 states. Krispy Kreme

recognized a good place to grow and therefore moved to those new markets in order to

make additional revenue. Krispy Kreme started to grove and had a discreet success in the

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other American states and therefore decided to move abroad. The first country KK

decided to target was Canada, the operation was predicted to be a success, but it had a

catastrophic effect, because of no market research six of the ten stores closed and the

branch of KK in Canada went bankrupt. That was the catastrophic result of not

performing an adequate feasibility study and market research. Other countries Krispy

Kreme is present are: Australia, Hong Kong, Indonesia, Japan, Kuwait, Mexico, the

Philippines, Qatar, Saudi Arabia, South Korea, the United Arab Emirates and the United

Kingdom. The company counted 449 stores of which 245 were situated in the U.S.A. and

204 were international. The company recognized the good opportunity of spreading

internationally because of the slowly saturation of the American fast food market, but

unfortunately did not do enough market research on which they can base further

spreading on new markets. KK did not target the European market (except the UK),

because they recognized the difficulty in succeeding against the local companies and the

whole concept does not fit in the European eating culture. KK made a step forward to

further development by lowering the royalty fees and the Brand founding fees for

International and US franchisees. KK is making a step forward to development by

entering the Chinese market, but unfortunately by not doing enough market research they

are entering it in the wrong city. Shenzhen is not the right city to start, the best would be

Shanghai or Beijing (Wolf, 2008, p. 1), were there is at least a large American expat

community to make revenue from. It is a stupid way of throwing away at least 30 million

dollars, which is the minimum net worth for starting a franchising in a new country and a

minimum of ten stores (Franchises, 2009).

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7.0 Actual financial position of Krispy Kreme Doughnuts

Krispy Kreme Doughnuts is every day nearer to bankruptcy. The shares of Krispy

Kreme, when it went public on the New York Stock Exchange were trading at 21$ in

April 2000 and raised up to nearly 50$, in August 2003 the price starts its rapid descent to

around 6$ in May 2005 an finally fall down to 1.40$ in February 2009 (KKD, 2008). At

the time when KK entered the stock market it was referred to from the Fortune magazine

as “hottest brand in the land”, which was at the time true because of its fast climb on the

stock market but the greed to get fast to the top was the one that lead KK even faster to

the bottom (O’Sullivan, 2005, p. 1). One of the main problems that caused KK’s fall were

the fact that KK neglected its franchisees and made them pay high costs for the machines

and the doughnut making powder. In place of creating revenue from charging royalty fees

they focused more on making money from charging high costs for the doughnut making

machines which had an effect on lowering the number of franchisees. This can be seen in

the fact that Krispy Kreme made 152.7 million or 31% of its revenue in 2003, from

selling the doughnut mix and doughnut making machines (O’Sullivan, 2005, p. 2).

Another financial problem was the fact that Krispy Kreme spent a great amount of money

on buying back franchised stores. In 2003 the company spent around 67 million dollars

for buying back six franchised stores. In 2004 the company spent around 16.8 million

dollars to buy 33% of Golden Gate Doughnuts LLC it did not already own. In some of

these deals there were many conflicts of interests, because some of the stores or

companies bought by Krispy Kreme were owned by some of the board members or their

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family members. This made them earn lots of money on the cost of getting Krispy Kreme

into deeper and deeper financial and legal problems (O’Sullivan, 2005, p. 4).

The annual revenue of KK went also through a descending path. In 2005 the company

made its highest revenue of 707 million dollars to slowly fall to 543 million in 2006, 461

million in 2007 and respectively 429 million dollars in 2008, a fall of 1/3 of total revenue

in only 3 years. Indifferent of its revenue the company had its highest net loss the year it

made its highest revenue (2005), the last year KK operated with a net profit was in 2004

with 50 millions of net profit. Krispy Kreme has a too high operating cost which

accounted to 84.4% and even 88.5% in 2008 of the total revenue in those years (KKD,

2008, p.33).

The Krispy Kreme first quarter results from July 2008 showed that the company started

to recover. Despite a drop in sales of 6% they achieved earnings of 0.06 on revenue of

104 millions (lower then last quarter but first positive earnings). They succeeded by

successful cost cutting and by lowering the dept and raising their cash flow. These

financial data show that Krispy Kreme was heading towards a positive net income after

years, but unluckily nobody predicted the actual economic crisis which affected all the

markets and therefore it affected as well Krispy Kreme and caused a plunge of the

company’s share stock value and making KK lose even more money (Krieger, 2008, p.

1).

8.0 Comparison to competitors

Krispy Kreme’s major direct competitors on the market are Dunkin Donuts and

Starbucks, but there are many other competitors that compete for the same dollar. Krispy

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Kreme and Dunkin doughnuts have always been competitors. The main advantage of KK

is its reputation, which stands as a synonymous for hot original glazed doughnuts. KK

operates mainly in the southern part of the USA, while Dunkin Donut is fierce in the

northern parts of America (Regani & Dutta, 2003).

Krispy Kreme

Krispy Kreme receives their main revenue from sales of donuts, which accounts to 90%

of their sales. Whereas Dunkin Donuts and Starbucks emphasize more on revenue from

sales of mainly coffee, food and other beverage which add up to 50% of their sales. Only

20% of Dunkin Donuts sales come from doughnuts (Regani & Dutta, 2003).

Krispy Kreme uses both on and off premises sales. On premises sales include KK’s own

shops where customers walk in the shops and purchase doughnuts and off premises sales

where they use various distribution channels. They exceed their revenue by distributing

doughnuts through off premises sales as retailers and wholesalers in places where there

are no shops. By operating a delivery system they can sell their products to the customers

off premises, in places such as supermarkets, retailers and malls where they provide at

least 15-20 different kinds of doughnuts. This has a good impact on revenue but it would

be more effective to limit the off premises sales were there are already factory stores. The

off premises sales lower the number of customers that come to the factory shop and

therefore they cannot experience the real KK experience (KKD, 2008).

Dunkin Donuts

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Dunkin Donuts by the end of year 2007 had 7988 stores around the world with 5769

franchises and 2219 shops in 30 countries outside USA and 34 shops in the states (DD

financial, 2009). Furthermore they would like to expand the number of stores up to

15 000 by the year 2020. Their business idea has a clear strategy and outlined goals. In

comparison to Krispy Kreme whose focus is doughnuts, Dunkin Donuts receives most

profit from selling beverages, especially coffee and snacks at an affordable price.

In addition Dunkin Donuts provides a wholesale with focus on coffee but they also make

sales on donuts, bagels, beverages, Dunkin Deli (sandwiches, salads and soups), oven

toasted items such as waffles, hash browns, muffins, croissants and flatbreads (“DD”,

2009). In the beginning Dunkin Donuts most frequent customers were policemen and

workers, but today they target a larger segment of the market, people who appreciate the

lower cost of coffee in comparison to Starbucks high prices. There is as well a difference

between the main conflict issue between Krispy Kreme and Dunkin Donuts which is

doughnuts. The matter of taste and structure of the doughnuts itself differs, DD

doughnuts are thicker whereas Krispy Kreme doughnuts are lighter, sugar glazed and

served hot.

Starbucks

Starbucks is another big player in the market. Starbucks Corporate was founded in 1985

and have since then been a leading purchaser and provider of roasted, whole bean coffee,

fresh and rich brewed coffees, but also teas, cold beverages, bakeries, snacks and quick

meals. Starbucks uses its brand name while selling coffee and tea products such as mugs

and accessories which is a good advertisement for the company.

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By the end of year 2007 Starbucks had around 7000 stores in the states and 4000

international licensed stores counting in total over 15000 stores worldwide. Starbucks

operates in more than 30 countries internationally. Starbucks main advantage is their

globally known name and the Starbucks experience that they provide with every cup of

coffee. By providing a clean and well managed store operation, staff and by customizing

the stores according to geographic market location they manage to create customer

loyalty. When it comes to the matter about which is the best quality and best tasting

coffee, according to consumers report from 2007; Starbucks coffee lost against Dunkin

Donuts and even McDonalds coffee in matter of taste, which could be even used by KK

to push itself better in the coffee business. Starbucks made a step forward by acquiring a

doughnut making Seattle based company called Top Pot. The Top Pot products are

offered in all of the over 5000 Starbucks stores in the U.S. The Top Pot products sold in

Starbucks include an apple fritter, vanilla cake, glazed old-fashioned and chocolate old-

fashioned doughnuts. The price of the doughnuts offered in Starbucks range from 1.25$

to 1.65$, which is a lot more the standard prices of KK doughnuts, whose price start from

0.50$. In this regard KK has a price advantage over Starbucks (Harris, 2008).

Conclusion of differences

Overall Dunkin Donuts has a stronger brand name and it’s a bigger corporation then

Krispy Kreme. Furthermore Dunkin Donuts has a bigger choice of products compared to

Krispy Kreme and Starbucks which focus more on doughnuts and flavoured coffee.

Therefore as seen KKD should implement some changes in the range of products offered

and in the presence on the market in order to win over a part of the market share from its

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opponents Dunkin Donuts, Starbucks and other smaller companies that compete for the

same dollar.

9.0 Future development of Krispy Kreme Doughnuts

Krispy Kreme could be implemented by introducing some improvements:

 New marketing strategy

 Introducing loyalty programs (loyalty cards, as Starbucks has)

 Better adaptation to foreign cultures when moving to outer markets

 Creating and introducing new trends (healthy food, low calories food)

 Introduction of new products

 Move back to the first concept of selling the experience, not just the products

 Perform a better feasibility study before entering a market

 Attract new franchisees by lowering the royalty fees

10.0 Conclusion

After evaluating the positive and negative aspects of the current Krispy Kreme situation

we came to the conclusion that some changes in the marketing and product strategy could

be implemented. Due to the increase of competition it is crucial for Krispy Kreme to

follow the actual trends and be a step ahead of the competition in order to differentiate

from the competition and increase its competitive advantage. Even though Krispy Kreme

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is now facing a rough time it is still in a position to become once a gain a successful

business and gain back its market share.

Reference list:

Associated Press, (2006). It's Dunkin' Donuts vs. Krispy Kreme. Retrieved on March 2,
2009, from:http://www.sptimes.com/2006/11/14/Business/It_s_Dunkin__Donuts_v.shtml

Arner, F. (2003). Can Dunkin KO Krispy Kreme. Retrieved on March 2, 2009, from:
http://www.businessweek.com/bwdaily/dnflash/jul2003/nf2003073_6817_db014.htm

Consumer Report (2008). Sarbucks War, Coffe taste. Retrieved on March 2, 2009, from:
http://www.consumerreports.org/cro/food/beverages/coffee-tea/coffee-taste-test-3-
07/overview/0307_coffee_ov_1.htm

DiCarlo,L (2008). Dunkin Donuts vs Starbucks. Retrieved March 2, 2009, from:

http://www.forbes.com/2004/03/22/cx_ld_0322mondaymatchup.html

Douglas A. M (2008). Dunkin’ Donuts Kicks Starbucks While It Is Down. Retrieved on

March 2, 2009, from: http://247wallst.com/2008/09/08/dunkin-donuts-k/

Dunkin Donuts: About Us, Company Corporation Background, (2009). Retrieved March
2, 2009, from: https://www.dunkindonuts.com/aboutus/company/

Financial data (2009). Retrieved on February 14, from the Dunkin Donuts webpage:
www.dunkindonuts.com

Firm to assist Krispy Kreme with international marketing. (February 20, 2009). Retrieved
on the 29th February 2009, from Winston-Salem journal website:
http://www2.journalnow.com/content/2009/feb/20/firm-to-assist-krispy-kreme-
with-international-mar/

Franchises (2009). Retrieved on February 5, 2009, from the Krispy Kreme Doughnuts
website: www.krispykreme.com

Harris, C. (February 1, 2008). Top Pot Doughnuts goes nationwide. Retrieved from the
Seattle pi web page: http://seattlepi.nwsource.com/business/349616_toppot01.html

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Krieger, M. (July 18, 2008). Krispy Kreme turnaround gaining traction. Retrieved on
January 29, 2009, from the Seeking Alpha webpage:
http://seekingalpha.com/article/85653-krispy-kreme-tournouraund-gaining-traction.com

Krispy Kreme Doughnouts Inc. – KKD (April 17, 2008). Annual financial report.
Retrieved on January 29, 2009, from the New York Stock Exchange website:
www.nyse.com

Linn, A. (2008). Dunkin aims at Starbucks. Retrieved on March 2, 2009, from:

http://adblog.msnbc.msn.com/archive/2008/10/27/1587106.aspx

Ministry of Housing, Transport and Environment (2008). Energy in the Maldives.

Retrieved on March 2, 2009, from: http://secfilings.nasdaq.com/edgar_conv_html
%2f2008%2f04%2f17%2f000126774-08-000807.html#FIS_BUSINESS

O’Sullivan, K. (June 1, 2005). Kremed! Retrieved on February 2, 2009 from the CFO
website: www.cfo.com/printable/article.cfm/4007436

Starbucks INC (2009), Annual Report Company information. Retrieved on March 2,

2009, from: http://www.marketwatch.com/tools/quotes/profile.asp?
symb=SBUX&sid=9064&dist=TQP_Nav_profile

Tenn,F. (2006). Doughnut Wars, KK Vs DD. Retrieved on March 2, 2009, from:

http://www.cbsnews.com/stories/2006/10/20/business/main2112599.shtml

Wolf, D. (April 17, 2008). Krisp Kreme’s China foray is doomed. Retrieved on January
29, 2009 from the Seeking Alpha webpage:
http://seekingalpha.com/article/72660-krispy-kreme-china-foray-is-doomed.com

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Appendix

1. PESTEL

POLITICAL FACTORS- P

1. Great variety in Political policies due to the variety in countries where Krispy Kreme is

located

2. Governments like the Chinese limit foreign business interact within China

3. Countries were KK is located have miner lacks in political stability (Kuwait)

4. Taxation on unhealthy products, for example, in Germany

ECONOMICAL FACTORS- E

1. The Financial crisis limits buying power of costumers

2. The challenge of unbalanced currencies (Dollar vs. Euro) destroys cash flow

3. The increase in weed and corn prices due to the great demand of the Chinese and

Indian market

SOCIAL-CULTURAL FACTORS- S

1. Health oriented society (seen as a new trend, started to develop in 2001)

2. Cultural differences within the baking traditions

3. Adapting to different cultures

4. Lack of interest towards the brand, the brand is no longer seen as a lifestyle item

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TECHNOLOGICAL FACTORS- T

1. Development in the internet (more emphasise on internet)

2. Introduction of the hot doughnut technology

3. Introduction of the “MyKrispyKreme“, which links the franchise management and the

KK vendors

ENVIORNMENTAL FACTORS- E

1. Success of the business heavily depends on the infrastructure

2. Production in low tariff countries and export into other markets

3. Local construction of returning costumers

4. Market size (Population count) and size of demand

LEGAL FACTORS- L

1. Commercial litigation (franchise issues, employment disputes, Dept collections

/payments)

2. Transactions between KK and other businesses

3. Property issues concerning building of stores and factories in different countries

4. The legal aspects of merger between Krispy Kreme and different companies and

organizations

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2. SWOT

STRENGTHS-S

1. Krispy Kreme makes it possible for different organizations among the community to

benefit from the donuts, for free, resulting in great marketing.

2. Krispy Kreme is most popular in grocery and convenience stores which gives

customers easy access to the product.

3. KK is a qualitative and unique brand with a famous product.

4. KK able to produce 4,000 to 10,000 donuts daily in one factory.

5. Great interaction between costumers and KK due to life production which results in

quality (showmanship)

6. KK has a high returning costumer base.

7. KK offers a product that is second to none, with regards to taste, freshness and the

finest ingredients.

8. KK has great service and innovation which cannot be compared to other companies.

9. Powerful and successful marketing strategies

WEAKNESS-W

1. Competing against Starbucks coffee and Dunkin Donuts beverages

2. KK create high depth over the years

3. Manufactures all equipment internally in its Manufacturing and Distribution dept.

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4. Uncertainty of International markets

5. KK snacks are not healthy

6. Loosing brand image

7. KK is only focused on one product (donuts)

8. Advertisements are oriented only for certain locations but not for KK do not adapt to

the environment

OPPORTUNITIES-O

1. Growth in two-income will increase snack-food consumption

2. On-Premise sales royalties (3%). The higher the sales, the more money received

3. Closing of many stores which allows greater control

4. Re-brand the product (create a new image around KK

5. Increase research and development for new products which results in a better

competitive position (coffee, tea)

6. Rebuilt costumer loyalty within the native market (America/Great Britain)

7. In 2008 KK started to recover which can be used to reinvest into the company

THREATS- T

1. Increase in competition (results in fewer costumers)

2. Increasing trend in healthy diets

3. Loss of brand name

4. Shutting down many stores due to decrease in demand

5. Financial crisis limits buying power of costumers

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3. Comparison between competitors

Products KKD DDK STARBUCKS

Beverage 4 coffee Types Coffee types and Vast Variety of
flavors, Iced coffee, coffee, flavored
Milk drinks coffees, Iced coffees,
Teas, Soft drinks
Food Donuts Breakfast, Bagels, Sandwiches, Bagels,
Sandwiches, Muffins, Salads,
Hash Browns, Yoghurt, snack bars,
English Muffins Scones, Oatmeal’s,
Oven Toasts flat Fruits and berries,
breads, Salad and Power protein Plate,
soups
Bakery Hot Glazed Muffins, Cookies, Ice cream, Cakes,
donuts, Filled Brownies, Biscuits, bakeries, cookies,
Donuts and Croissants, Waffles pastries, Biscuits,
Mini donuts and Danish pastry
Purchases, Hats, toys, KK Coffee Equipment, Coffee Equipment,
Online Cards, T shirts, Gifts, T shirts, hats, Music, Movies and
Shopping, Fundraising beach towels and Books, Starbucks
Charity programs cups, DD Cards, Card,
Brands DD Fuel awards Ethos water

Alliances/Brands Ice Cream, Baskin Robbins, Partnership with

And Future New technology Dunkin Brands, Apple, Tazo tease
machines WiFi usage Wireless in stores

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