Gene One Benchmarking: Krispy Kreme and Kraft Foods
What cause the demised of Krispy Kreme Doughnut Inc. in its transition from a private to a public company? Krispy Kreme, is well known for their sweet tasting donuts went public in April 2000. Sandra Abrams wrote in a 2005 Investment Dealers' Digest article that, the once private company, based out of Winston-Salem, N.C., raised $72.5 million and closed its first day of trading at $37 a share. Stakeholder and Wall Street had high expectations of the company progress. However, five years later in an endlessly decline, Krispy Kreme stock was trading at $7.45 a share (Investment Dealers' Digest, 2005).
Before Krispy Kreme when public the sweet tasting donuts could only be bought from one of the few local Krispy Kreme shops. After the company went public, it seem like you could buy the sweet tasting donuts at any grocery or convenient store. The once difficult to get to donut was now easily found just about anywhere. Consumers no longer had travel across town to get them hot sweet glazed donuts or do the quick u-turn traffic when they see the Krispy Kreme "Hot Donut" light on. In a 2005 interview with Roger Lipton, president of New York-based Lipton Financial Services (Chain Leader, 2005), explain his reason to Krispy Kreme demised, "Its biggest single flaw was building big stores--3,000 square feet--that required wholesale distribution to be economically viable (2005)." Krispy Kreme built large donut coffee shops and distributed their products to numerous suppliers without evaluating or testing the concept. In other words the small chain franchise went too far too fast without proving that concept of wide distribution and access would work.
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