External Analysis Krispy Kreme

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3.2 PEST analysis
3.2.1 Political
Political factors affecting the specialist eateries industry are few and consist mainly of minimum wage and employment law changes. Krispy Kreme train their staff who usually have little experience or education; consequently, they pay employees minimum wage or similar and are therefore affected by minimum wage increases. Other political factors are government actions to reduce obesity; however it is very unlikely that government will legislate against high fat and unhealthy foods 2

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3.2.2 Economic
The continued economic downturn has meant tightened consumer spending, as Krispy Kreme is a non-essential food item this may pressure sales. Inflation is above the Bank of England target and there is upward pressure on long-term interest rates as shown by the UK treasury yield curve. An increase in interest rates will increase the cost of capital and mean more expensive borrowing at a time that they could need to expand to compete with rivals.

3.2.3 Social
UK consumers are becoming more aware about the ingredients in food, e.g. boycotting trans fats, battery farmed poultry and mass farmed tuna. In 2008 this motivated Krispy Kreme to remove trans fats from their products. Low carb diet trends (e.g. Atkinʼs) can also have an effect on purchasing.

Going out to eat and drink is a social habit that is unlikely to change in the near future, but consumers can change their habits from eating doughnuts to other sweet foods such as icecream or pastries. 3.2.4 Technological

Due to the nature of purchasing and preparing foods, few technological trends influence the industry. However technology can be used to improve efficiency, production, distribution, and monitor commodity prices in real-time. Some commentators argue that ecommerce will erode visits to physical stores, however the convenience food nature of speciality eateries require strong physical presence to capitalise impulse purchases. 3.2.5 Environmental...
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