Question 1: Analysts are predicting that Krispy Kreme will be able to perform highly effectively and continue to grow rapidly in the coming two years. Do you agree with their analysis? If so, why? If not, why not? Answer:
In my opinion, Krispy Kreme will continue to grow rapidly in the coming two years. There are 4 reasons will be showed below:
1. From the business prospective of KKD, the company’s reputation for making tasty, high-quality doughnuts grew steadily throughout the southeastern United States in the 1960s and 1970s, thus, KKD Brand based on high quality product. In addition, there are several ways for KKD to generate revenues; some other revenues can offset one loss. 2. From the case study, there are strong opportunities to extend network of stores geographically and area developer model likely to be working. 3. It can be indicated that, from the competition prospective of KKD, the doughnut industry was highly fragmented. Even though there were hundreds of regional bakeries that sold doughnuts through supermarkets, retail stores or restaurants, most of them are less brand recognition. What is more, there are large demands of donuts as donuts is one of the most popular snacks for many years. 4. From the growth prospective of KKD. New opened stores work well. “In February 2002, company owned stores generated average weekly sales per store of $72000 versus $53000 for franchise stores” (Chapter 6 Case Study).
Question 2: What factors did the CIBC analysts examine to forecast sales growth for KKD in the years ended January 2003 and 2004? What assumptions did they implicitly make about number of new stores and weekly sales per store (for both company and franchise stores)? What are their implicit assumptions about revenue growth from franchise operations and KKM&D? Do you agree with these forecasts? Answer:
From this case, it can be indicate that: KKD plans to add 62 new stores in 2003, most of them are franchise stores. Secondly,...
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