Krispy Kreme Doughnuts, Inc.—2004 Cynthia Duff

Topics: Krispy Kreme, Dunkin' Donuts, Generally Accepted Accounting Principles Pages: 18 (5088 words) Published: October 21, 2010
Francis Marion University Ticker Symbol: KKD

The neon sign "Hot Doughnuts Now," when illuminated, lures hungry customers into the local Krispy Kreme stores. The sign signals that Krispy Kreme's signature product, Hot Original Glazed doughnuts, are right now rolling under the glazing process and are ready to be devoured by anxiously waiting customers. There's nothing better than a hot, fresh, fluffy glazed doughnut that melts in your mouth to satisfy your sweet tooth. Krispy Kreme Doughnuts went public on April 5, 2000, allowing its customers to have their doughnuts and eat them too. It opened a test doughnut-making store in a Wal-Mart Super center in October 2003.

Vernon Rudolph opened a doughnut company, Krispy Kreme, on July 13, 1937, in Winston-Salem, North Carolina. The company started out by selling doughnuts to local grocery stores. People walking in front of the bakery soon began stopping by to ask if they could purchase the doughnuts hot. Rudolph decided to cut a hole in the wall of the bakery so that his Hot Original Glazed doughnuts could be sold directly to the customer, marking the introduction of Krispy Kreme's retail service. During the 1950’s the doughnut-making process was mechanized with the new Krispy Kreme automat. doughnut cutter. Hand-cut doughnuts became a thing of the past. All processes in the bakery became entirely automatic. This was the initial version of Krispy Kreme's continuous yeast doughnut-making equipment.

The year 1962 saw new innovation for Krispy Kreme. Doughnuts were no longer cut; they were extruded by air pressure from a dough hopper directly to trays. On May 28, 1976, Krispy Kreme Doughnut Corporation became a wholly owned subsidiary of Beatrice Foods Company of Chicago, Illinois. The headquarters for Krispy Kreme remained in Winston-Salem, North Carolina. Krispy Kreme was then purchased back from Beatrice Foods Company on February 28, 1982, by; group of Krispy Kreme franchisees, led by Joseph A. Mc Aleer Sr. Krispy Kreme made history when a contribution of Krispy Kreme artifacts was donated to the Smithsonian Institution's National Museum of American History in Washington D.C. on July 17, 1997.

Krispy Kreme sought to enhance and broaden its beverage offerings to customers and therefore acquired Digital Java, Inc., in 2001. Digital Java was a small of fee roaster and brewing-equipment fabricator located in Chicago. Also in 2001, Krispy Kreme's common stock transferred to the New York Stock Exchange under the new ticker symbol KKD. On December 11, 2001, Krispy Kreme opened its first store out side the United States, in Canada. Then on June 19, 2003, it opened its first store outside of North America, in Australia.

Krispy Kreme produces approximately 7.5 million doughnuts a day, serving customers in 302 stores operating in 41 states in the United States, and also in Cam: and Australia. Exhibit 1 is a map of the locations of Krispy Kreme stores by including the stores currently in Canada and Australia. Exhibit 2 provides locations listed by major metropolitan areas. Krispy Kreme doughnuts and snacks are also sold at thousands of supermarkets, convenience stores, and other retail outlets throughout the United States.

KKD acquired Montana Mills Bread Co., in early 2003. Under the terms of the merger agreement, the shares of Montana Mills common stock will be converted to Krispy Kreme stock. Krispy Kreme has plans to develop a bakery-cafe strategy with Montana Mills' product and brand as a basis for this new concept. Montana Mill' offers more than eighty types of bread, muffins, rolls, scones, cookies, brownies, ant cakes, which are sold through its twenty-two retail stores located primarily in suburban areas in New York, Ohio, Pennsylvania, and Connecticut. The stores cater to upscale customers, offering baked goods, ready-made sandwiches, specialty coffee, and gift...
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