Krispy Kreme Doughnuts owns and franchises stores that produce and sell over 20 different types of specialty doughnuts. Since the company’s founding in 1937, Krispy Kreme has grown into a leading specialty retailer producing over 1.8 billion doughnuts a year. With the acquisition of Digital Java in 2002, Krispy Kreme expanded its product line to include gourmet coffee. Retail stores now brew and sell their own line of coffee, which puts them in direct competition with many food and beverage establishments. In the recent years, Krispy Kreme has been expanding rapidly in both the United States and abroad. Their most important source of marketing has been their loyal customer base and word of mouth. Their market is everyone, everywhere. Krispy Kreme has become a universal product and a global brand. This has all been accomplished without the expensive costs of brand building and product awareness. They have significant growth opportunities domestically and internationally.
Krispy Kreme has had a strong presence in the southeastern United States for over forty years. Fifteen years ago, a business model was put into place and the company began expanding throughout the nation. Eight years ago, they entered into 27 new U.S markets. In December 2001, they opened their first international store in Ontario, Canada. Since that time, the business operations have expanded into three additional international markets: Australia, the United Kingdom and Mexico. In recent years, their target market has been cities with a population of 100,000+. As they continue to grow in the future, they will begin to expand their operations into smaller communities.
The food and beverage industry as a whole is growing rapidly. Increasingly, Americans are on the go and eating meals away from home. Doughnuts are fast and affordable treats, and Americans are not just eating doughnuts for breakfast. Half of Krispy Kreme sales occur in the late afternoon and early evening. People are eating doughnuts for dessert and for a quick snack. Krispy Kreme even receives orders for wedding cakes made of doughnuts. Every time a new Krispy Kreme opens in a community, it increases the overall awareness of doughnuts. Our competitors even see increased doughnut sales when a Krispy Kreme opens a new location. As we expand internationally, we hope to spread America’s love of doughnuts around the world.
Demographically, Krispy Kreme has no limits. People of all ages, ethnicity and income enjoy our products. Our international stores have been enthusiastically accepted in all cultures. We do not define our markets by geography - we define our markets by their stages of development.
Market Geographies: Our strongest market is the southeastern United States and is our Established target market. We have been doing business in this part of the country for over 65 years. We have a very loyal customer base which crosses all demographic lines. Since our nation-wide expansion began in 1996, we have primarily focused on large cities and urban areas. As we continue to grow, we will expand our operations into communities with smaller populations that are currently serviced by off-premise retail sellers such as grocery stores and convenience stores. Both of these expansion strategies make up part of our Emerging and New target markets.
Market Demographics: Within our current markets, our demographic with the highest 12-month patronage (26%) has been mid-boomers ages 42-55 (Sheridan ).
According to the National Restaurant Organization, Americans spend approximately $354 billion annually at food and beverage establishments (Fox ). Of this amount, approximately $3 billion is spent on doughnuts alone. Over $6 billion is spent annually on gourmet coffee, and with our expanded coffee and beverage line, we have broadened our market. This will be very important in sustaining our long-term competitive edge.
Americans are increasingly looking...