Given the slightly addictive nature of a hot glazed donut right off the Krispy Kreme (KKD) conveyor belt, it’s remarkable that so many people still buy them cold, in a box, at the supermarket. Between one-half and one-quarter of the company’s revenue comes from sales to supermarkets and convenience stores. It’s looking to change that, starting with 157 more U.S. stores by 2017, up from 243 right now.
To do so, it is changing its strategy. As of now, its existing stores sell donuts retail and wholesale. Some of its new stores, which will be smaller and cheaper to build and operate, will sell only retail.
Originally, Krispy Kreme was primarily a wholesaler, which required big spaces that ranged from 4,000 to 6,000 square feet and included a retail area, a manufacturing area, and a loading dock. The chain started developing its retail business in the mid-1990s, but even the smaller factories were about 2,800 square feet. Sales fell through the late 2000s. The new design, which is exclusively for retail, measures about 2,300 square feet, and the stores will be able to produce from 65 to 110 dozen doughnuts per hour, compared with 150 to 600 dozen at traditional factories.
To read the rest of the story, please go to: Bloomberg Businessweek
