For Krispy Kreme Doughnuts, Inc., 2013 was a year full of news with an international flavor, from the company’s announcement in January that it would be entering India to its September statement it would set foot in South America.
But in a Jan. 13 presentation at the Integrated Corporate Relations XChange, James Morgan, chairman, president and chief executive officer of Krispy Kreme, said the Winston-Salem, N.C.-based company now has the building blocks in place to start growing its domestic business “at a more rapid pace.”
“Our domestic growth has not been nearly as dramatic as has been our international growth, but that is now starting to change,” Mr. Morgan said. “We have spent the last five years rethinking our domestic business model, building our marketing capabilities, coming to better understand our consumers, and improving our day-to-day execution skills. The building blocks are now in place to start growing our domestic business at a more rapid pace.”
He said Krispy Kreme “took a big step forward” when it refranchised three shops in Dallas and signed a 15-store development agreement with a major multi-concept operator in that market. Krispy Kreme also signed a 10-store development agreement for Houston and a 4-store agreement for Anchorage.
“We anticipate signing additional domestic development agreements in the coming quarters and years,” he said.
For company shops, Krispy Kreme has set its sights on the Southeast, with focus on small, freestanding factory stores that will not participate in wholesale distribution to grocers, mass merchants, or convenience stores.
“These small footprint stores are very important to our future growth, and we are pleased with the results we are seeing thus far from the seven new shops we have built,” he said.
Mr. Morgan said the oldest of the seven freestanding factory stores has been open less than a year, but results give Krispy Kreme “great confidence” in the model.
“Substantially all of our company shop growth next year will be in the new format, and we expect you will also see domestic franchisees opening these new small format shops next year as well,” he said.
Outside of the Southeast, Krispy Kreme plans to grow through franchising as the company opens up the vast portion of the United States that is yet to be franchised, Mr. Morgan said.
“We have put new and proven resources in place to lead our domestic franchise recruiting efforts,” he said. “Moreover, we are seeing increased development activity with our existing franchisees and now forecast they will open between 20 and 25 new shops in our next fiscal year.”
Krispy Kreme has more than 810 locations in 24 countries around the world, including 94 company stores in the United States.