Krispy Kreme

Early years

In 1933, eighteen-year-old Vernon Rudolph, along with his brother Lewis Rudolph, began working for his uncle, Ishmael Armstrong, who owned a small general store in Paducah, Kentucky, that sold a wide variety of goods, including its very popular doughnuts. While the exact origin of the doughnut recipe remains partially a mystery, it is believed that Ishmael Armstrong was inspired by an Ohio River barge cook named Joseph LeBeouf who was famous for his light and fluffy doughnuts, which contained potatoes.

The store struggled during the Great Depression. In 1934, Vernon and Ishmael decided to move to the larger city of Nashville, Tennessee, where they hoped business would be better. The uncle and nephew focused solely on selling their doughnuts and opened "The Krispy Kreme Doughnut Company" in a rented store on Gallatin Road. The shop did so well that Vernon's father, Plumie, also left Kentucky and moved to Nashville to help sell doughnuts. In 1937, Rudolph opened his own store, deciding on Winston-Salem, North Carolina, for the location when he learned that his favorite cigarette company, Camel Cigarettes, was headquartered in the small North Carolina city. Rudolph primarily sold to convenience stores; however, he also sold hot doughnuts to individual customers who came during production time between midnight and 4 a.m. The first store in North Carolina was located in a rented building at 534 South Main Street in Winston-Salem in what is now called historic Old Salem. The Krispy Kreme logo was designed by Benny Dinkins, a local architect. The first Krispy Kreme bakery outside the South opened in Akron, Ohio, in 1939.

Growth

Expansion occurred in the 1950s, including an early store in Savannah, Georgia. By the 1960s, Krispy Kreme was known throughout the Southeast, and it began to expand into other areas. In 1976, Krispy Kreme Doughnut Corporation became a wholly owned subsidiary of Beatrice Foods of Chicago, Illinois. The headquarters for Krispy Kreme remained in Winston-Salem. A group of franchisees purchased the corporation back from Beatrice Foods in 1982.

Krispy Kreme began another phase of rapid expansion in the 1990s, opening stores outside the southeastern United States where most of their stores were located. In December 2001, Krispy Kreme opened its first store outside the US in Mississauga, Ontario, Canada. The minimum investment amount to open a Krispy Kreme franchise ranges from approximately $450,000 to above $4M.

IPO and accounting scandals

On April 5, 2000, the corporation went public on the NASDAQ at $21 using the ticker symbol KREM. On May 17, 2001, Krispy Kreme switched to the New York Stock Exchange, with the ticker symbol KKD, which it carried until its private acquisition. The stock reached what would be its all-time high of $50 on the New York Stock Exchange in August 2003, a gain of 135% from its IPO price. For the fiscal year ending in February 2004, the company reported sales of $665.6 million and operating profits of $94.7 million from almost 400 stores (including international locations). The market initially considered the company as having "solid fundamentals, adding stores at a rapid clip and showing steadily increasing sales and earnings."

In May 2004, the company missed quarterly estimates for the first time and suffered its first loss as a public company. Chairman and CEO Scott Livengood attributed the poor results to the low-carbohydrate diet craze. This explanation was viewed with skepticism by analysts, as "blaming the Atkins diet for disappointing earnings carried a whiff of desperation", and as rival doughnut chain, Dunkin' Donuts, has not suffered from the low-carb trend over the same compared period.

By 2005, the company's stock had lost 75–80% of its value, amid earnings declines, as well as an SEC investigation over the company's alleged improper accounting practices. A turnaround plan in December 2005 aimed to close unprofitable stores in order to avoid bankruptcy.

Analysts suggested Livengood expanded too rapidly post-IPO, over-concentrating certain markets. While this approach initially grew revenues and profits at the parent-company level, due to royalty payments from new franchisees, this reduced the profitability of individual franchisees in the long run as they were forced to compete with one another. For the 2003–04 fiscal year, while the parent enjoyed a 15% increase in second-quarter revenues, same-store sales increased only a tenth of a percent. Krispy Kreme also had supermarkets and gas stations carry their doughnuts, which soon contributed up to half of the chain's sales, creating further market saturation as well as increasing competition to its franchisees. All this expansion devalued Krispy Kreme brand's novelty by making the once-specialty doughnuts ubiquitous, particularly as the newer sales outlets required pre-made doughnuts as opposed to the ones made fresh in factory stores, which alienated brand devotees.

International operations

The first Krispy Kreme store to open outside North America was in Penrith, part of metropolitan Sydney in Australia. The second Krispy Kreme store that was opened internationally was in the United Kingdom and was in Harrods department store London. It closed in June 2011. As of 2018, there are over 100 stand alone Krispy Kreme stores in the UK, and a presence in 500 Tesco stores. Besides the stores that Krispy Kreme operate in the United States and Canada, there are also locations in Egypt, France, the United Kingdom, Australia, New Zealand, South Africa, Spain, Lebanon, Turkey, India, the Dominican Republic, Iceland, Ireland, Kuwait, Guatemala, Mexico, Costa Rica, Panama, Russia, Taiwan, South Korea, Malaysia, Thailand, Brazil, Indonesia, the Philippines, Japan, Singapore, Cambodia, Jordan, the United Arab Emirates, Qatar, Saudi Arabia, Bahrain, Hong Kong, Nigeria, Ethiopia, Jamaica and Chile.

In August 2011, Krispy Kreme's Japanese operation planned to increase the number of stores from 21 to 94, and its Mexican operation announced the number of stores would increase from 58 to 128 in five years. In the United Kingdom, Krispy Kreme continues its expansion and had plans and funding in place to open further stores in 2012. In South Korea, their first store opened on December 16, 2004, and celebrated their 100th store opening exactly ten years later, on December 16, 2014. As of September 2016, they held the most stores in the Asia-Pacific region with 129 stores. Krispy Kreme opened its first store in India on January 19, 2013, in Bangalore, Karnataka. The stores are operated by Citymax Hotels India under a franchise arrangement. On July 23, 2014, Krispy Kreme launched its first shop in Chennai, India, at Express Avenue mall. On September 25, 2013, Krispy Kreme announced the opening of 25 stores, all within 5 years, in Colombia. This marks the first South American country for the company. In October 2014, Krispy Kreme opened another store at Colombia in Bogotá and Chía, Cundinamarca. On December 12, 2013, Krispy Kreme opened its first store in Taipei, Taiwan.

On May 18, 2015, Krispy Kreme announced it had signed a development agreement with KK Doughnuts SA (Pty) Ltd., to open 31 Krispy Kreme shops in South Africa over the following five years. This marked the company's first venture into Africa. On September 10, 2015, Krispy Kreme signed a development agreement with Agape Coral, SAC to open 24 shops over the next five years in Peru. On November 25, 2015, Krispy Kreme opened its first store in Rosebank, Johannesburg, South Africa. On December 2, 2015, Krispy Kreme opened its largest store in the United Kingdom in Glasgow, Scotland.

On May 5, 2016, Krispy Kreme opened their first store in Bangladesh at Banani in Dhaka and quietly left the country around 2020. On July 27, 2016, Krispy Kreme was acquired by JAB Beech. Under the terms of the transaction, company shareholders received $21 per share in cash for each share they own. As a result of the completion of the acquisition, Krispy Kreme's common stock ceased trading on the New York Stock Exchange. On November 5, 2016, Krispy Kreme opened its first store in Kópavogur, Iceland.

Controversies

Krispy Kreme Klub Wednesday

In February 2015, a Krispy Kreme branch in Kingston upon Hull, England, announced during the half-term break of schools that it was launching, among other events that week, "Krispy Kreme Klub Wednesday", during which children could decorate doughnuts. However, it attracted controversy after it was promoted as "KKK Wednesday" on Facebook, due to it sharing an abbreviation with the Ku Klux Klan, an American white supremacist group. Krispy Kreme promptly apologized, canceled the event, pulled all marketing relating to it, and launched an internal investigation.

Cage-free eggs

In 2016, Krispy Kreme committed to sourcing 100% cage-free eggs in the US by 2021, and globally by 2026. In 2024, the company stated it had achieved the goal of 100% cage-free egg use in U.S. operations, but commented that the supply constraints from avian flu drove them to review the commitment and timing of the global goal, stating intentions to set a new target once the supply chain stabilized.