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Krispy Kreme # 1 Essay

2835 words - 11 pages

Introduction to Business and Technology SUMA04 - sect MKrispy Kreme CasePart 1August 1, 2004COMPANY OVERVIEW AND INDUSTRY OUTLOOKThe principal business of Krispy Kreme Doughnuts, which began in 1937, owned and franchising Krispy Kreme doughnut stores make and sell over 20 varieties of premium quality doughnuts, including the Hot Original Glazed. Each of the traditional stores is a doughnut factory with the capacity to produce from 4,000 dozen to over 10,000 dozen doughnuts daily. Consequently, each factory store (stores which contain a full doughnut-making production line) has significant fixed or semi-fixed costs, and margins and profitability are significantly impacted by doughnut production volume and sales. Their doughnut stores are versatile in that most can support multiple sales channels to more fully utilize production capacity.SALES AND OBJECTIVESResponses from customers indicate that Krispy Kreme's doughnuts are enjoyable and an excellent reputation has developed. Inquiries form prospective customers suggest that there is considerable demand for their product. Krispy Kreme's marketing strategy is to aggressively enhance, promote and support the fact that their products are high quality and offer consumers a one-of-a-kind taste in this industry. Strategic insights are1. Opening the door to International Sales in December 28, 2000 has proven a success for Krispy Kreme. Krispy Kreme currently has stores in Europe, Australia, Asia and New Mexico.2. Krispy Kreme has expanded its market to include states other than the previously mandated southeastern states to include all but about eight of the 50 United States, including Hawaii.3. Drive-through windows, along with discounted sales to community organizations that in turn sell our products for fundraising purposes.4. Off-premises sales. Daily sales of fresh doughnuts on a branded, unbranded and private label basis to convenience and grocery stores and5. Select co-branding customers. Doughnuts are sold to these customers on trays for display and sale in glass-enclosed cases and in packages for display and sale on both stand-alone display units and on our customer's shelves.("Branded" refers to products sold bearing the Krispy Kreme brand name and is the primary source of off-premises sales. "Unbranded" products are sold unpackaged from the retailer's display case. "Private label" products carry the retailer's brand name or some other non-Krispy Kreme brand. Unbranded and private label products are a minor portion of our business.)Krispy Kreme Doughnuts, Inc. announced on May 10, 2004, based on recent category dynamics, it expects fiscal 2005 diluted earnings per share from continuing operations, excluding certain charges, to be 10% lower than previously announced at 30% more than their 2004 profits of $665,592,000.COMPANY RISK AND SETBACKSThe start up risk factors for Krispy Kreme franchises is the certain level of investment needed to open the new facilities. Also the fact that the demand for...

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