Krispy Kreme Case Study
Length: 1162 words (3.3 double-spaced pages)
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To become a Krispy Kreme franchisee, an entrepreneur must have the dream of one day owning their own business, have a willingness to take risks, be able to recognize opportunities when they occur and be a naturally optimistic thinker who can use their time, capital, and talent to achieve success. To be considered for a Krispy Kreme franchise, entrepreneurs must have demonstrated a time standing history of success as a businessperson, to be willing to work as part of and to foster a team environment, as well as have a large financial base in which to invest in the Krispy Kreme franchise. Although these characteristics are a solid base to be considered for any franchise, there is always risk of failure. In the words of General Colin Powell, former US Secretary of State, "A dream doesn't become reality through magic; it takes sweat, determination, and hard work". (Boone & Kurtz p.12) Krispy Kreme uses these characteristics to choose the right persons to run their businesses, and in doing so, they promote a high quality team oriented atmosphere that adheres to the highest customer service.
Using technology and innovation, Krispy Kreme could expand into an e-commerce retail establishment. Although Krispy Kreme has an internet merchandise e-business, they have yet to introduce the ability to deliver their fresh doughnuts to the masses through the use of the internet. This company could accomplish this by creating a reusable shipping container that has the ability to self-warm its contents. This combined with a Global Position System (GPS) tracking could activate the warming process near the final destination. Customers could order Krispy Kreme doughnuts on-line and have them delivered hot and fresh anywhere in the world within 24 hours using current e-mail and shipping practices. This process would entitle Krispy Kreme to reach customers in extreme rural areas in the US and in the world who would have to drive 50 miles or more to get to a Krispy Kreme store. Customers in these extreme rural areas are not in a market for a potential franchise.
Krispy Kreme has a competitive advantage over other bakeries because the self-rising yeast doughnut has an excellent reputation representing freshness at its finest and because of the innovative doughnut making process. This process appeals to its customers through anticipation and the sensory response. The first indication is the large red "hot Krispy Kreme now" neon sign that's displayed while the doughnuts are being made.
When the customer enters the Krispy Kreme doughnut shop, the aroma of the fresh doughnut hits their nose, and the anticipation from watching the fresh doughnuts roll off the line four feet away overtakes them. When the customer gets to the cashier, their mouth is watering and they always order too many. This highly refined presentation through the senses has made Krispy Kreme a cult favorite. (New York Times January 18, 2005) It's been said that "It's not how you prepare your food but how you prepare your guest." (Source Unknown) And Krispy Kreme has prepared both with its doughnut making process.
With the implementation of MyKrispyKreme extranet, the company has attempted to create a decision support system within the company as a whole. However, the use of this system is voluntary and does not lend itself to just decision support. The system takes on several roles while providing a connection among franchisees, vendors, and managers at corporate headquarters. Its benefits include continued management training; e-mail capability within the company as well as the ability to create daily sales reports from the point of sale system. This information is accessible throughout the company with the right access code. Company managers have the ability to use this daily information to make informed decisions about the direction and growth of the company. The effective use of this extranet will give franchising and company managers the competence to run their business while providing them the freedom to make good business decisions. Using the extranet will allow them to grow their business to new heights.
Some of Krispy Kreme's tangible assets include the stores, innovative doughnut making equipment, the products which are the doughnuts and beverages, and the employees and managers. The most valuable and important tangible assets are the employees and managers. This workforce creates the driving force and the life blood of the company. They are the front line to customer service and are chosen because of their motivation and willingness to be part of a team. Choosing motivated, goal oriented employees and managers will insure Krispy Kreme's success in the future.
Some of the more important intangible assets incorporated by Krispy Kreme are the company's reputation of serving high quality doughnuts and beverages; their current marketing practices through word of mouth advertising; the company's goal to become the local hometown doughnut shop (Boone & Kurtz p.151); and their strict franchise selection process. Of these intangible assets, the Krispy Kreme reputation of delivering high quality doughnuts and beverages is the most important asset because their reputation begins the process to make Krispy Kreme stand out from other doughnut shops. Without the highest of reputations in the commercial bakery business and without Krispy Kreme's high quality process, Krispy Kreme would become just another doughnut shop.
Even with the dwindling stock prices and the current hardships that the company faces, I believe that the company is still growing in consumer awareness and has taken the first steps to restructuring for the long term. Krispy Kreme has defiantly blackened the eyes of some top annalists but most agree that this downward trend is temporary. Some are predicting that Krispy Kreme, while restructuring, may even file for bankruptcy protection and may need to close a few stores. (The Capital Times February 10, 2005) The short term Krispy Kreme financial picture may look bleak, but in the long term, Krispy Kreme is a company that has overcome adversity in the past and will do so again in the future. I believe that in the near future Krispy Kreme, an American icon, will continue to slowly expand its business internationally and domestically. This growth combined with the current management restructuring will allow Krispy Kreme to produce its "evil lard-pods of joy" (The Capital Times February 10, 2005) for future generations
Boone, Louis E and David L. Kurtz. Contemporary Business, Ed., 11,
Mason: South-Western, 2005
Breed, Allen G. "Sweet Dreams." The Capital Times. 10 Feb 2005.Web Ed. Business Sec.
Norris, Floyd. "Krispy Kreme Picks Turnaround Specialist."
The New York Times 18 Jan. 2005: Business Sec.
January 30, 2005. www.KrispyKreme.com/history.html.