• 64°

Krispy Kreme hopes to heat up sales with ice cream

By LAUREN SHEPHERD
AP Business Writer

NEW YORK (AP) – Krispy Kreme’s signature glazed doughnuts may be best hot, but its sales have been anything but in recent years. Now the chain is hoping that going cold ó with its new soft-serve ice cream ó will be the catalyst it needs.

The company has been trying to revive its sales for nearly three years, amid a health craze that made its glazed doughnuts an indulgence that many just couldn’t stomach.

Now industry watchers say Krispy Kreme Doughnuts Inc.’s latest turnaround plan ó which includes launching the new ice cream as well as opening smaller stores and expanding overseas ó still may not be enough to help the chain climb out of its hole.

“They’re trying to reposition themselves as more of a treat concept” that offers consumers desserts and indulgences, said Bob Goldin, executive vice president at food industry research firm Technomic. But “it’ll be hard to argue it’s a growth business” given trends toward eating healthier, he said.

The Winston-Salem, North Carolina-based company replaced its chief executive with its chairman, James H. Morgan, in January to try to revitalize the management team. That followed years of losses as the company attempted to recover from allegations of mismanagement, bankruptcy filings of its franchisees and the resurgence of competitor Dunkin’ Donuts.

Krispy Kreme’s stock price has reflected the turmoil, falling to an all-time low of $2.23 earlier this year. The stock had been trading nearer to $50 at the beginning of the decade.

In the first half of the fiscal year that began in February, Krispy Kreme posted a profit of $2.1 million after reporting a $34.4 million loss a year earlier. But that gain was mainly due to a lack of one-time charges that had weighed down the prior year’s results.

Sales actually declined 8 percent for that period and same-store sales, or sales at stores open at least a year, dropped 6.5 percent in the six months ended Aug. 3.

During the company’s second-quarter earnings conference call, Morgan laid out his plans to regain the confidence of investors and analysts, who have largely dropped coverage of the company.

Morgan said Krispy Kreme will begin opening smaller locations that are less expensive to build than its older “factory store” model that allowed consumers to watch the doughnuts being made. The company plans to open the first of those stores in North Carolina and Tennessee during this fiscal year.

Spokesman Brian Little said the company is expecting the stores to perform well, particularly since it has used the model in its international locations and sales have been “very positive” there.

Internationally, the company has been expanding aggressively, adding 58 stores since February. More than half of its stores are now located outside the U.S.

Another key part of the plan is the company’s new Kool Kreme soft serve, which will be featured with a toppings bar. The product is being tested in several stores around the country.

Whether the new offering will boost sales remains to be seen, but analysts have yet to be impressed ó especially as Krispy Kreme’s competitors are trying to attract health-conscious customers with egg-white sandwiches and whole-grain pastries.

“There’s no question that Americans are changing their attitude about health as a way to add good things to your diet,” said Harry Balzer, vice president of consumer research firm NPD Group.

Balzer said that although diners “will always have a desire for indulgent food,” if restaurant chains want to stay competitive they must be responsive to the healthy eating trend.

Little said the “nutritional concerns of our consumers are always a consideration” but that the company sees its products as “an affordable indulgence” and one of “many sweet treats available to consumers worldwide.”

Goldin said regardless of whether it speaks to consumers’ desires, ice cream may not be different enough from other products already on the market. McDonald’s Corp., for example, sells a soft serve treat for less than a dollar in some areas.

“I’m not saying it won’t work, but how are you going to compete against that?” Goldin said. “I just don’t think that’s a product that’s going to carry that well.”

Still, he said, “they’ve got to do something.”

Comments

Comments closed.

Crime

Sheriff’s office: Man takes deputies on chase with stolen moped

Coronavirus

Afternoon, evening COVID-19 vaccination clinic planned Thursday

Crime

Concord man charged with woman’s murder in drive-by shooting

Ask Us

Ask Us: Have city, county elected officials received COVID-19 vaccine?

Local

City gives away nearly 100 trees during ‘We Dig Salisbury’ event

Local

Political Notebook: Bitzer expects most ‘Trump-like’ candidate to be favorite in state’s Senate race

Crime

Blotter: Concord man arrested in Rowan for indecent liberties with children

Coronavirus

Half of US adults have received at least one COVID-19 shot

Nation/World

Police: FedEx shooter legally bought guns used in shooting

News

Hester Ford, oldest living American, dies at 115 … or 116?

Local

Size of pipeline spill again underestimated in North Carolina

BREAKING NEWS

Kannapolis Police searching for suspect who fled scene of homicide

Education

RSS superintendent talks district’s future, strategic plan survey

News

Complaints and fines pile up against unpermitted landfill in southwest Rowan County

College

Catawba baseball: Crowd comes out to say goodbye to Newman Park

Lifestyle

History is a great teacher: Farming has helped shape Rowan County

Business

‘A safe place for them’: Timeless Wigs and Marvelous Things celebrates fifth anniversary

China Grove

County will hear request for more tree houses, hobbit-style homes in China Grove

Coronavirus

Livingstone College partners with Health Department to administer 500 Pfizer vaccinations

Education

‘Elite and it shows’: Staff at Partners in Learning at Novant celebrate news of national accreditation

Business

Biz Roundup: Food Lion earns Energy Star award for 20th consecutive year

Columns

Ester Marsh: What body type are you?

Nation/World

The queen says goodbye to Philip, continues her reign alone

Nation/World

Worldwide COVID-19 death toll tops a staggering 3 million