• Strategy
  • CFO Magazine

Kremed!

The rise and fall of Krispy Kreme is a cautionary tale of ambition, greed, and inexperience.

UNC’s Clark suggests the company may need to go private or sell itself to another large chain, like McDonald’s. “But I’m not sure that buyers are exactly lining up at the door,” he adds. KeyBanc’s Waite calls an acquisition doubtful, in part because he says the company is “not terribly cheap,” given the amount of work needed to get it back on track. Indeed, Waite hasn’t ruled out the possibility of bankruptcy. “The biggest thing they have to do is bring on an operator,” he says. “They need an industry insider who can stem the drop in sales at the unit level — somebody who knows how to drive organic sales growth.”

Ultimately, Krispy Kreme needs to get back to what fueled its phenomenal growth in the first place: really good doughnuts. “They need to emphasize the hot-doughnut experience,” says Waite, “rather than the cold, old doughnut in a gas station.”

Kate O’Sullivan is a staff writer at CFO.

Half-Baked

Krispy Kreme first reported solid growth, but has since announced that its results for 2001-2005 are not reliable.

2002 2003 2004
Total revenue* $394.4 $491.6 $665.6
Net Income* $26.4 $33.5 $57.1
Total long-term debt* $3.9 $62.4 $146.2
Number of stores 218 276 357
Note: Figures for fiscal years ended in February
*in $ millions
Source: www.krispykreme.com

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