Krispy Kreme doubles down … huh?

Excerpted from Chicago Tribune, “Krispy Kreme looking for hot sales in smaller stores, ice cream in latest turnaround plan”, by Lauren Shepard, September 21, 2008

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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 — with its new soft-serve ice cream — 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 — which includes launching the new ice cream as well as opening smaller stores and expanding overseas — 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.

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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.

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Another key part of the plan is the company’s new Kool Kreme soft serve, which will be featured with a toppings bar.

Whether the new offering will boost sales remains to be seen, but analysts have yet to be impressed — 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.

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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?” Bob Goldin, executive vice president at food industry research firm Technomic, 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.”

Edit by DAF

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Full article:,0,5045476.story

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