For the past few quarters now, Krispy Kreme has been talking about its pivot to an omnichannel strategy: shifting its focus from doughnut shops to hubs, spokes, and doors, where customers can access their favorite doughnuts in places like grocery store aisles and McDonald’s drive-thrus. The strategy appears to be paying off, as the Charlotte, N.C.-based company reported 9.2% revenue growth and 15% sales per hub growth in North America for the fourth quarter ended Jan. 1.
“We are pleased with the strong end to 2022, with notable progress on expanding our omni-channel model, furthering our global growth strategy and executing successfully on the initial phase of our hub optimization efforts,” CEO Mike Tattersfield said in a statement. “Our e-commerce business also achieved impressive growth of 23%, marking the best quarter in this channel since the pandemic, led by growth in Insomnia Cookies and Krispy Kreme in the U.S.”
We first wrote about Krispy Kreme’s pivotal transformation in Nov. 2022, and then at the company’s investor day conference in December, Krispy Kreme COO and interim CFO Josh Charlesworth said that boosting e-commerce and increasing points of access have been the two key aspects of their strategy. However, expanding access to the Krispy Kreme brand while also being sure that the product remains fresh at all points of access has proven to be a challenge—one that might be solved by automation.
At the time, Charlesworth said that part of their omnichannel approach involved closing poorly performing stores or converting them to non-public-facing hubs that can churn out doughnuts for nearby spokes and doors. This change is reflected in Krispy Kreme’s earnings results, where the company saw a net loss of $2.7 million per share, largely attributable to expenses incurred from closing unprofitable shops.
Although Krispy Kreme is in a fairly niche dessert category and their omnichannel approach to fresh doughnut access may not be directly applicable to other segments of the restaurant industry, Krispy Kreme does have the right idea of expanding their reach without necessarily opening new stores. Restaurants are learning to expand their boundaries and areas like e-commerce, grocery and convenience store partnerships and hubs of ghost kitchens are the future of foodservice. Ease of access and omnichannel flexibility is Krispy Kreme’s long-term goal and despite any bumps in the road from closing stores, in the long run it makes sense for a brand entering a new phase of growth.
“Looking to 2023, we are well-positioned to deliver another year of terrific growth with a great start led by premium offerings for celebrations,” Tattersfield said in a statement, reiterating their goal of expanding fresh points of access by 10-15%. “We are particularly excited for our global growth this year as we expect to open in five to seven new countries in 2023, including in France.”
Krispy Kreme ended the fourth quarter with $0.11 earnings per share, up 38% compared with the same quarter a year prior. At the end of FY 2022, Krispy Kreme had 11,837 total global points of access up more than 10% from the same quarter last year.
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