Krispy Kreme is narrowing its focus to doughnuts exclusively on the road to 75,000 global points of access — up from the doughnut company’s initial goal of 20,000 when it went public in 2021 — the company’s CFO Jeremiah Ashukian and incoming CEO Josh Charlesworth shared during Tuesday’s presentation at the Morgan Stanley Global Consumer & Retail Conference. As previously shared, Krispy Kreme is looking to sell Insomnia Cookies as it focuses exclusively on doughnuts to massively expand consumer access to the company’s product.
“The number one reason why someone doesn't purchase is convenience,” Charlesworth said. “They may know the brand. Often when I introduce the company to people — 39 markets with $1.6 billion of revenue — people say they thought the brand would be bigger…. About 85% of people will have not had Krispy Kreme…So we put it in drugstores, we put it in QSRs, we put it in subway stations. We put it in Walmart…and then people are like, ‘let me try them.’”
One partnership that is likely going to be the cornerstone of Krispy Kreme’s road to 75,000 points of access? McDonald’s. Although both executive leaders were cagey around specifics of a possible partnership expansion in the drive-thru lane, it’s clear that the doughnut company sees McDonald’s as a smart way to reach more customers:
“We're in advanced discussions to consider a rollout and because we're in those advanced discussions…why would we be looking at anything else?” Charlesworth said. “This is a significant growth lever for us. We’d want to do this very well, so we appreciate taking this time to be diligent improving our operation…. But if it doesn't work out in the discussions with McDonald's, the QSR channel has, in our eyes, been proven as a great growth driver in general.”
In order to get ready for putting more Krispy Kremes in McDonald’s locations, the company would have to tweak its hub and spoke model (including selling and closing some hubs) for efficiency and to keep up with demand. One idea that Krispy Kreme has been tossing around a lot is to invest in automation. Charlesworth said that the company still largely “makes the doughnuts the same way we have for decades,” with Krispy Kreme employees individually decorating each doughnut. So, right now the company is testing out automation technology to improve the speed and consistency of the product.
“You can imagine a doughnut flips over into a basket of chocolate and comes out again, to more complex things like a robot putting the doughnuts into the box or onto the tray -- those are happening,” Charlesworth said. “We would maintain quality and consistency, which is becoming increasingly important to our most sophisticated customers now.”
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