Title of the Case: “KRISPY KREME”
Krispy Kreme began in the mid-1930s when a doughnut maker named Vernon Rudolph bought a secret recipe for yeast doughnuts from a French pastry chef out of New Orleans. Rudolph moved from to Winston-Salem and, on July 13, 1937, he opened up a wholesale business selling to local grocery stores. People walking by Rudolph’s plant began requesting hot doughnuts, so he cut a hole in the factory wall and sold them out on the street (the first drive-through).
Over the next few decades, Rudolph opened other stores—some his, some franchised—in north and South Carolina, and a regional chain was started. Rudolph soon chose the red, ...view middle of the document...
Livengood decided that the company needed to go public.
However, this became a battle due to a protocol set earlier where all franchises (in this case it was 183) had to vote unanimously on matters. Eventually all 183 agreed to the idea, and in April 2000, Krispy Kreme went public (Holland, 2003).
Krispy Kreme’s business is quite simple. According to Shook (2002), the company boasts 165 franchises and 93 company-owned stores, and is opening new outlets in both large and small U.S. cities.
The first time Krispy Kreme moved to expand beyond its brand namesake was on April 7, 2003, when the company acquired the Montana Mills Bread Co. This Rochester, N.Y-based bakery chain cost Krispy Kreme about $40 million in stock (Ceron, 2003).
CEO Scott Livengood commented on the need to acquire Montana Mills Bread Co. This acquisition is an outgrowth of the development of Krispy Kreme over the past five years. As I have indicated previously, we view Krispy Kreme Doughnuts, Inc., first and foremost as a set of unique capabilities which include the abilities to explore and nurture our customers’ passion for and connection to a brand, create an effective franchise network, vertically to provide a complete range of products and services to a system-wide store network serving flour-based products, and deliver these products across multiple channels. (Krispy Kreme Agrees to Acquire Montana Mills, Inc., 2003)
Another recent plan of Krispy Kreme was to open doughnut-making retail stores within Wal-Mart Supercenters. To provide a fresher product, doughnut machines and fresh shops managed by Krispy Kreme will be placed in a handful of Wal-Marts (Lofton, 2003). Fresh shops have Krispy Kreme doughnuts delivered multiple times during the day from nearby factory stores.
Senior Vice-President of Merchandising at Wal-Mart Canada Bob Brunet felt like the partnership between the two companies was a great fit. “Both companies are firmly committed to quality, affordability, customer service, and local community involvement” (Wal-Mart Canada launches partnership with Krispy Kreme, 2003).
KremeKo, Inc. was the company’s first international franchisee and was previously awarded development rights (Krispy Kreme Announces Expansion of Development Plans in Canada, 2003, ¶2). KremeKo, Inc. is the company’s exclusive area developer for Krispy Kreme in all provinces in Canada.
After two years of thought and research, Krispy Kreme acquired Digital Java Inc., a small coffee company in 2002. Digital Java offered a broad array of coffee-based and non-coffee based beverages, both hot and cold. This acquisition attained many strategic goals for Krispy Kreme including providing an improved coffee experience and increasing their vertical integration. This vertical integration helps Krispy Kreme control the sourcing and consistency of the coffee (Krispy Kreme Acquires Digital Java, Inc, 2002 ¶3).
One of the more interesting things about Krispy Kreme is that there is not one...