Case Study - Krispy Kreme Doughnuts, Inc

Group 4
Table of Contents.

Case Background Environment Analysis

Problem Statement
supported with evidences
Case Background
 Krispy Kreme Doughnuts, Inc
Krispy Kreme Doughnuts, Inc. is a popular doughnut and
coffee brand based in Winston-Salem, North Carolina, with
a global presence in 23 countries. The company was
established in 1933 and has a long history of manufacturing
and marketing its unique special glazed doughnuts. Their
mission statement emphasizes their dedication to quality,
collaboration, and customer service. Their distribution
method comprises a variety of retail establishments as well
as overseas places. The company's fundamental approach is
around providing hot and fresh doughnuts with a one-of-a-
kind taste, and they also sell their products in a variety of
retail locations.
 Krispy Kreme Doughnuts, Inc
The doughnut market in the United States is a big industry,
with Dunkin' Brands and others competing. The sector is
being influenced by the trend towards healthy eating habits
and changing consumer tastes. They also compete with
Dunkin' Brands, Tim Hortons, and Starbucks, with Dunkin'
Brands having the biggest market share. Krispy Kreme is
moving its focus from wholesale to retail and boosting its
international presence as a result of this. As a result, the
company is also taking precautions against potential
takeovers and addressing the growing demand for healthier
food options, as well as focusing on developing a three-year
strategic plan that aims to strike a balance between Krispy
Kreme's roots as a fresh, retail-oriented doughnut brand and
its evolving position in the market.
Environment Analysis
 Environment Analysis

A. General Environment

Opportunities
● Socio-Cultural Demographic Forces - The company is working on introducing a healthier doughnut
option to cater to health-conscious consumers.
● Technological Forces - The company uses the website for purchasing and marketing channels, such
as in-store signage and advertising.
● Economic Forces - They offered a dozen combo meals to attract budget-conscious customers.
● Environment Forces - They are transitioning to an eco-friendly packaging material for donut boxes
and cups.
● Politico-Legal Forces - There are new smaller factory stores outside the southeast that are more
likely to be operated under franchise agreements.
 Environment Analysis

A. General Environment

Threats
● Socio-Cultural Demographic Forces - Health consciousness of consumers and dietary restrictions
especially low-carb diet.
● Technological Forces - Adaptability to advanced technologies and innovation.
● Economic Forces - Rising inflation may increase cost expenses.
● Environmental Forces - Waste disposal and recycling of packaging materials concerns.
● Politico-Legal Forces- Laws that restrict portion sizes of soft drinks and other sugary-laden snacks.
 Environment Analysis
B. Operating Environment
Opportunities
● Rivalry Among Competition Firms - Competition can push Krispy Kreme to develop effective
customer loyalty programs.
● Potential Entrants - Introducing an innovative doughnut product that can cater to evolving
preferences.
Substitute Products – Low-carb, healthy pastry options
● Bargaining Power of Suppliers- The prices of supplies has direct effect the market position of KKD in
a highly competitive market
● Bargaining Power of Buyers - Buyers have low bargaining power affecting the prices of the KKD
products.
● Industry Growth - The company is transitioning toward smaller factory shops that will focus on retail
rather than wholesale customers.
● Shareholder’s Actions – KKD is practicing clear and open communication with shareholders.
● Creditor’s Actions - Providing transparent, accurate, and timely financial reporting to build trust.
● Community - Helping the communities with fund-raisers, even offering special packaging at times.
 Environment Analysis
B. Operating Environment
Threats
● Rivalry Among Competition Firms - Competitors of KKD, including Dunkin’ Brands and Starbucks,
have already diversified their menu options to include healthier choices.
● Potential Entrants - New entrants may focus on healthier snack options catering to changing
consumers.
● Substitute Products – KKD is yet to diversify its menu to cater to the growing preference to health.
● Bargaining Power of Suppliers- Price fluctuations due to environmental factors.
● Bargaining Power of Buyers - Changes in customer preferences for healthier and low-carb food
options.
● Industry Growth - Economic recessions can negatively impact food industries.
● Shareholder’s Actions – Shareholder’s dissatisfaction could affect the growth of the company.
● Creditor’s Actions - Financial difficulties may harm the company's reputation.
● Community - Public perception of the high-sugar and fat products that led to health issues.
 Environment Analysis
Internal Environment
Strengths

● Marketing - Sharing concept and the famous “Hot Doughnuts Now” sign marketing strategy.
● Production/Operations - Customers can easily watch at their factory store Doughnut Theater for their
firm commitment to quality and freshness.
● Finance - The company had an outstanding 2013 and the firm’s stock price was up over 100
percent.
● Operation and Management - The company is likely structurally functional.
● Human resources - The company has more employees than competitors.
● Research and Development - Continually develop new doughnut flavors, shapes, and variations to
keep customer interest
● Information Systems - Customers can purchase the products at both Keurig and KKD websites.
 Environment Analysis
Internal Environment
Weaknesses

● Marketing - Krispy Kreme Doughnuts does not appear to have a published vision statement.
● Production/Operations - A late product innovation may affect customer interest.
● Finance - Rival firms and other food-producing companies are eyeing the possibility of acquiring the
company.
● Operation and Management - KKD reports revenues by geographic region but is not structured
geographically.
● Human resources - The company does not have a Chief Operating Officer (COO), Chief
Administrative Officer (CAO), or Chief Strategy Officer (CSO).
● Research and Development - They are not investing in research & development for lower-calorie or
healthier doughnut options.
● Information Systems - Outdated information system.
 Environment Analysis
STRENGTHS WEAKNESSES

History and Experience Low income from international sales

Strong company reputation More wholesale income accounting for

51% of sales
Strong financial structure 89% sales come from doughnuts

Opportunities THREATS

Increasing doughnut consumption Healthy life industry

Globalization Competitive disadvantage

Factory shops Increasing raw materials prices

Technological integration and digital Government regulations

channels
Environment Analysis
Environment Analysis
Environment Analysis
Environment Analysis
Environment Analysis
Environment Analysis

G. Assumptions
Krispy Kreme Doughnuts has constant and stable consumer preferences, which drive
demand, particularly for their famous hot, fresh, and exceptional glazed doughnuts. As long
as the economy stays robust, the anticipated expansion can take place in a safe atmosphere.
Furthermore, socio-cultural trends on the liking for sweet delights and decadent foods would
be a significant advantage for customer demand.
Environment Analysis

G.2. Industry Growth Prospects

Krispy Kreme's industry growth prospects depend on its ability to react to changing
consumer preferences, and the food industry trend of product innovation which can be an
opportunity to develop new flavors and products and expand its product range. the market's
desire for quick, portable snacks and its "Hot Doughnuts Now" idea. Their smaller-sized
factory outlets and the franchise model for quicker expansion and capital requirements can
cater to the industry trends that offer the company with high growth potential.
 Environment Analysis
G.3. Company's Competitive Position
The company is known for its high-quality distinctive glazed doughnuts and well-established
brand for its “Hot Doughnuts Now” marketing campaign. Their worldwide expansion will
boost their global presence and the franchise model that helps them contact clients and so
make them a cost-effective business. In contrast, Krispy Kreme's true challenge lies in its
ability to launch new flavors and healthier products that appeal to consumers who are health-
conscious. In addition, to laws and regulations compliance with the changing food safety,
labeling standards, and other regulatory requirements can offer flaws in their products.
Likewise, the globe today is confronting the hype of climate change issues that need to be
addressed in the sustainability efforts of the food company.
Problem Statement supported with
evidences
 Problem Statement supported with evidences
The increased awareness of sugar's detrimental effects on individuals and changing
consumer choices may impact the doughnut industry, its goods, and customer attitudes.
Several potential problem statements for Krispy Kreme may include:
● Declining sales and market share in the face of rising competition from rival doughnut and
dessert businesses.
● Inefficient operations and supply chain management, leading to higher costs and reduced
profitability. Inability to adapt to changing consumer preferences and needs, leading to a
loss of relevance in the market.
 Evidences
1. Dunkin’ Brands accounts for about 54% of total doughnut shop market share while
Krispy Kreme and Time Hortons account for about 5% of US doughnut market share.

2. For coffee, KKD share is 2% vis-à-vis Starbucks 35% share and Dunkin’s 25% share

3. KKD reports revenues by geographic region, but is not structured geographically instead
structurally.
 Evidences
1. Both in the US and globally, people are becoming more health conscious in their diet and food
choices. Competitors of KKD have already diversified their menu to include healthier choices.

2. Price of coffee is subject to wild price fluctuations. Coffee prices doubled from 2013 to 2014.

3. In comparison with top global player, Dunkin has 11,000 stores in 43 states and 32 countries,
while KKD has only 801 stores; US (278), and in other 23 countries (523).

4. KKD international franchise sales declined by 1.7% company’s EPS increased by buying back of
391,3000 shares of stocks.
THANK YOU!