CASE 10Krispy Kreme Doughnuts in 2005Are the Glory Days Over?Arthur A. ThompsonThe University of AlabamaAmit J. ShahFrostburg State UniversityC-199early 2004, Krispy Kreme’s prospects appeared bright. With 357 Krispy Kremestores in 45 states, Canada, Great Britain, Australia, and Mexico, the companywas riding the crest of customer enthusiasm for its light, warm, melt-in-your-mouthdoughnuts. During the past 4 years, consumer purchases of Krispy Kreme’s doughnutproducts had taken off, with sales reaching 7.5 million doughnuts a day. Considerablecustomer excitement—approaching frenzy and cult status—often surrounded the open-ing of the first store in an area. When a new Krispy Kreme opened in Rochester, NewYork, in 2000, more than 100 people lined up in a snowstorm before 5:00 AM to getsome of the first hot doughnuts coming off the conveyor line; within an hour there were75 cars in the drive-through lane. Three TV stations and a radio station broadcast livefrom the store site. The first Krispy Kreme store in Denver, which opened in 2001,grossed $1 million in revenues in its first 22 days of operation; commonly had lines run-ning out the door with a one-hour wait for doughnuts, and, according to local newspa-per reports, one night had 150 cars in line for the drive-through window at 1:30 AM.Opening day was covered by local TVand radio stations, and off-duty sheriff’s deputieswere brought in to help with traffic jams for a week following the store’s grand opening.The first Minnesota store, just outside of Minneapolis, had opening-week sales of$480,693—the company record for fiscal 2002. In July 2003, the first store to open inthe Massachusetts market—in Medford, outside Boston—had a record opening-dayrev...
