Krispy Kreme Doughnuts is an American doughnut company based in North Carolina. The document provides an overview of a case study on Krispy Kreme, including its mission, vision, internal/external assessments, strategies, and major competitors. It analyzes Krispy Kreme's strengths, weaknesses, opportunities, and threats. Key points include declining revenues/profits, disputes with franchisees as weaknesses, and opportunities in expanding overseas markets and developing new product lines to attract health-conscious customers.

2. STRATEGIC MANAGEMENT
“KRISPY KREME DOUGHNUTS (KKD)”
CASE STUDY FROM THE BOOK
(STRATEGIC MANAGEMENT, CONCEPTS AND
CASES… WRITTEN BY, FRED R. DAVID)
Presented by:
Bano Khisrow, Hira Ali, Maha Jawed and Misbah Khan
Department of Commerce, BS (final year)

5. PRESENTATION PREVIEW
 Introduction
 Mission and Vision
 Internal assessment
 External assessment
 Strategy formulation
 Strategy implementation
 Strategy evaluation
 Conclusion

6. INTRODUCTION
Krispy Kreme Doughnuts, Inc. is an American
global doughnut company and coffeehouse
chain based in Winston-Salem, North Carolina,
United States.

7. INTRODUCTION
 Founder: Vernon Randolph
 Company type: Public
 Industry: Restaurant
 Founded in: 1937
 Headquarter: Winston Salem, North Carolina,
United states.
 Employees: 3700
 Official website: krispykreme.com

8. INTRODUCTION
Krispy Kreme doughnuts deals in the following
main products:
* Doughnuts
* Sausage rolls
* Soft drinks
* Coffee and other beverages

9. INTRODUCTION
 Krispy Kreme Doughnuts, Inc. is an American
global doughnut company and coffeehouse chain based
in Winston-Salem, North Carolina, United States.
 Though there are other similar companies in the market but
Krispy Kremes signature item is a glazed doughnut that is
traditionally served warm.
 Beside the store their products are sold in super markets,
grocery stores, convenience stores, gas stations, Wal-Mart
and Target stores in the United States.

10. Krispy Kreme Doughnut’s existing
vision and mission statements.

11. VISION STATEMENT:
"Our vision is to be the worldwide
leader in sharing delicious tastes and
creating joyful memories."

12. MISSION STATEMENT:
"Our mission is to touch and enhance
lives through the joy that is Krispy
Kreme."

13. Krispy Kreme Doughnut’s re-designed
vision and mission statements.

14. VISION STATEMENT:
"Our vision is to be the worldwide
leader in sharing delicious tastes and
creating joyful memories."

15. MISSION STATEMENT:
"Our mission is to reach every culture
throughout the world with our
delicious doughnut. We will provide
quality service and product to everyone
that walks through our doors."

16. The vision and mission statements of
Competitors!

17. Starbucks vision and mission
statements.

18. VISION STATEMENT:
“To establish Starbucks as the premier
purveyor of the finest coffee in the
world, while maintaining our
uncompromising principles, while we
grow.”

19. MISSION STATEMENT:
“To inspire and nurture the human
spirit – one person, one cup and one
neighborhood at a time.”

20. Dunkin Donuts vision and mission
statements.

21. VISION STATEMENT:
“To be always the desired place for
great coffee beverages and delicious
complementary donuts & bakery
products to enjoy with family and
friends”

22. MISSION STATEMENT:
”To be the leading provider of the wide range delicious
beverages & baked product around the kingdom in a
convenient, relaxed, friendly environment, that insures
the highest level of quality product and best value for
money.
We provide our guest, the elegant service and
unforgettable experience to meet their expectations in
every single visit.​”

23. Internal Assessment

24. Existing organizational chart of,
Krispy Kreme Doughnuts (KKD)

26. Improved/ recommended organizational
chart of ,
Krispy Kreme Doughnuts (KKD)

28. The market positioning map of the
firm and the competitors

30. Marketing strategies of the Firm

31. MARKETING STRATEGIES:
 Krispy Kreme doughnuts were vertically integrated in
term of their supply chain.
 They introduced the free doughnut strategy, termed as
“hot now” (free doughnut while waiting in the line)
 Gift/ accessories: shirts, hats, coffee mugs, toys.
 Fundraising: helped schools raise over $30 million in a
matter of few years (selling doughnuts, coffee,
certificates and partnership cards).

32. KKD divisions and operations

33. KKD DIVISIONS AND OPERATIONS:
 Krispy Kreme is operating 523 stores in the United
States, Australia, Bahrain, Canada, Hong Kong,
Indonesia, Japan, Kuwait, Lebanon, Mexico, the
Philippines, Peurto Rico, Qatar, Saudi Arabia, South
Korea, the United Arab Emirate and the United
Kingdom.
 There are two types of Krispy Kreme stores:
* Factory stores (281)
* Satellite stores (242)

34. KKD DIVISIONS AND OPERATIONS:
 The “factory stores” usually contain a doughnut-making
production line in addition to retail establishment. They
can produce from 4000 to10,000 dozen doughnuts daily.
 The second type of KKD store is the “satellite store”,
which sells doughnuts and beverages and some satellite
stores contain what is termed a hot shop, tunnel oven
doughnut heating equipment, which allows the
consumers to have a hot doughnut experience.

35. WEBSITE AND E-COMMERCE EFFORTS:
The new site of Krispy Kreme doughnuts was launched in December 2012 and
has proved a success:
 Before its new site launched, Krispy Kreme found making vital improvements to
the site proved extremely difficult - as the development agency who maintained it
were based outside of the UK.
 Krispy Kreme had also lost touch with the payment service provider responsible for
processing card payments made on the site; and attempting to re-establish contact
with them was "proving to be a nightmare.“
 In light of these issues, it was agreed that a complete overhaul of Krispy Kreme
UK’s e-commerce operation was needed: the FMCG e-commerce market was
moving forwards at an incredible pace, and for Krispy Kreme, being left behind was
simply not an option.
 As a result, Nigel Perry, Internal Audit Manager, took responsibility for overseeing
the project and selected the Drupal platform(an open source technology), considering
it a significant move.

36. “VALUE OF FIRM” , ANALYSIS:
Krispy Kreme Doughnuts, Supply chain:
•KK Supply Chain produces doughnut mixes and manufactures doughnut-making
equipment, which all franchisees are required to purchase.
Additionally, KK Supply Chain operates a distribution center that provides Krispy
Kreme stores with supplies for the critical areas of their business.
KK Supply Chain generates revenues on sales of doughnut mixes, supplies,
ingredients and equipment to franchisees.
It supports both Company and franchise stores by providing product knowledge and
technical skills, controlling critical production and distribution processes and
collective purchasing of certain materials.

37. STRENGTHS:
 Brand recognition
 Vertical integration
 Effective supply chain
 Affordable prices
 High-quality doughnuts
 Strong visual appearance
 “Hot shop” stores (Advance equipment/ machines)
 Wide demand
 Consistent expansion

38. WEAKNESSES:
 Decline in revenues, facing loss
 Decline in profitability ratios
 Limited product line
 Ineffective advertising
 Ineffective organizational hierarchy
 Management disputes with franchises

39. INTERNAL FACTOR EVALUATION
(IFE) MATRIX

40. Key Internal Factors Weight Rating
Weighted
Score
Strengths
1) Affordable, high-quality doughnuts with strong visual appeal
and "one-of-a-kind" taste
0.09 4 0.36
2) Neon "Hot Doughnuts Now" sign encourages people outside
the store to make an impulse purchase
0.06 3 0.18
3) Market research shows appeal extends to all major
demographic groups including age and income
0.08 4 0.32
4) "Hot shop" stores save money while keeping Krispy
Kreme Donuts customer experience intact
0.07 3 0.21
5) Vertical integration helps ensure high quality product 0.07 3 0.21
6) Consistent expansion; now in 16 countries 0.08 3 0.24
7) Product sold at thousands of supermarkets, convenience stores,
and retail outlets through U.S.
0.06 3 0.18

41. Key Internal Factors Weight Rating
Weighted
Score
Weaknesses
1) Return on equity, assets, and investments all negative in the
trailing twelve months; skill of management is questionable
0.10 1 0.10
2) Shareholders have not received dividends recently, and are
not expected to in near future; stock price in state of flux
0.07 1 0.07
3) Closing stores when stores should be opening globally at
steady rate to keep up with competitors' growth
0.06 2 0.12
4) Management states in recent 10-K that it is struggling with
how to make stores profitable
0.07 1 0.07
5) Product line slow to expand with nothing outside "sweet
treats" to draw in health-conscious customers
0.04 2 0.08
6) Advertising not aggressive enough to appeal to areas
outside southeast of U.S. where most stores are
0.03 2 0.06

42. Key Internal Factors Weight Rating Weighted
Score
7) Revenues down, net losses in each of past three
years
0.08 1 0.08
8) Per 10-K, continued disputes with franchisees
could hurt future business
0.04 2 0.08
Total 1.00 2.36

43. MAJOR COMPETITORS OF KRISPY
KREME DOUGHNUTS

44. MAJOR COMPETITORS OF KRISPY
KREME DOUGHNUTS

47. EXTERNAL FACTOR EVALUATION
(EFE) MATRIX

48. Key External Factors Weight Rating
Weighted
Score
Opportunities
1) Families crave convenience because of busy lifestyles 0.08 3 0.24
2) Asians love sweets and are open to trying foreign foods 0.05 2 0.10
3) Starbucks lacks a diversified and distinctive pastry line 0.10 3 0.30
4) Dunkin' Donuts does not have hot doughnuts to sell 0.07 4 0.28
5) Many children love sweet treats 0.03 2 0.06
6) Tim Hortons has yet to expand beyond the U.S. and Canada,
and its product line does not appear to be competitive
0.04 2 0.08
7) South America, Africa, and Southern Asia are markets to
conquer
0.09 1 0.09

49. Key External Factors Weight Rating
Weighted
Score
Threats
8) Dunkin' Donuts presently dominates the doughnut
market, particularly in northeastern U.S.
0.12 1 0.12
9) People are becoming more health-conscious, which
does not bode well for high-sugar, high-fat treats
0.08 2 0.16
10) Starbucks has approximately 25 times the amount of
stores worldwide that Krispy Kreme Donut has
0.08 1 0.08
11) Restricted cash flow from banks and massive layoffs
have stifled the world economy, decreasing discretionary
income
0.06 2 0.12
12) Europeans prefer their local brands of doughnuts 0.05 2 0.10

50. Key External Factors Weight Rating
Weighted
Score
13) Britons tend not to have cars, which inhibits drive-thru
customers, and their eating habits and office etiquette differ from
Americans
0.06 2 0.12
14) Shareholders may sell Krispy Kreme Donut stock for lack of
returns and dividends compared to other similar firms in the
industry
0.09 1 0.09
Total 1.00 1.94

51. COMPETITIVE PROFILE MATRIX
(CPM)

52. Dunkin' Donuts Starbucks Tim Hortons
Critical Success
Factors
Weight Rating Score Rating Score Rating Score
Advertising 0.11 4 0.44 3 0.33 2 0.22
Product Quality 0.15 3 0.45 3 0.45 2 0.30
Product Diversity 0.08 3 0.16 1 0.08 2 0.16
Price Competitiveness 0.08 3 0.24 2 0.16 3 0.24
Management 0.10 3 0.30 3 0.30 2 0.20
Financial Position 0.10 3 0.30 2 0.20 3 0.30
Customer Loyalty 0.10 4 0.40 3 0.30 3 0.30
Global Expansion 0.13 3 0.39 4 0.52 1 0.13
Market Share 0.10 3 0.30 3 0.30 1 0.10
Sales Distribution 0.05 2 0.10 3 0.15 2 0.10
Total 1.00 3.08 2.79 2.05

53. OPPORTUNITIES
 Asian love sweets and are open to trying foreign foods.
 Dunkin’ donuts does not have hot doughnuts to sell.
 Many children love sweet treats.
 South America, Africa, and Southern Asia are markets to
target.
 Tim Hortons has yet to expand beyond the U.S. and
Canada, and its product line does not appear to be
competitive.
 Families crave convenience because of busy lifestyles.

54. THREATS
 Starbucks has much greater in amount, store
worldwide than Krispy Kreme.
 People are much health conscious, and much care
about high sugar and high fat.
 European mostly prefer their local brands.
 Dunkin’ Donuts presently dominates the global
market, particularly in north- eastern U.S.
 Shareholders can sell their shares due to lack of
return or dividend compare to their competitors.

55. STRENGTHS-WEAKNESSES-
OPPORTUNITIES-THREATS (SWOT)
MATRIX

56. (SWOT) Matrix
Strengths Weaknesses
1) Affordable, high-quality doughnuts
with strong visual appeal and "one-of-a-
kind" taste
2) Neon "Hot Doughnuts Now" sign
encourages people outside the store to
make an impulse purchase
3) Market research shows appeal
extends to all major demographic
groups including age and income
4) "Hot shop" stores save money
while keeping KKD customer
experience intact
5) Vertical integration helps ensure
high quality product
1) Return on equity, assets, and
investments all negative in the trailing
twelve months; skill of
management is questionable
2) Shareholders have not received
dividends recently, and are not expected
to in near future; stock price in state of
flux
3) Closing stores when stores should be
opening globally at steady rate to
keep up with competitors‘ Growth
4) Management states in recent 10-K
that it is struggling with how to make
stores profitable

57. (SWOT) Matrix
Strengths Weaknesses
6) Consistent expansion; now in 16
countries.
7) Product sold at thousands of
supermarkets, convenience stores, and
retail outlets through U.S.
5) Product line slow to expand with
nothing outside "sweet treats" to draw in
health-conscious customers.
6) Advertising not aggressive enough to
appeal to areas outside
southeast of U.S. where most stores are.
7) Revenues down, net losses in each of
past three years.
8) Per 10-K, continued disputes with
franchisees could hurt future business.

58. Opportunities SO Strategies WO Strategies
1) Families crave convenience
because of busy lifestyles
2) Asians love sweets and are
open to trying foreign foods
3) Starbucks lacks a diversified
and distinctive pastry line
4) Dunkin' Donuts does not have
hot doughnuts to sell
5) Many children love sweet
treats
1) TV, radio, and print ads
demonstrating 27 varieties of
doughnuts against non-descript
pastry offerings by Starbucks
(S3, O3)
2) All store signs in
supermarkets and
conveniences where product is
sold have picture of young
child eating a Krispy Kreme
doughnut (S7, O5)
3) Continued grand openings
of stores in highly-populated
cities such as Sao Paulo, Brazil
&
Johannesburg, South Africa
(S6, O7)
1) Make doughnuts filled
with fruit, put fruit cups on
menu, and develop wide
variety of fresh fruit
smoothies; offer ways to
incorporate nuts and protein
into foods (W5, O3)
2) Aggressive Internet ads
demonstrating the appeal of
Krispy Kreme Doughnut
“hot doughnuts now” (W6,
O4)
3. Open small but profitable
"hot shops" in South
America, Africa, and
Southeast Asia in order to
expand globally (W3,O7)

59. Opportunities SO Strategies WO Strategies
6. Tim Hortons has yet to
expand beyond the U.S. and
Canada, and its product line
does not appear to be
Competitive
7. South America, Africa, and
Southern Asia are markets to
conquer

60. Threats ST Strategies WT Strategies
1) Dunkin' Donuts
presently dominates the
doughnut market,
particularly in northeastern
U.S.
2) People are becoming
more health-conscious,
which does not bode well
for high-sugar, high-fat
treats.
3) Starbucks has
approximately 25 times the
amount of stores
worldwide that Krispy
Kreme Donut has.
1) Compare "hot" doughnut appeal
of Krispy Kreme Doughnut to cold
doughnuts of Dunkin' Donuts in
TV and Internet ads (S1,T1).
2) Do "roadshow" across Europe as
means of advertising, driving truck
and mobile "hot shop" to major
European cities and filming their
reactions for European ads (S2,
S4,T5, T6).
3) Express strengths and outline
concrete strategies in clear format
within 10-K in order to restore
shareholder confidence in future of
Krispy Kreme Doughnut (S1-S7,
T7).
1. Expand product line with
low-calorie foods (W5, T7).
2. Recruit top executive
talent from other fast-food
firms (W1, T7).
3. Survey franchisees to
discover ways to repair
business relationships and
retain growth of franchise
model; study McDonald's
model for tips (W8, T1,
T3) .

61. Threats ST Strategies WT Strategies
4) Restricted cash flow from
banks and massive layoffs
have stifled the world
economy, decreasing
discretionary income.
5. Europeans prefer their local
brands of doughnuts.
6. Britons tend not to have
cars, which inhibits drive-thru
customers, and their eating
habits and office etiquette
differ from Americans.
7. Shareholders may sell KKD
stock for lack of returns and
dividends compared to other
similar firms in the industry.

62. STRATEGIC POSITION & ACTION
EVALUATION (SPACE) MATRIX

63. Strategic Position & Action Evaluation (SPACE) Matrix:
Financial strength (FS) factors include: Profit (+1); Sales growth (+2); and Cash flow (+2)
1+2+2=5; 5/3=1.67
Competitive advantage (CA) factors include: Customer loyalty (-2); Product quality (-1); and Market share (-
5)
-2 + -1 + -5 = -8; -8/3 = -2.67.
**For the above, KKD's financials were compared against competitors Dunkin' Donuts, Starbucks, and Tim
Hortons.
Environmental Stability (ES) factors include: Barriers to entry into market (-4); Risk involved in business (-
3); and Ease of exit from market (-4)
-4 + -3 + -4 = -11/3 = - 3.67
Industry Strength (IS) factors include: Profit potential (+2); Financial stability (+1); and Technological know-
how (+4)
2 + 1 + 4 = 7/3 = 2.33

64. (SPACE) MATRIX:

65. BOSTON CONSULTING GROUP
(BCG) MATRIX

66. BOSTON CONSULTING GROUP (BCG)
MATRIX:
 Krispy Kreme Doughnuts has three business
segments, and they are presented here along with
their annual revenues: Company Stores ($266M),
Franchise ($26M) and Krispy Kreme Supply Chain
($93M), with approximately $384M in total revenues.
This means that each business segment represented
the following percentage in revenues: Company
Stores (69.2%), Franchise (6.7%), and Krispy Kreme
Supply Chain (24.1%).

67. BOSTON CONSULTING GROUP (BCG)
MATRIX
 Profits for each business segment are as follows:
Company Stores ($-2M); Franchise ($18M); and KK
Supply Chain ($25M), for a total of $41M in profits.
Therefore, Company Stores has 0% of the profits;
Franchise has about 41%; and Krispy Kreme Supply
Chain has about 59%. We’ll assume that Company
Stores has 3% of the market share and a -13%
growth rate; Franchise has 3% of the market share
and a 10% growth rate; and Krispy Kreme Supply
Chain has 3% of the market share and -7% growth
rate.

69. INTERNAL – EXTERNAL (IE)
MATRIX

70. INTERNAL – EXTERNAL (IE) MATRIX:
The IE matrix employs two key dimensions
which is the IFE total weighted score on the
X-axis and the EFE total weighted score on
the Y-axis. Moreover, the matrix is divided
into three main regions; cells I, II and IV are
classified as growth and build, cells III, V,
and VII are hold and maintain while cells
VI, VII and IX are classified as harvest or
divest. For Krispy Kreme, the combined
score of IFE and EFE puts it in cell VII
which is a hold or maintain. This translates
that the business strategies to be employed
by KKD should be defensive, appropriate
sub-strategies include market penetration,
and product development.

71. CLASSIFICATION OF CELLS:
 I, II, IV classified as: Grow & Build
Backward, Forward, or Horizontal Integration
Market Penetration
Market Development
Product Development
 III, V, VII classified as: Hold & Maintain
Market Penetration
Product Development
 VI, VIII, IX classified as: Harvest & Divest
Retrenchment
Divestiture

72. INTERNAL – EXTERNAL (IE) MATRIX:
The IE Geographic matrix indicates
sales by region, with the Krispy Kreme’s
largest share of sales being in the US,
followed by the Asia Pacific, Middle
East, Other North American countries
and lastly Europe. The US quick service
industry as whole is highly competitive
and price/value sensitive. Krispy
Kreme’s presence internationally is
currently weak and greater focus needs
to be placed on increasing its market
share in the growing Asia Pacific
regions.

73. GRAND STRATEGY (GS) MATRIX

74. f
RAPID MARKET GROWTH
Quadrant II
 Market Development
 Market Penetration
 Product Development
 Horizontal Integration
 Divestiture
 Liquidation
Quadrant I
 Market Development
 Market Penetration
 Product Development
 Forward Integration
 Backward Integration
 Horizontal Integration
 Related Diversification
j
Quadrant III
 Retrenchment
 Related Diversification
 Unrelated Diversification
 Divestiture
 Liquidation
WEAK
COMPETITIVE
POSITION
STRONG
COMPETITIVE
POSITION
SLOW MARKET GROWTH
Quadrant IV
 Related Diversification
 Unrelated
Diversification
 Joint ventures

75. QUANTITATIVE STRATEGIC
PLANNING MATRIX (QSPM)

76. QUANTITATIVE STRATEGIC PLANNING
MATRIX (QSPM):
 In the QSPM two strategic alternatives were
compared: whether KKD should discontinue its
Company Store segment and concentrate solely on
building the Franchise segment via the "hot shop"
model, or whether it should continue the slow and
steady growth of its Company Stores and Franchise
business segments through its traditional business
model.

77. RANGE FOR ATTRACTIVE SCORES:
 1 = Not attractive
 2 = Some what attractive
 3 = Reasonably attractive
 4 = Highly attractive

78. STRATEGIC ALTERNATIVES
1) Discontinue company
stores and concentrate
solely on building
Franchise via "hot shop"
stores
2) Continue slow and
steady growth of
Company Store and
Franchise business
segments through
traditional business model
(without "hot shops")
Key Factors Weight AS TAS AS TAS
Opportunities
1) Families crave
convenience because of
busy lifestyles
0.08 _ _
2) Asians love sweets and
are open to trying foreign
foods
0.05 _ _

79. Key Factors Weight AS TAS AS TAS
3) Starbucks lacks a diversified
and distinctive pastry line
0.10 _ _
4) Dunkin' Donuts does not
have hot doughnuts to sell
0.07 4 0.28 3 0.21
5) Many children love sweet
treats
0.03 _ _
6) Tim Hortons has yet to
expand beyond the U.S. and
Canada, and its product line
does not appear to be
competitive
0.04 4 0.16 3 0.12
7) South America, Africa, and
Southern Asia are markets to
conquer
0.09 3 0.27 2 0.18

80. Key Factors Weight AS TAS AS TAS
Threats
1) Dunkin' Donuts presently dominates
the doughnut market, particularly in
northeastern U.S.
0.12 3 0.36 1 0.12
2) People are becoming more health-
conscious, which does not bode well for
high-sugar, high-fat treats.
0.08 _ _
3) Starbucks has approximately 25 times
the amount of stores worldwide that KKD
has.
0.08 2 0.16 1 0.08
4) Restricted cash flow from banks and
massive layoffs have stifled the world
economy, decreasing discretionary
income.
0.06 _ _

81. Key Factors Weight AS TAS AS TAS
Threats
5) Europeans prefer their local
brands of doughnuts
0.05 _ _
6) Britons tend not to have cars,
which inhibits drive-thru customers,
and their eating habits and office
etiquette differ from Americans
0.06 _ _
7) Shareholders may sell KKD stock
for lack of returns and dividends
compared to other similar firms in
the industry
0.09 2 0.18 1 0.09
1. 00

82. Key Factors Weight AS TAS AS TAS
Strengths
1) Affordable, high-quality
doughnuts with strong visual appeal
and "one-of-a-kind" taste
0.09 _ _
2) Neon "Hot Doughnuts Now" sign
encourages people outside the store
to make an impulse purchase
0.06 4 0.24 3 0.18
3) Market research shows appeal
extends to all major demographic
groups including age and income
0.08 _ _
4) "Hot shop" stores save money
while keeping KKD customer
experience intact
0.07 4 0.28 1 0.07
5) Vertical integration helps ensure
high quality product
0.07 _ _

83. Key Factors Weight AS TAS AS TAS
Strengths
6) Consistent expansion; now in
16 countries
0.08 _ _
7) Product sold at thousands of
supermarkets, convenience stores,
and retail outlets through U.S.
0.06 _ _

84. Key Factors Weight AS TAS AS TAS
Weaknesses
1) Return on equity, assets, and
investments all negative in the trailing
twelve months; skill of management is
questionable
0.10 3 0.30 1 0.10
2) Shareholders have not received
dividends recently, and are not expected
to in near future; stock price in state of
flux
0.07 _ _
3) Closing stores when stores should be
opening globally at steady rate to keep up
with competitors' growth
0.06 3 0.18 1 0.06
4) Management states in recent 10-K that
it is struggling with how to make stores
profitable
0.07 4 0.28 1 0.07

85. Key Factors Weight AS TAS AS TAS
Weaknesses
5) Product line slow to expand with
nothing outside "sweet treats" to draw
in health-conscious customers
0.04 _ _
6) Advertising not aggressive enough
to appeal to areas outside southeast of
U.S. where most stores are
0.03 _ _
7) Revenues down, net losses in each
of past three years
0.08 3 0.24 1 0.08
8) Per 10-K, continued disputes with
franchisees could hurt future business
0.04 1 0.04 2 0.08
Total 1.00 2.97 1.44

86. RECOMMENDATIONS

87. RECOMMENDATIONS:
1) Reduce operating expenses
 Change entire manufacturing and distribution strategy.
– Implement par baked manufacturing operation.
 To allow individual stores to decrease in size, thus lowering per
store operating costs to a more appropriate level for sales volume.
 Increased efficiency – smaller workforce per store, par- bake allows
for minimal waste – inventory as needed (important b/c fresh goods
– low shelf life).
 Par bake will allow for “hot doughnuts now” all of the time.
 New Plant Equipment – freezers, production equipment, freezer
trucks for distribution/delivery.
 Store Equipment – freezers, oven for various par baked goods,
fryers for doughnuts.
 R&D for unique par bake operation.

88. RECOMMENDATIONS:
2) Develop stronger relations and control of
franchisees
 Short-term period of one year – postpone new
franchise agreements/new store openings.
 Implement Franchise Support Systems.
 Communication – between corporate and franchisees
 Support – training, advertising.
 Utilize recommendation #1 in order to lower
operating expenses for franchisees.

89. RECOMMENDATIONS:
3) Implement Marketing Strategies
 Advertising – national television and radio advertising
campaign based on “hot doughnuts now”.
 Marketing research – periodic research to stay familiar of
trends.
 R&D – product development.
4) Strengthen Competitive Advantage through differentiation
in products and services.
 Continue to utilize “hot doughnuts now”.
 Expand product line.

90. FINANCIAL ANALYSIS

91. KKD BALANCE SHEET (USD)
FISCAL YEAR ENDING 31-JAN2011 31-JAN2012 31-JAN2013
Cash & Equivalents 22.0M 44.3M 66.3M
Accounts Receivable 20.8M 22.3M 26.3M
Inventories 14.6M 16.5M 12.4M
Pre-paid Expenses 0 0 4.50M
Deferred Tax Assets 0 10.5M 23.3M
Other Current Assets 5.97M 3.61M 1.94M
Total Current Assets 63.4M 97.2M 135M
Property, Plant & Equipment 71.2M 75.5M 78.0M
Goodwill & Intangibles 23.8M 23.8M 24.2M
Other Long-term Assets 11.6M 9.41M 11.8M
Total Long-Term Assets 107M 238M 207M
Total Assets 170M 335M 342M

92. BALANCE SHEET (USD)
Accounts Payable 9.95M 10.5M 12.2M
Accrued Expenses 0 0 0
Short Term Debt 2.51M 2.22M 2.15M
Other Current Liabilities 0 3.17M 4.32M
Total Current Liabilities 40.8M 41.5M 46.7M
Long Term Debt 32.9M 25.4M 23.6M
Capital Lease Obligations 19.8M 0 0
Other Long-term Liabilities 0 18.9M 25.2M
Total Long-term Liabilities 52.7M 44.3M 48.8M
Total Liabilities 93.5M 85.8M 95.5M
Additional Paid-In Capital 371M 378M 354M
Retained Earnings -294M -128M -107M
Other Equity -34.0K -336K -338K
Total Shareholder's Equity 76.4M 249M 246M

93. RATIOS
For the years 2011 2012 2013
Debt / Equity 0.46 0.11 0.10
Current Ratio 1.55 2.34 2.89
Quick Ratio 1.19 1.94 2.52
Times Interest Earned Ratio 2.38 19.16 23.17

96. KKD
INCOME STATEMENT (USD)
FISCAL YEAR
ENDING
31-JAN
2011
31-JAN
2012
31-JAN
2013
Total Revenue 362M 403M 436M
Cost of Revenue 312M 346M 362M
Gross Profit 50.0M 57.2M 73.4M
SG&A 21.9M 22.2M 25.1M
Amortization & Depreciation 8.95M 8.66M 10.3M
Other Expenses 3.31M 749K 394K
Total Operating Expenses 34.1M 31.6M 35.8M
Operating Income 15.9M 25.6M 37.6M
Other Income -693K 6.41M 317K
EBIT 15.2M 32.0M 38.0M

97. KKD
INCOME STATEMENT (USD)
Interest Expense 6.36M 1.67M 1.64M
Income Before Taxes 8.86M 30.4M 36.3M
Income Taxes 1.26M -136M 15.5M
Net Income from Continuing Ops 7.60M 166M 20.8M
Net Income 7.60M 166M 20.8M
Net Income to Common 7.60M 166M 20.8M

98. For the years 2011 2012 2013
Net profit margin 0.02 0.41 0.04
Return on total assets(ROA) 0.04 0.49 0.06
Return on shareholders Equity(ROE) 0.09 0.66 0.08
Earning per share(EPS) 0.11 2.43 0.31
PROFITABILITY RATOS

102. BALANCE SORECARD OF KRISPY
KREME DOUGHNUT

103. OBECTIVE MEASURE TARGET
To add value to the
purchase and dining
experience
Frequency of walk-ins
and improved
customer feed back
At least 15% in 1 year
Intensive marketing
efforts
number of franchise
and satellites store
At least 2 store per
month in year
CUSTOMERS PERSPECTIVE

104. OBECTIVE MEASURE TARGET
Venturing into e-
commerce
Number of online
members
At least 10% of the
area population in 1
year
Intensive marketing
efforts
number of ad
launched
At least 1 ad campaign
per quarter
PROCESS PERSPECTIVE

105. GROWTH/INNOVATION LEARNING
PRESPECTIVE
OBECTIVE MEASURE TARGET
Training of staff and
crew for use of internet
tools and software
Accomplishment of
training
Maximum of 2 months
Employing team
building activities
accomplishment of
activity
At least once a year

106. FINANCIAL PROSPECTIVE
OBECTIVE MEASURE TARGET
To have a positive and
increasing ROE
Percent ROE At least 10% in 1
year
Employing team building
activities