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Krispy Kreme Doughnuts Incorporated Case Study Solution

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Submitted By maimemai
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Krispy Kreme Doughnuts, Inc.

I. POINT OF VIEW
This case is analyzed from the point of view of a third party consultant.
II. PROBLEM
There is inefficiency in the management of Krispy Kreme Doughnuts, Inc. in terms of its operations, marketing, accounting, and investment planning.
III. OBJECTIVES
a. To gradually gain back analysts’, investors’ and lenders’ confidence in the company in the succeeding months.
b. To increase sales and profitability in terms of its core business, selling of doughnuts.
c. To regain and increase stock price therefore increasing shareholder value.
d. To correct inaccurate entries in the financial statements of KKD and to present a clean and unbiased reports.
e. To extend further reach to consumers strategically to achieve significant growth in the next five years.
f. To implement extensive marketing measures for its brand and products and investment strategy for both on and off premise operations.
IV. AREAS OF CONSIDERATION
• Fortune magazine had dubbed Krispy Kreme Doughnut, Inc. “the hottest brand in America.” With ambitious plans to open 500 doughnut shops over the first half of the decade.
• The company generated revenues through four primary sources: on-premise retail sales at company owned stores (27% of revenues), off-premises sales to grocery and convenience stores (40%); manufacturing and distribution of product mix and machinery (29%); and franchise royalties and fees (4%).
• Roughly 60% of sales at a Krispy Kreme store were derived from the company’s signature product, the glazed doughnut.
• On May 7, 2004, Krispy Kreme announced adverse results. The company told investors to expect earnings to be 10% lower than anticipated, claiming that the recent low-carbohydrate diet trend in the United States had hurt wholesale and retail sales.
• The company also said it planned to divest Montana Mills and would take a

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