News Column

Krispy Kreme to Open Its 500th International Shop

Dec. 6, 2012

Richard Craver

Krispy Kreme 75th anniversary array
Krispy Kreme 75th anniversary array

Krispy Kreme Doughnuts Inc. will reach a symbolic threshold Friday with the opening of its 500th international shop.

The debut of a franchisee shop in Aguascalientes, Mexico, comes just 11 years after the company began selling its iconic glazed delicacies internationally.

International franchise sales represented 11 percent of Krispy Kreme's revenue ($17.8 million) through the first three quarters of its fiscal year 2013.

However, global expansion is a big part of its growth strategy.

Counting the United States, Krispy Kreme has franchisee shops in 21 countries: Australia, Bahrain, Canada, China, Dominican Republic, Indonesia, Japan, Kuwait, Lebanon, Malaysia, Mexico, the Philippines, Puerto Rico, Qatar, Saudi Arabia, South Korea, Thailand, Turkey, United Arab Emirates and United Kingdom.

It has signed franchisee agreements this year to enter India, Russia and Singapore. It is also pursuing a franchisee in Brazil.

"Sharing the unique Krispy Kreme brand experience with more and more fans around the globe is incredibly rewarding," said Jeff Welch, president of Krispy Kreme's international division. "I believe we have only just begun to see what is possible for our brand globally.

"As a result of a strategic approach to international growth, we have commitments for nearly 400 additional international locations, so we are well on our way to meeting our corporate goal of 900 international stores by the end of fiscal 2017.

In the past 17 months, Krispy Kreme has announced major expansions for the United Kingdom (35 planned new shops, for a total of 80), Japan (73 planned, to 94) and Mexico (58 planned, to 128), as well as entering the following countries, India (115 shops), Russia (40) and Singapore (15).

Krispy Kreme entered Mexico in 2004. The new Aguascalientes store is its 90th in the country.

Sean Williams, an analyst with The Motley Fool, said in October that international sales will become increasingly important to Krispy Kreme as it again approaches sales saturation within domestic markets.

"Management can add new flavors, healthier options such as yogurt and more coffee styles, but they will not move the needle in terms of revenue," he said. "International sales can, in part because the obesity trend pushback in the U.S. is not seen as much in other countries."

Williams said Krispy Kreme's Asian expansion plans are similar to those of tobacco companies, with both trying to entice young middle-class consumers who have disposable income.

"Krispy Kreme is doing a better job understanding its international customers," Williams said. "Having learned its lesson about expanding beyond its means, it's focusing on smaller factory stores to keep costs low and maximize its potential in smaller population areas.

"Keep your eyes peeled for excessive spending, but international markets look like a genuine area of consistent growth for Krispy Kreme."

Source: (c)2012 Winston-Salem Journal (Winston Salem, N.C.) Distributed by MCT Information Services

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