Growth | September 2012 | By Sonya Chudgar
The 75-Year Roller Coaster
It seems so simple.
Seventy-five years ago, Krispy Kreme created a product people loved. It was nothing more than a deep-fried ball of dough with a hole in the middle, but since the time when Franklin D. Roosevelt reigned in the Oval Office, Krispy Kreme has reigned over the oval offering.
Ask Krispy Kreme CEO Jim Morgan how the company stays solvent by focusing on a product as straightforward as the doughnut, and he gives a small laugh. “No one’s ever asked that question before,” he says. “That is interesting.”
Of course, the secret to Krispy Kreme’s success has been enigmatic for years. No one quite knows how the brand conceived the addictive recipe for the doughnut and leveraged it to convert everyday people into religious Krispy Kreme diehards (and made it look easy).
“One thing that really gave us a head start is [we have] that one product that, darn it, just happens to be the best product in the world,” Morgan says. “I know there should be something more complicated than that, but I’m not sure there is.”
Some experts say a brand that adheres to one product, however beloved, is unsustainable.
“Brand loyalty counts for a lot, and loyalists are great, but you can’t keep milking the same cow,” says Cliff Courtney, chief strategy officer at Zimmerman Advertising. Zimmerman is a national retail
brand builder and the agency behind quick serves such as Papa John’s, White Castle, Firehouse Subs, and Boston Market.
“It’s not enough for any brand to try and remain relevant today based on what they did in the past,” Courtney explains. “All brands must evolve because society evolves. The marketplace evolves. Pricing evolves. Recessions evolve. You can’t just say, ‘We will stand for this forever.’”
That stance, however, is exactly Krispy Kreme’s strategy.
The Hole in One
The dough mix in Krispy Kreme’s doughnuts has barely been altered in 75 years. The mix, in fact, is still blended in the same plant in Winston-Salem, North Carolina, that has been in place for 67 years. Much of the original equipment is still in use.
“I’ll quote you a friend of mine when I came here a couple of years ago,” says CMO Dwayne Chambers. “They said, ‘Listen, I don’t know what you’re going to do there—just don’t mess it up.’”
Unlike other concepts that constantly add new combos and menu items, Chambers says, Krispy Kreme has remained top of mind by understanding what its fans want—hot, fresh doughnuts—and concentrating on that without straying into other avenues.
The modest menu has given birth to an animated fan base. Krispy Kreme’s Facebook page is 4.5 million fans strong—a feat, given the brand initiates little to no traditional marketing and has only 250 stores in the nation. Fans have been known to motor down highways on eight-hour road trips to access the nearest Krispy Kreme, and they take orders from friends and neighbors along the way.
Chambers says fans extrapolate an emotional connection to the sweet treat, and that bond heartens them to build and drive the concept.
“People come to Krispy Kreme not because they’re hungry,” Chambers explains. “There are a lot of things they could do to solve an appetite need. They come because they have a desire. It may be a reward for a great week or a tough week or a hard day. It may be that, ‘Hey, I just got a new boyfriend,’ or, ‘Hey, I just lost my boyfriend.’ Somehow, there’s an emotional reason that people want to be comforted by doughnuts.”
To feed the cravings, Krispy Kreme’s R&D team has a roster of close to 300 doughnut varieties it can roll out. While the original glazed doughnut is still the biggest seller, Chambers says the multiplicity of toppings, fillings, shapes, characters, flavors, and themed doughnuts make the possibilities endless—except when it comes to health-focused doughnuts. The company learned its lesson when it debuted a whole-wheat doughnut in 2007.
“The story I like to tell is, I bought one and thought it was pretty doggone good,” Morgan says. “Somewhere, someone else in the country bought one. And those are the two we sold. And that’s not far from the truth.”
Courtney says concocting a whole-wheat doughnut takes away from Krispy Kreme’s identity as a favorable indulgence. “When Americans want to satisfy a craving, 47 percent of them choose unhealthy foods,” he says. “So understand who you are and what you’re selling.”
Given that the barest menu item is the biggest seller, Morgan says executives often talk about whether the novelty will ever wear off. “And the answer is no,” he says. “I think it’s not really novel; it’s almost a staple … I really don’t worry about it being a trend or a fad or being out-motored.”
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