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.”
Food & Beverage
Our Secret is Out
We never meant to keep it a secret. Truth be told, we’ve communicated it in not-so-subtle ways for many years. Perhaps we should have tooted our horn more or made a ruckus. But we had faith and knew you would see it too. The situation spoke for itself.
And now we’ve been proven correct.
It began with this year’s edition of the National Restaurant Association’s annual “What’s Hot” survey. Once again the results showed that American Culinary Federation chefs feel ethnic-influenced breakfast are “Hot.” That meant that eggs and their traditional home turf continue to be recognized as something alive and vibrant. Yes!
Then the brand and product consultancy Sterling-Rice Group (SRG) issued its annual “Cutting Edge Dining Trends” for 2014, naming one of its ten trends “The Year of the Yolk.” Although whole eggs remain in growth mode, in SRG’s view the yolk itself will be making news this year. The group’s belief is that the “creamy, decadent, golden globe will reign in 2014,” providing a richness to foods that might have been thought to be the sole jurisdiction of cheeses and creams.
Examples of operators chosen by SRG to show those currently using yolks in creative ways are fine dining operations, which are traditionally where trends incubate before moving on to other segments’ menus. Included among them are Blackbird (Chicago) and its Heirloom Tomato Salad with Cured Egg Yolk, and Blue Hill (NYC) with an Egg Yolk Carbonara in celery root and bacon.
To be sure, cured egg yolks are showing up on more and more menus, and the growing interest in Korean cuisine in which yolks are an integral part will also increase their visibility. We’re looking forward to seeing what else creative chefs do to prove the Sterling-Rice group right.
Then, in January, came this pronouncement from Restaurant.com: The #1 trend in 2014 for American eateries would be eggs. And not just in the morning.
“Overall, 2014 really will be the year of the egg,” stated Christopher Krohn, president and CEO of Restaurant.com, the largest restaurant dining deals website.
The organization reviewed thousands of menu items from more than 15,000 operations to prepare its 2014 trend predictions. The item that kept rising to the top? Eggs.
Krohn expects to see “an explosion of egg dishes in 2014.” Although breakfast is a given, he anticipates significantly more eggs on lunch and dinner menus as well. And the dishes won’t be only traditional egg salads or quiche, but also egg-topped salads, burgers, pizza and pastas.
The breakfast-for-dinner trend is expected to continue to grow, as will availability of ethnic egg specialties such as Huevos Rancheros. Eggs have a lot going for them. They appeal as a comfort food, are also extremely versatile and fit into a wide variety of cuisines.
So our secret is now out. Or had you already figured it out?
Yeah, I thought so.
For more, visit www.AEB.org.
Go to bit.ly/LidG5V to read our first three 2014 Incredible Breakfast Trends on Asian influenced breakfasts, the evolution of Latin-inspired breakfast cuisine, and the success of breakfast-focused food trucks.