Industry News | August 27, 2008

Dunkin' Donuts Moves to Krispy Kreme Hometown

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It was practically inevitable. With Dunkin’ Donuts’ rapid expansion in top gear and store counts dwarfing those of Krispy Kreme by more than 5,500, it’s not surprising that the Massachusetts-based bakery and coffee concept is knocking on Krispy Kreme’s door in Winston-Salem, North Carolina. “Dunkin’ Donuts is expanding into the Winston-Salem market because, now more than ever, there is a growing demand in the market for what we offer,” says Lynette McKee, vice president of franchising for Dunkin’s Brands.

Dunkin’ Donuts franchisee Sunny Patel plans to open five stores in Forsyth County, home to Krispy Kreme headquarters. Winston-Salem already has two Dunkin’ Donut stores. Another franchisee Sundeep Makhani plans to bring eight stores to the area over the next four years and possibly more after that.

The move to increase stores in the area is part of Dunkin’ Donuts’ aggressive expansion, which it launched in 2006. That plan laid out a strategy for entrance into markets in the West as well as markets with existing stores like Winston-Salem.

According to reports from the town’s local newspaper, The Winston-Salem Journal, Makhani is not worried so much about Krispy Kreme as he is the other quick-serves in the area. He sees McDonald’s and Bojangles’ as the brand’s nearest competitors since most traffic for Dunkin’ Donuts comes from coffee sales.

According to numbers from corporate, Dunkin’ Donuts beverage sales account for about 63 percent of sales while donuts constitute only 17 percent.

Brian Little, director of corporate communications for Krispy Kreme says the brand is more focused on its own expansion efforts than encroaching Dunkin’ Donuts franchisees. According to Little, the brand, which just refranchised a location in Arizona, is actively seeking real estate in North Carolina and Tennessee.

“Dunkin’ has had a presence in Winston-Salem for a couple years,” he says. “Krispy Kreme has been a part of this community, has been giving back to this community, for more than 70 years. So we welcome these new franchisees and we wish them well.”

McKee is confident that Winston-Salem customers will embrace the brand. “Dunkin’ Donuts is the world’s largest coffee and bakery quick-service restaurant,” she says.

Krispy Kreme has failed to find its footing after its fall from grace in 2004. The year before was the peak of the brand’s performance with shares reaching $49.37 and store counts totaling 357 nationwide.

Dunkin’ Donuts has about 5,769 stores in the U.S. with system wide sales of $5.3 billion during fiscal 2007.

--Blair Chancey