Krispy Kreme

Krispy Kreme, which currently has about 4,000 employees, plummeted in the market with stocks reported to have fallen 50% this year.   “Company shares that once sold in the $40s closed at $8.07 in Friday trading.   By one estimate, 80 stores have closed in the last two years.   Krispy Kreme operates about 400 stores, including 316 in the United States” (Branding Blog, 2009).   The company recently disclosed prolonged shortfalls in its third quarter with projections of a significant number of franchised stores that are expected to close in the immediate future.   “The company lost 5.9 million.   Revenue fell by 9 percent to 94.3 million.   Same sales stores plummeted by 12 percent.   Company-owned stores, which make up 20 percent of the total, lost 4.5 million, up from 1.9 million, which is 2.6 million more than it lost in last year’s third quarter” (Branding Blog, 2009).
      Krispy Kreme’s donuts may be very tasty, but the franchise over extended itself during its prime in the 1990s by embracing a large amount of debt.   This large dept now necessitates lofty returns to meet operating costs and expenditures. The company began to struggle in many parts of the United States.   Where the company once had chains in 8 areas it now has only 4.   While Krispy Kreme has slashed expenses and closed stores not maintaining the bottom line, the chain still has not earned an operating profit in three years.     With the present state of the economy, consumers are holding on to their dollars on most everything, such recovery efforts may be unsuccessful in trying to counterbalance top-line short falls, directing Krispy Kreme to search for some kind of reprieve from investors over in the future.   In the meantime, the company is contemplating baby steps.   In addition to decreasing chain openings and closing some stores, the Krispy Kremes says it may also scale back the stores themselves.   Some shops have opened minimal stores with small expenses and larger profit gains.   This technique may...