Krispy Kreme Fell Apart, Then Came Back Strong. Here's How.
Ah, that smell! The smell of featherlight, just-out-of-the-fryer doughnuts covered in a sugary glaze. The smell so good it drew lines of single-minded devotees, zombie-like, to the wholesale factory during the only time they were allowed to buy them -- between midnight and 4 a.m., through a window cut into the wall. Even the name was delicious: Krispy Kreme.
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That’s how the iconic company started, in Winston-Salem, N.C., in the 1930s. How it nearly ended, decades later, is a case study in how franchises can stumble. First there was the sale, in the 1970s, to an international conglomerate so big it peddled everything from luggage to bras to window treatments. For the new parent company, a doughnut chain was a handy way to unload products made by its other myriad divisions, including soup and ice cream -- which it actually sold at Krispy Kreme outlets. To cut costs, it even committed the sacrilege of changing the doughnut recipe.
Saviors emerged in 1982, when outraged franchisees banded together to buy back the company. But 18 years later, when the new owners took it public, the brand got sidelined again while scrambling to satisfy Wall Street’s demand for higher earnings, fast. It responded to this pressure by abandoning its famous neon-clad promise of “Hot doughnuts now,” making some of its signature product in central kitchens and trucking it to stores, and by selling cold doughnuts -- cold Krispy Kreme doughnuts!
