McDonald’s are set to start selling Krispy Kreme doughnuts at 9 locations in Kentucky, in a testflight of a partnership between the two chains.
Get that dough
Founded in 1937 in Winston-Salem, NC, Krispy Kreme has a storied history. After originally selling direct to grocery stores, founder Vernon Rudolph soon had customers asking if they could buy fresh doughnuts after smelling them while walking down the street — so he cut a hole in the wall and started selling straight to customers. Rudolph’s efforts eventually turned into the Krispy Kreme Corporation, a company that grew modestly until the 1990s, when they expanded aggressively with franchised locations all across the US — with an IPO following in April 2000.
After going public Krispy Kreme grew quickly, but management were glazing over the details. Franchisees accused them of overloading certain areas, leaving franchisees competing with each other. More seriously, some accused Krispy HQ of "channel stuffing" — claiming that twice the number of doughnuts they actually needed would turn up at their franchise in the final few weeks of a quarter, in order for the company to meet its sales targets. Growth slowed, losses mounted, the CEO blamed low-carb eating and the company teetered on the brink of bankruptcy.
The hub and the spoke
The company was eventually taken private in 2016, and new management are now all-in on a “hub and spoke” model. Stores — or other mini-factories — now act as the “hub”, serving a number of “spokes” like grocery stores, retail locations and now the Golden Arches. The idea is that by having smaller “hubs” near the “spokes” the doughnuts can be super fresh, helping them to charge premium prices. Rudolph would approve, and customers seemingly have too, with sales set to top $1.5bn this year, triple what they sold in 2015.
