hrd 328 team project - krispy kreme

8/6/2019 HRD 328 Team Project - Krispy Kreme

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Denise Cheng, Claudia Funes, Emma Geach, Jennifer Lin, Brian Walker

HRD 328Team Project

February 16, 2010


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Executive Summary

Known for their hot doughnut experience and doughnut theatres, Krispy

Kreme Doughtnuts, Inc. is currently facing many major obstacles in its

business operations and organizational structure. Recent SEC filingdiscrepancies have added to the lack of optimism (and

market confidence?) among stockholders. A major reason for the decline in

franchise sales is because of market oversaturation and overexpansion. The

company doubled its number of stores from 70 to 150 in 3 years and supplied

their products to other outlets such as supermarkets, gas stations,and convenient stores without examining the quality of their products or their

marketing strategy. Currently, the company is planning to develop small retail

concept stores, cut costs, and expand upon their beverage and Kool Kreme

concepts.

This presentation will examine the history of Krispy Kremes strategy, their

current strategy (delete "now"), and our recommendations to transform the

company into a high performing organization with the assistance of the

balanced scorecard approach, HR best practices, and a better organizational

strategic direction.

DC, CF, EG, JL, BW


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Agenda

Company Overview Company Strategy Then and Now

Key Performance Indicators

SWOT Analysis

New Organizational Strategy

New Human Resources Strategy

A Balanced Scorecard Approach Questions?

DC, CF, EG, JL, BW


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Company Overview Founded in 1938 by Vernon Rudolph

Bought a secret yeast-raised doughnut recipe from a French Chef

People wanted hot doughnuts so he cut a hole in the wall and started selling Hot

Original Glazed doughnuts directly to customers

1976: bought by Beatrice Foods

1980s: focus on hot doughnut experience

1982: small group of Associates bought back from Beatrice

Renewed focus on hot doughnut experience priority

2000: held initial public offering of common stock, opened first

international store in Canada

2001: acquired Digital Java, Inc.

2002: introduce 4 new signature coffees to stores Franchises available in US, Canada, Asia, Mexico, Puerto Rico, Australia and

Eastern and Western Europe

DC, CF, EG, JL, BW


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Then Hot Doughnuts Now Experience

Doughnut Theatre experience Rely on Word of mouth than paid advertising

Growth binge in 1990s

Location close in proximity

Sell brand everywhere and anywhere Ranged from Gas stations to Kiosks

Now Develop small retail concept store

Cook doughnuts on site or have them delivered from nearby factory store

Less expensive to open, run, and staff

When locations are supplied by a large Krispy Kreme factory store, I improves the utilization of thefactory store and significantly enhances return on those stores

Convenience

Cost cutting measures to strengthen bottom line Kool Kreme soft serve ice cream

Baked goods

Coffee, expresso, blended drinks

Limited Time Only Valentines day heart shaped donut promotion more than 100 US stores old 400,000 of the donuts

Switch products with 0 grams of trans fat

Company Strategy

DC, CF, EG, JL, BW


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Financials/KPIs

2009 Total Revenue: $383,984 Return on investment: -0.67

Compared to Starbucks 14.49 and industry ROI 1.39

Inventory Turnover

18.72 days compared to industry 0.61 turnover

DC, CF, EG, JL, BW


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SWOTAnalysisStrengths Cost advantage

Nationally known brand of donuts Donut making theatres

Strong community relationships

One of a kind taste

Excellent locations

Streamlined doughnut making process

Buying power for doughnut ingredients and

store operating equipment

Opportunities Emerging markets and expansion abroad

Innovation Product and services expansion

Premium coffee lines, beverage program

Offer more health conscious items

Co-branding opportunities

Krispy Kreme Charge card

Weaknesses Limited menu items

Lack of advertising Opening additional locations without focus

on increasing store performances

Legal issues Channel Stuffing

Credibility of company management Accusations of misconduct

Bankruptcy filings by several of its franchises Low Inventory Turnover Ratio

Average 18 days compared to industry 0.61days

Threats Competition

Dunkin Donuts, Starbucks

Economic slowdown

External changes Government, politics, taxes

Market leaning towards healthier foodproducts

Increasing cost of ingredients

So What?:

Krispy Kreme must sharpen its strengths, focus its

competitive advantage, and offer a greater selection of

products that meets customer demands for deliciousand healthier doughnuts, while creating a unique

purchasing experience to attract and retain customers.

DC, CF, EG, JL, BW


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Organizational Strategy Go back to core business of the doughnut experience

Quality control Continuous improvement

Research and development

Recipe refinement

Better ingredients More health conscious

Unique Classic Breakfast and/or Snack Experience

Location

No retail concept stores without factory experience

Remove poor-quality/lesser-quality KK Doughnuts from gas stations,

7-11s, and supermarkets

Find a more exclusive location that will act as an attraction (one

location per major city)

Combine retail portion with factory experience DC, CF, EG, JL, BW


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Organizational Strategy Marketing

Find Specific Market Niche Target mass market niche

Increase fresh doughnut prices from $0.50 to $1.00 (50%

increase)

Offerings of Seasonal Items (winter coffee, summer ice cream)

Doughnut Card with Incentive Plan

Advertising -- TV/Internet/Magazines

Kool Kreme, Coffee, Chillers, low fat doughnuts/products

Strategic Partnering

Jenny Craig/Weight watchers (100 calorie dessert options)

IKEA (Finding Big Chain Stores with High Foot Traffic to open small KK

factory retail for shoppers)

National Gyms (e.g.: 24 Hour Fitness; LA Fitness); Marathon Runners

DC, CF, EG, JL, BW


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Human Resources Recruiting/Culture

Family environment Old fashioned feel

Value employee creativity and innovation

Competencies

Positive Attitude

Image/brand management

Training and Development

Marketing -- employee word of mouth

Development of employees

Leadership

Management

Product knowledge

Team Development

Customer service -- unique purchasing experience

Personal touch

DC, CF, EG, JL, BW


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Human Resources Quality Control

Unique products -- trial and error (Panda Express)

Research and development

Performance Management Program

Employee engagement/retention

Incentives

Suggestion box

Succession planning

Employee Performance

Attitude, competency, customer service, contributing to positive experience,promoting different products, maintaining culture

Social Responsibility

Fundraising Outreach to surrounding communities

Volunteer employee time

Promote Social Responsibility

DC, CF, EG, JL, BW


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BSC Approach Product/Service Attributes

Knowledge of products Continuous Improvement Feedback

Proper preparation of products

Customer Service

Personal touch

Smiling, friendliness, asking for name on orders, etc

Maintenance/Improvement of Company Image and

Reputation Knowledge of company history, how doughnuts are made,

company image portrayal, etc

Attitudes and behaviors (in alignment with team?)

Customer Interaction (Courtesy and Politeness)DC, CF, EG, JL, BW


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BSC Approach

Employee Competencies

Leadership skills

Management skills

Interpersonal/Communication skills

Team-player skills

Financial

Revenues

Inventory turnover Return on investment

Stocks

DC, CF, EG, JL, BW


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References 2009 Krispy Kreme Annual Report. Krispy Kreme, Web. 26 Feb 2010. .

" Financials: Krispy Kreme Doughnuts, Inc. (KKD) Stocks." BUsiness & Financial News, Breaking US & International News. Reuters, Web. 26 Feb 2010.

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Gentry, C.R. (2006). No more holes at Krispy Kreme. Chain Store Age. New York: 82, 7, 64.

Hovland, Christa. "Krispy Kreme CEO confident in brand strategy." 12 May 2009. QSR Web, Web. 25 Feb 2010.

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Kell, J. & Barris, M. (2009). Corporate news: Krispy Kremes loss narrows. WallStreet Journal. New York, New York.

Krispy Kreme. Wikipedia, Web. 26 Feb 2010. .

"Krispy Kreme Expands Kool Kreme Test." 05 Aug 2009. Web. 26 Feb 2010. .

"Krispy Kremes Chief Executive Quits Amid Turnaround ." 08 Jan 2008. The New York Times, Web. 26 Feb 2010.

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"Krispy Kreme Presskit." Krispy Kreme, Web. 26 Feb 2010. .

"Learning from the Franchising Mistakes of Failed Krispy Kreme." 27 Jan 2010. Morebusiness.com, Web. 26 Feb 2010.

.

Lockyer, Sarah. "Analysts: Krispy Kreme outlook not so sweet: company admits operational and strategic changes needed to increase profits." 06 Sept

2004. BNET, Web. 26 Feb 2010. .

Lockyer, Sarah. "Krispy Kreme looks to climb out of the hole with new strategy." 13 Nov 2006. BNET, Web. 26 Feb 2010.

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May , Rob. Krispy Kreme Part II - A BadStrategy. 23 June 2003. Business Pundit, Web. 26 Feb 2010. .

Mayes, W. Krispy Kreme. University of Oklahoma, Web. 26 Feb 2010. .

McCormack, S. (1998). Sweet success. Forbes. New York: 162, 5, 2.

McGreer, Ben. "Krispy Kreme Marketing Plan." 17 Jan 2009. Web. 26 Feb 2010. .

Peters, J. (2003). Krispy Kreme brews new drink slate as doughnut field booms. Nations Restaurant News. New York: 37, 23, 4.

"Strategy: Krispy Kreme Word-of-Mouth Tactics Continue to Go Against the Grain." 21 Oct 2002. Brandweek, Web. 25 Feb 2010.

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Szczepaniuk , Jack. "Krispy Kreme Doughnuts." 22 April 2008. Web. 26 Feb 2010. .

Wilson, M. (2004). Recipe for comfort. Chain Storage Age. New York: 80, 4, 70.DC, CF, EG, JL, BW

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