Why Krispy Kreme is 'hot now'
Amid takeover speculation, the doughnut maker adopts a 'poison pill' and sets upon an ambitious expansion path.
Krispy Kreme (KKD)'s doughnuts aren't the only things that are hot at the company. The stock price has jumped 64% in the past year.
The stock surge has come amid speculation that Krispy Kreme could get gobbled up by a larger company, and marks a big turnaround from where the doughnut maker was a decade ago.
On the heels of the takeover speculation -- and a "poison pill" strategy to deter a hostile takeover -- Krispy Kreme is embarking on a new plan to entice investors: It's planning an ambitious store rollout that will boost the number of outlets by 71%, reports Bloomberg.
Known for its "hot now" neon signs that light up when the doughnuts are ready, Krispy Kreme wants to deliver its deep-fried goodies to about 400 new locations. Most of those will be outside its Southeast base, according to the report.
The expansion is a recipe from chief executive James Morgan, who was tapped to run the company in 2008 after Krispy Kreme hit upon hard times.
The doughnut company wowed investors with its 2000 initial public offering, when the stock was a darling of both retail and institutional investors. With demand high for the stock, shares surged to almost $50 in 2003.
But the stock soon grew stale. Amid franchisee bankruptcies and downward sales, Krispy Kreme was at risk for getting delisted from the New York Stock Exchange, and traded for as low as a buck and some change in 2009.
Under CEO Morgan, the company has made a slow and steady comeback. While doughnuts are still its bread and butter, Krispy Kreme has added fruit-based drinks and specialty doughnuts such as the double dark chocolate doughnut, which is available through Feb. 17 at some stores.
He's also reached out to younger, tech-savvy consumers, creating iPhone and Android apps that deliver the "hot now" doughnut sign alert to smartphones when local stores have fresh goodies.
Krispy Kreme is also benefiting from an American trend to seek out smaller meals instead of spending as much as $30 at chains such as Applebee's, restaurant consultant John Gordon told Bloomberg.
Still, Krispy Kreme has room to grow: The company's U.S. market share is only 2.1%, compared with 25% for rival Dunkin' Brands Group, according to data from IBISWorld cited by Bloomberg.
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Kick out the crappy MR DONUGHTS chain that we have in Japan and replace each one with a Krispy Kreme please LOL
"Krispy Kreme wants to deliver its deep-fried goodies to about 400 new locations. Most of those will be outside its Southeast base, according to the report."
Doughnuts are cooked by floating on top of hot oil. They are not "deep fried." You must be thinking of fast-food chicken and okra.
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