Will Russians love Krispy Kreme?

The company is planning to open 40 locations in Moscow alone over the next five years.

By Kim Peterson Apr 23, 2012 3:25PM
Credit: © Vincent Thian/AP
Caption: A customer orders doughnuts at a Krispy Kreme store in Tokyo, JapanGet ready, Russia. Krispy Kreme is coming.

It's hard enough to find a Krispy Kreme (KKD) store in many U.S. cities, but residents of Moscow will soon be swimming in glaze. The company is planning to build 40 Krispy Kreme shops in that city alone in the next five years.

That's a lot of doughnuts. The largest cities in the U.S. don't have anywhere near that many. Los Angeles has one store. Same for New York. Chicago and Houston have none. Krispy Kreme has closed many underperforming U.S. locations over the last several years.

So why Moscow? And can one city sustain 40 Krispy Kreme locations? The company has Arkady Novikov to thank for the deal. Novikov is nothing short of a celebrity in Russia, a multimillionaire who owns some 50 restaurants in Moscow. He recently opened his first restaurant in London.

Novikov obviously thinks big, and he has signed on as a Krispy Kreme franchisee. "We believe Krispy Kreme's premium products and one-of-a-kind experience will quickly become a favorite of Muscovites," he said in a statement announcing the deal.

Novikov knows the Moscow dining scene better than any one else, and if he thinks the city can handle 40 locations, how can Krispy Kreme say no to that?

Krispy Kreme shares were down nearly 3% to $7.18 in Monday's down market.

Even as it rethinks its U.S. strategy, Krispy Kreme has been busy expanding internationally. In fact, most of its 694 stores are now outside the U.S. The company is aiming for 1,000 international locations, reports the Winston-Salem Journal.

Doughnuts apparently do very well in Russia. Dunkin' Brands (DNKN) has opened 15 Dunkin' Donuts locations in Moscow over the last few years, reports the Moscow Times. It's planning to open four more this month.

Krispy Kreme's president and chief operating officer left the company earlier this month after less than five months in the position. CEO James Morgan has assumed the duties of president since then.

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Apr 23, 2012 6:07PM

Krispy opened up a couple shops in CT about 8 years ago and were shut down within a few years of operation..   Everything was glazed or sugared and being diabetic I never went back and have been a Dunkin Donut fan for over 40 years..    The first time I went in Dunkin Donuts outside of Boston they had quite a variety and there was a counter with stools (like a drug store soda fountain) to sit inside and I believe I paid 20 cents for a donut and coffee..    Now I can't stand getting in line for a coffee with kids getting these special whipped cream coffee's that hold everyone up and a menu list which is becoming like a McDonalds..    All I want is a donut and small coffee which now runs me over $2 and the donuts are smaller...    

Apr 23, 2012 4:28PM
Might as well go over there and make the Russians as fat as we are.
Apr 23, 2012 5:43PM
Several years ago, they did a huge expansion in the U.S., and ended up closing up them all down in less than a year. Hope the Russkies are primed for disappointment, because that's probably what will happen there as well.
Apr 24, 2012 8:08AM

OMG!!! That is what Americans going to do to the Russians?? C'mon, people, you already won the cold war. Sent those dougnuts to Iran!!!

Apr 23, 2012 8:08PM

Sell that KK stock before you lose all of your money to some sure-to-be-failing culinary entrepreneur in central Moscow.  Just sayin.

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