Krispy Kreme Is In Serious Trouble

For a place that makes some pretty damn good donuts, Krispy Kreme isn’t quite as good at managing their money. The troubled donut maker will close about half of its 15 Chicago-area stores and its Illinois franchise will enter Chapter 11 bankruptcy. From the Chicago Tribune:

Sweet Traditions [franchise] abruptly shut down its three tollway oasis locations in May, citing high rent and low foot traffic.

Schlegel said the company had been obligated to pay leases at a total of seven oasis location, even though it had shuttered three and had not built stores at the other four.

“We were needing to get out of those leases,” Schlegel said. Bankruptcy allows companies to void unwanted leases.

Schlegel said some corporate practices at Winston-Salem, N.C.-based Krispy Kreme had also hurt her company.

At one time, the company required its franchisees to build large factory stores, where all doughnuts are made on site. The stores cost about $3 million each, Schlegel said, a large capital investment that was difficult to recover.

We’re not experts or anything, but you sort of need to sell more than donuts to make money, especially if your stores cost $3 million to build. Krispy Kreme stores are in trouble all over the country. What gives?

America: Why aren’t you eating at Krispy Kreme? Still doing that Atkins diet?

Krispy Kreme cools further [Chicago Tribune]

Comments

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  1. letoofdune says:

    Nooooooooooooooooooooooooooooooooooooooo – *gasp, pant, wheeze, cough* -oooooooooooooooooooooooooo!

  2. foghat81 says:

    It’s a shame we’re down to 3 in Ohio now….all in places I don’t care to haul myself out to. The fact that you can get Krispy Kremes at gas station stores makes the 15-20 mile drive out of the question. Perhaps selling them at non-factory stores was the beginning of end?

  3. Steel_Pelican says:

    Krispy Kreme corporate is probably making more profit by selling the donuts at other retail outlets (I get them at Turkey Hill and Sheetz, 2 PA-area gas station/convenience store chains), so they’re shafting their franchises.

  4. remedies says:

    so…it’s not time to make the donuts? :[

  5. warf0x0r says:

    Those things are nasty and the stores have this cloud of sugar that surrounds them. The first/last time I went into one I almost gagged, plus no Debit card purchases under 1.49. A big plus though, the guy just told me to take the single donut I was sent to retrieve. Great Customer Service, if you can call it that. Horrible cloud of sugary death.

  6. ReverseCarpetbagging says:

    I’m not sure it’s Atkins. I think it’s just that Krispy Kreme only offers donuts. Dunkin’ Donuts survived a long time on donuts and coffee, but even they realized that they might need something else and I can only assume that is what lead to the Baskin/DD stores. When Krispy Kreme can offer a solid cup of coffee, then they might be able to hold on. Blame it on Rosie O’Donnell. I also dig Dunkin’ Donuts better than Krispy Kreme.

  7. brendanm14 says:

    Bascially they did this to get out of the Illinois Tollway Oases. They closed up shop in 3 of them, but yet had to pay for 4 others that have not yet been built. A pretty good business decision I guess. Some of the locations are bringin’ in the $$$ like they used to. The one in Union Station is always crazy….plus with Dunkin Donuts adding stores like crazy in the Chicagoland I could see this coming.

    “We were needing to get out of those leases,” Schlegel said. Bankruptcy allows companies to void unwanted leases.

  8. vonskippy says:

    Business Model = mediocre
    Main Product = Dichromatic (you either love them or hate them).
    Health Trend = rising.
    Swimming in red ink = go figure.

  9. mmcnary says:

    As a Krispy Kreme purist, I only like to buy them when the red ‘HOT DONUTS’ light is on…

  10. bluegus32 says:

    I Miss them so! The KK just down the street from my office shut down a month ago. My wife thinks that their donuts were so-so but she’s wrong. Their donuts were delicious and I truly weep for my loss.

    Damn it! Now I want some of their donuts and I can’t have them!

  11. B says:

    If I remember correctly, Krispy Kreme used to use some accounting tricks to make the stores look more profitable then they really are. They went public, and expanded rapidly based on the misleading numbers, and now they’re in major trouble.

  12. timmus says:

    I’ve never understood the hype over Krispy Kreme. We tried them a few times when they opened up a new store, but it was just kind of “eh, that’s nice”. You can only pack so much sugar and HFCS into an item before you reach an endorphin plateau. Plus I don’t like binging on ultra-high calorie desserts… if I feel like blowing a diet I’d rather do it on a real meal.

  13. timmus says:

    I tried posting a comment but got an error message that it was a “duplicate post”. WTF?

    Anyway I was just saying that I’ve never understood the hype with Krispy Kreme.. it’s basically just fresh donuts with tons of sugar and HFCS. You’ll find me at Wendy’s and Jack In The Box a lot, but I just can’t bring myself to blow a diet on sweets.

  14. timmus says:

    what? now my old comment appears? I give up!

  15. JosephFinn says:

    “America: Why aren’t you eating at Krispy Kreme?”

    Because they suck? Really, you can get a better donut over at Dunkin’ Donuts.

  16. mandarin says:

    Dunkin Donuts forever!

  17. Don Roberto says:

    They left the Houston market a couple of years back. I like Shipley’s a whole lot better.

  18. awall25 says:

    KK are far superior to Dunkin Donuts. Seriously, it’s not even a question.

    Also, if you haven’t ever had a fresh one from the store then you are really missing out. The ones that sit in gas stations are terrible.

  19. scoobydoo says:

    The Chicagoland Oasis locations are nice, but KK isn’t the only vendor in trouble there. At the nearest one here the Hot dog vendor lasted 6 months, the ice cream/juice vendor closed, the Mrs.Fields is gone… The rent is apparently extremely high and the funny thing is that the owner is getting rent, but isn’t passing it on to the Illinois Tollway Authority…

  20. jbohanon says:

    In some places they saturated the market. Sure there were huge lines the first few weeks, but they lost their novelty after that, and all of a sudden they had three stores in a medium-size town all doing poorly.

  21. King of the Wild Frontier says:

    $3 million per store? The hell? Folks, it’s a donut. Someone in their corporate office must be smoking the Krispy Krack if they think that your average donuteria is going to pay that back.

    Yes, the donuts are nice if you get them right out of the fryer or assembly line or whatever th….

  22. King of the Wild Frontier says:

    Why did half my post get eaten?

  23. Buran says:

    At least they aren’t closing all the stores like Wendy’s did with EVERY store in St. Louis.

  24. 82300sd says:

    I stopped eating at KK when they no longer gave out free samples right off the conveyor belt. Is this on a store by store basis, or is it everywhere too?>

  25. itmustbeken says:

    Just got back from London this week. Took a trip to Harrod’s food court and nearly passed out when I saw a Krispy Kreme stand…with a huge line of people!

    With the exchange rate, those people were paying $4 for a donut.

  26. etinterrapax says:

    I like KK all right, but they’re there and Dunkies is here. Everywhere, like, on every other corner. I can go to three different places in five minutes. And the donuts are good. So it’s not really a mystery why they’re not doing so well in the northeast. They just don’t have the market penetration. And people around here are loyal as hell, especially if it’s a New England company. I don’t think Dunkies technically is anymore, but who knows whether people understand that fully.

  27. Nemesis_Enforcer says:

    @JosephFinn: Puhlease Dunkin Donuts suck giant monkey scrotum compared to the delicious Krispy Kreme…mmmmm damn now I have to drive the 12 miles to my nearest store.

    A box of DD donughts sits there for most of the day at my office. KK is gone within 5 min. of someone smelling the delictible aroma of fresh hot doghnuts.

  28. McWatt says:

    I agree that Krispy Kreme donuts are nasty, like previously stated. Their product is destined to fail because it appeals to sugar addicted kids but they get their morning fix from Cap’n Crunch, etc.

  29. bluegus32 says:

    @King of the Wild Frontier: Your post got half-eaten because you blasphemed Krispy Kreme. A pox on your house!

  30. lockdog says:

    The French, and now foodies everywhere share the buzzword terroir when talking about how food and place can be intrinsically linked. Maybe we need another word to apply that notion to our beloved regional chains and how they tend not to do so well when they expand beyond their native turf. If I’m in the southeast, I eat Krispy Kreme, in New England it’s Dunkin all the way and across the border it’s Tim Hortons. To each region, its donut! Whether its the climate or what, anything else seems out of place.

  31. bbbici says:

    The only good KK ‘nuts are the original glazed, and then only when warm. When they are cold they are not much better than Safeway’s glazed ‘nuts. The rest of their ‘nuts are sickeningly sweet.

    Serves them right– I once applied for a corporate position and didn’t even get a response despite a cover letter that expressed my love for their hot ‘nuts. Fcuk ‘em.

  32. Pipes says:

    Dunkin Donuts > Krispy Kreme.

    Like Von Skippy said, you either love them or hate them. Personally, I hate the guck that gets all over your fingers every time you eat one of their original glazed, and their creme-filled blows. DD’s cake donut filled with boston creme? Nothing better!

    My mother used to be a secret shopper at Krispy Kreme, so we’d get free donuts all the time. Then that location closed. I don’t even miss the free donuts.

  33. kc2gvx says:

    I miss the one here in Central NJ. Nothing was better than a hot, fresh one when the light was on. KK’s doughnuts are far superior to the stale crap Dunkin’ serves. Oh well, I miss you Krispy Kreme here in NJ.

  34. nctrnlboy says:

    I never understood the love people have for krispy kreme donuts. Their donuts with that thick sugary shellack of glaze they put on them would turn a person into a diabetic after 2 donuts! Heck! even regular glazed donuts from any other shop wouldnt have as much sugary glaze as Krispy kreme does!

    Dont get me wrong… I LOVE a good donut, but not one that is just way too overly sweet like krispy kremes are! Blech!

  35. bluegus32 says:

    @bbbici: yes, f#ck their ‘nuts.

  36. drjayphd says:

    @bbbici: That’s funny, I thought it was the ultimate sign of admiration to express your love for someone’s hot ‘nuts.

  37. quail says:

    (I heard someone mention Shipley’s Donuts. Yea!) KK only did well in locations where there were no alternatives. Fresh from the store the donuts were OK. But in places where you’ve got small mom & pop shops all over the place, where you can experience donut nirvana, KK reveals itself to be as ‘blah’ as most of the commenters here have mentioned.

  38. Chicago7 says:

    Their donuts cost too much. It’s a joke. Go to Dunkin Donuts. There’s no such thing as a mass produced gourmet donut.

  39. revmatty says:

    Their donuts are awful and overpriced. Might have something to do with it. There’s no Dunkin in my neck of the woods, or sadly Winchell’s, but there’s two great local donut shops within 10 blocks of my house.

  40. OnceWasCool says:

    How can this be? They make the smallest regular size donuts in the world at regular price. They do taste great but here in North Georgia we just get the day old ones.

  41. Snakeophelia says:

    I can’t view this objectively, since I grew up less than 5 miles from one of their little factories. Thus, I’ve been infusing my bloodstream and fat cells with KK magic almost since my birth. The thought of them disappearing is enough to make me weep.

    And eat. Weep and eat.

  42. EtherealStrife says:

    @JosephFinn: If by “over” you mean a state over, then yes you are absolutely correct.

    Personally I prefer Winchell’s or a local mom and pop.

  43. Falconfire says:

    good dounuts? christ I dont know anyone but fat asses and teenagers who ate Krispy Kremes around here (while they lasted, practically every NJ store died within a year)

    They are the most disgusting “donut” I have ever eaten in my life.

  44. kable2 says:

    Guys KK and DD suck, I really disliked them. Now Tim Hortons is doughnut heaven. Tim Hortons is a doughnut/ coffee chain across canada that was sold to wendys several years ago. They are opening some stores in the states, I saw a couple in Maine last time I was down there.

    /Tim hortons coffee kills DD coffee

  45. TechnoDestructo says:

    No national chain has donuts as good as ANY local donut shop or small chain I’ve ever been to anywhere.

    Most aren’t as good as made-in-store supermarket donuts.

    Krispy Kreme makes profoundly mediocre donuts, as do Winchells and Dunkin Donuts. I have never understood what the hubbub is about.

    That a major city, which no doubt has many better donut options, would be losing some Krispy Kremes does not surprise me, and restores some of my faith in humanity.

  46. Falconfire says:

    @TechnoDestructo: You must have some excellent donut shops, or terrible DD shops.

    Around here I have yet despite going to easily 13-14 different bakeries found one that makes a donut anywhere as good as Dunkin Donuts. And considering I live in NJ, and have tried Donuts from Philly to NY, thats saying much.

    Now Bagels or other pastries, dont even bother with DD, they are awful, but Donuts, nope DD is king here.

  47. synergy says:

    Dang. Lots of Dunkin Donuts fans in here. I was just about to post that I miss having DD stores everywhere when I stopped to read the comments and was surprised. Here in San Antonio there’s only, I think, 3 stores in the entire city. Once or twice a year I get a real hankering for DD donuts and I drive the 20 minutes to the nearest (and largest in the city) store to get me a donut or two. I wish there were more stores…

  48. Greasy Thumb Guzik says:

    Krispy Kreme is way over priced!
    And massively overrated!
    Dunkin Donuts are at least 15¢ cheaper & Jewel & Dominick’s in Chicago are about 25¢ cheaper.
    And all of them are far better than KK!

    Especially chocolate covered chocolate donuts & long johns.

    Good riddance!

  49. kevinb7852 says:

    Arizona went KK free a while back due to money trouble. A perfect example of ruining a good thing through greed by some and over expansion. Their website showing their locations is kinda funny…says “updated often” with last update of September 2006! Uh Oh!

    At least for us, the good news was their store here was replaced with an In & Out Burger. I just hope I&O sticks to their successful business model – careful expansion, decent product and limited menu.

  50. it5five says:

    Good riddance. Their donuts were awful.

    I think they already closed all of their stores in the Phoenix-Metro area. There is one sort of near my house that looked like a ghosthouse for months. It had boarded windows and tall weeds growing all around it. I think they finally got someone out there to clean it up.

  51. HYDRAULICMONSTER says:

    The only Krispy Kreme I know of in my area is 20 minutes away by car using the freeway. Meanwhile, within WALKING DISTANCE there are a Dunkin Donuts, a Tim Hortons, a Tops supermarket that makes fresh donuts, and TWO family owned bakeries.

    Add in a 5 to 10 minute car ride and you can double or even triple that number.


    God I love living in Western New York.

  52. mattarse says:

    I live in Europe, and every trip to the states is began with a run to the nearest Krispy Kreme we can find. I love those little beauties!

    KRISPY KREME PLEASE OPEN IN CENTRAL EUROPE!!!!

  53. King of the Wild Frontier says:

    @bluegus32: If there’s a pox on my house, I’ll just paint right over it. Nyuck nyuck nyuck.

  54. IndyJaws says:

    @JosephFinn:

    Exactly! I’ve never understood the hype about KK. Gimme a peanut-crusted Dunkin Donut anytime. (Well, not now, since I’m on a diet…)

  55. BeastMasterJ says:

    Our KK in West Mifflin (South of Pittsburgh) went under and became a Chik-fil-a, So we got a different tasty food stuff.

    As for the DD vs KK debate, here’s what it comes down to for me.

    Day Old Kremes < Day-Old Dunkins < Fresh Dunkins < Fresh Kremes

    For the longest time, I couldn’t see what the big deal was with KK, until I wandered inside when the red neons were glowing. I was offered a Fresh n’ Hot ‘nut from the line, and then… I gained UNDERSTANDING. Those things don’t even melt in your mouth when hot… they SUBLIMATE.

    Sadly, they went under, but not before driving out the nearby Dunkin Donuts. So now we have neither :-(

  56. ahwannabe says:

    I’m not sorry to see them go. If I want something that tastes like pure sugar, I’ll eat, um, pure sugar. And wash it down with a swig of HFCS.

    Winchell’s = still the best in the West.

  57. ravana says:

    After the service I got at the KK when I was in Chicago this weekend, I am not surprised why they are going out of business.

    The kid at the counter wanted to pick my dozen donuts for me so he could go back outside and wash/wax cars with his buddies. While we were there a customer sat at the drive through for quite some time while waiting for someone to process his order.

    Their glazed donuts are great, but their service is definitely “teh suck”.

  58. Starfury says:

    The only time I’ll have KK donuts is if they’re free. There isn’t a local store by me. We also have a VERY good mom&pop donut place that’s close and the local Safeway has an excellent bakery staff and the donuts there are great.

  59. Balisong says:

    I used to be all about the Dunkin Donuts, but a couple of months ago I tried out the brand new one down the road. Hard as rocks! Like they were two days old! Gone to KK ever since. Glad I don’t live in Chicago (though maybe the DDs there are better?)

  60. Her Grace says:

    A single donut at KK will set you back $2.50 down in Australia. Two freaking fifty! That’s ridiculous. KK are okay (I don’t really care for donuts at all), but they are sure as hell not worth the long lines and ridiculous prices to get them here. W-S smelled like donuts all the time and was gross. Besides, the Aussies make cake donuts which are quite yummy, if you’re going to have donuts.

  61. zaq2g says:

    They need to expand thier product line. Krispy Kreme: Start selling “The Luther”

  62. jpboy says:

    The KK in Green Bay,Wi closed about a month ago with no warning…just…gone. It was in a prime location near Lambeau Field and had NO competition…anywhere. We have no DD,nothing else. After KK you need a grocery store or gas station to get a donut around here. Pretty sad when you are the only game in town and can’t make it. It’s a loss for me because like I said there isn’t any place else for what they offered. I stopped there maybe once every two months and spent an average of $3 per trip. When they first opened I was going 3 times a week but like anything the newness wears off. Plus its not healthy to eat that stuff all the time but for a quick sweet fix it was nice to have. Oh well. Lots of places are having problems. The best bagle shop in town has also closed up w/o warning. It’s tough right now and if your ‘stuff’ aint together it’s even harder.

  63. BeastMasterJ says:

    @Her Grace: TWO-FIFTY?!?
    What exotic ingredients are in the Austrailia KKs?? around here the’re about 79 cents for one, 7 bucks for a dozen!

  64. Timbojones says:

    You said “pretty damn good donuts”. I think you meant to say “overpriced oversweet disgusting donuts”.

  65. Anonymous says:

    I’m from Atlanta and Krispy Kreme RULES Dunkin Doughnuts. If you think they’re too sweet – you must not have a sweet tooth – b/c they’re delicious. And well worth the lil dollar or two. And who said they didn’t have coffee? They have juice, milk and coffee. Anyway thats my piece! I’m about to go get a couple now!