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]

Want more consumer news? Visit our parent organization, Consumer Reports, for the latest on scams, recalls, and other consumer issues.