Krispy Kreme
Krispy Kreme Doughnuts, Inc.
FIN
Professor XXX XXXX
Month xx, xxxx
History Krispy Kreme was founded by Vernon Rudolph after he purchased the famous secret recipe of yeast-raised doughnuts in 1937 from a French chef in New Orleans. Rudolph began to sell these doughnuts wholesale to supermarkets. The demand for his doughnuts grew quickly, and by cutting a hole in the wall of the factory to sell directly to customers the concept of Krispy Kreme retail stores was born. The retail concept for Krispy Kreme doughnuts allowed Rudolph to grow his factory stores to 29 shops in 12 states by the late 1950’s. When Rudolph died in 973 Beatrice Foods bought his company and expanded it to more than 100 locations and expanded the menu to include soups and sandwiches. Beatrice tried to reduce costs by changing the appearance of the stores and using cheaper ingredients. This negatively affected the company and Beatrice sold the company to a group of franchise owners. This group of owners was led by Joseph McAleer, who was the first Krispy Kreme franchisee. The leveraged buyout was completed for $24 million in 1982. The new group brought back the original recipe and logo. By 1989 the group was almost debt free and they were beginning to expand. The company CEO, Scott Livengood, took the company public in April of 2000. The share price after the first day was $40.63.
Holes in Doughnut Accounting Practices In May of 2004 Krispy Kreme announced to its investors that they should expect earnings to be 10% lower than predicted. It was at this time that the low-carb diet had taken the U.S by storm, and Krispy Kreme blamed this low-carb diet for their low wholesale and retail sales. They also announced the sales of a the Montana Mills bakery chain of 28 bakery café’s that had been acquired in January of 2003 for $40 million in stock. Krispy Kreme also announced that the Hot Doughnut and Coffee Shops were falling short of expectations and three of them were
FIN
Professor XXX XXXX
Month xx, xxxx
History Krispy Kreme was founded by Vernon Rudolph after he purchased the famous secret recipe of yeast-raised doughnuts in 1937 from a French chef in New Orleans. Rudolph began to sell these doughnuts wholesale to supermarkets. The demand for his doughnuts grew quickly, and by cutting a hole in the wall of the factory to sell directly to customers the concept of Krispy Kreme retail stores was born. The retail concept for Krispy Kreme doughnuts allowed Rudolph to grow his factory stores to 29 shops in 12 states by the late 1950’s. When Rudolph died in 973 Beatrice Foods bought his company and expanded it to more than 100 locations and expanded the menu to include soups and sandwiches. Beatrice tried to reduce costs by changing the appearance of the stores and using cheaper ingredients. This negatively affected the company and Beatrice sold the company to a group of franchise owners. This group of owners was led by Joseph McAleer, who was the first Krispy Kreme franchisee. The leveraged buyout was completed for $24 million in 1982. The new group brought back the original recipe and logo. By 1989 the group was almost debt free and they were beginning to expand. The company CEO, Scott Livengood, took the company public in April of 2000. The share price after the first day was $40.63.
Holes in Doughnut Accounting Practices In May of 2004 Krispy Kreme announced to its investors that they should expect earnings to be 10% lower than predicted. It was at this time that the low-carb diet had taken the U.S by storm, and Krispy Kreme blamed this low-carb diet for their low wholesale and retail sales. They also announced the sales of a the Montana Mills bakery chain of 28 bakery café’s that had been acquired in January of 2003 for $40 million in stock. Krispy Kreme also announced that the Hot Doughnut and Coffee Shops were falling short of expectations and three of them were
References: Chin, N. (2005). Krispy Kreme Dougnuts: Empty calories or empty profits? Retrieved from http://www.corporateconflicts.com/index-sb-cases-kk.html Krispy kreme doughnuts. (n.d.). Retrieved from http://www.google.com/finance?client=ob&q=NYSE:KKD