• by Steve Ellwanger , February 18, 2022

Don’t be surprised if freestanding displays of Krispy Kreme donuts start to appear in the bakery section of your local supermarkets.

It’s part of the 84-year-old brand’s ongoing transition from operating mostly franchised shops to company-owned locations that feed its supply chain to convenience, grocery and other retail outlets.

Krispy Kreme is less intent on coming up with new products and promoting them than it is sticking with proven items and bringing them to consumers differently -- namely, faster and fresher.

Krispy Kreme has been indulging consumers’ sweet-treat cravings since 1937 and now sells them in 31 countries.

Providing access to its products via a multichannel approach is a key driver of future growth. Currently distributed to 10,000 outlets—5,500 of them in the United States—the company sees the potential to grow that to 50,000.

On the ecommerce side, Krispy Kreme works with such third-party services as Instacart, Grubhub and Postmates.

As recently as 2020, the company sold its products wholesale into a supply chain that resulted in some doughnuts reaching store shelves when they were nearly a week old.

The new business model involves 120 Krispy Kreme facilities that act as “production hubs,” some of which can deliver products to retailers daily.

“In fact, we control the whole distribution,” Josh Charlesworth, CFO and COO, said at the recent ICR Investor Conference.

“We go through the front door of the grocery and convenience store. We place the doughnuts and, actually, any unsold doughnuts from the day before we return ourselves.”

Fresher also means higher retail pricing.

“We're able to get about a 50% increase in price, because people are looking for the best product possible,” explained CEO Mike Tattersfield.

A typical in-store display will hold boxes containing three, six or 12 doughnuts.

“And what we do in Krispy Kreme is, we really focus on the dozens business,” Tattersfield explained.

“And this really works with us on occasions, as people use our brand [for] gifting as well as specialty occasions as well.”

According to the company’s ICR presentation, more than 75% of its doughnuts are sold in “sharing quantities.”

That’s reflected in Krispy Kreme’s holiday-themed ads for occasions like Thanksgiving and Valentine’s Day.

According to research from IRI Integrated Fresh, dollar sales of doughnuts located in center-store locations rose 4.2% in the 52 weeks ended Jan. 23 while perimeter-placed doughnuts were up 13%.

In the same time period, center-store unit sales were down 0.7% compared to an increase of 16.5% for perimeter.