I walked into the store for a quick snack. A vast glass wall invited me to see the inner workings of the operation. They truly had nothing to hide. A conveyor belt carried fist-sized rings into a pool of oil. An employee was there to snag anything that did not fit the company's exacting standards of what the product should look like.
Out of the oil, and through a thin waterfall of sweet glaze, the fluffy hoops of delight were then placed in flat boxes or set neatly in display trays.
I proceeded to the counter, and stood there for a moment examining the menu of choices. As I carefully considered my options, an employee handed me one of the newly created treats, and invited me to enjoy it on the house. After one bite, the words “I'll take a dozen” flew out of my salivating mouth. A two-doughnut snack turned into a treat for the whole family when I got home.
If you haven't heard about Krispy Kreme doughnuts by now, you don't have any friends, and you don't have access to any news sources. It's the uber-food of the doughnut world.
Krispy Kreme spends almost nothing on advertising. No TV commercials. No billboards. No radio ads. No print ads.
They let the press give them free TV, radio, and print coverage because their store openings are so popular. Hundreds of people line up on the first day of a new store opening. After going public in 2000, its stock has whipped every major stock index over that time period.
Many stories have been written about how they have grown so fast in the last few years. They give away free samples in areas they will open stores. They only open one store in any single community to create demand for a scarce product. They embrace and support a community of Krispy Kreme fans.
Quality Product and the Customer Experience
Their product is darn tasty, and as addicting as a doughnut can be. If it weren't, they would never have attracted the legions of loyalists they now have. Word of mouth has worked well for them.
Not only is the product without peer, but the customer experience is the best in the business. While Subway lets you see your food being made, it's not nearly the same magical trip you get at a Krispy Kreme store. A sandwich can be very tasty, but a hot Krispy Kreme is a religious experience.
At the Crossroads
If the product is wonderful, and the experience is magical, what could possibly slow them down?
While shopping at my local mega supermarket, I saw boxes of Krispy Kreme doughnuts near the entrance to the store. Obviously, some marketing genius at Krispy Kreme thought this would be a great way to leverage the buzz about their product. Make it easier for people to buy the product, and sales will multiply exponentially, right?
By shipping their doughnuts to a grocery store, they lose two of the most compelling factors behind the phenomenon.
First, the quality is not the same as when you eat them right as they come off the conveyor belt at the retail store.
Second, they compromised the Krispy Kreme experience. Watching the doughnuts being made adds to the magic of the product. One of my friends drags people to the nearest Krispy Kreme store if they say they have never had one. He won't let them have their first taste out of a box from a grocery store.
Krispy Kreme doughnuts became a success because you had to work to get them, but the reward was worth any trial. Nobody says, “You absolutely have to run to the grocery store and pick up a dozen cold Krispy Kremes.”
Is History Repeating Itself?
In college, we used to drive almost an hour just to get a sack of White Castle Sliders. Some students had only heard of the small square delights that were cooked without even being flipped. When Sliders started showing up in supermarket freezers, the mystique was gone, and our road trips ended.
Unfortunately for White Castle, we never bought the grocery store burgers. It would have felt wrong to get the steamy sensations anywhere but in the restaurant.
Short Term Vs. Long Term
Will Krispy Kreme benefit financially from supermarket sales? Certainly they will see profits in the short term. In the long run, will Krispy Kreme doughnuts become just another nice commodity for jaded consumers? Maybe.
Krispy Kreme is banking on the buzz they created for their stores. What happens if the buzz changes, and the new word on the street is that Krispy Kreme is all about cold doughnuts at the grocery store?
Replace the grocery store bakery with a Krispy Kreme franchise, and you might just restore the magic. It worked for Starbucks.
Continue reading "Has Krispy Kreme Peaked?" ... Read the full article
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