1. Strategy Plan
Zoi Karakosta
Kyriaki Zafeiriadou
Strategy & Business Policy Efstathios Simeonidis
Assignment Kostas Takolas

2. Introduction of the industry and the company
Strategic Challenges and Environment Analysis
Analysis of the Competitive Environment
Assessment of the Strengths and
Strategy Formulation & Selection
Strategy Evaluation

3. is a leading branded retailer and wholesaler of high-quality doughnuts,
complementary beverages and treats and packaged sweets.
The Company’s principal business, is owning and franchising Krispy Kreme stores, at which
over 20 varieties of high-quality doughnuts, are sold and distributed together with
complementary products, such as a broad array of coffees and other beverages.
(144) (417)
(85) KKD
Domestic International
Company Supply
Franchise Franchise
Stores Chain
Stores Stores

4. Doughnuts and Related Products
20 varieties of high-quality doughnuts, including the
signature Original Glazed® doughnut.
88% of sales
Complementary products
Kool Kreme® and baked goods including sweet rolls,
pecan rolls, muffins and bagels.
Beverages
Frozen drinks, juices, sodas, milks. New hot
beverages - espresso, cappuccino and hot chocolate
11%

5. 1937: Vernon Carver Rudolph, the founder of Krispy Kreme
opens his own doughnut shop at Winston-Salem, North Carolina
1939: Rudolph registered the trademark “Krispy Kreme” with the
United States Patent and Trademark Office. The business grew
rapidly and the number of shops also grew.
1950s – 1960s : doughnut process steps such as Proofing,
cooking, glazing, screen loading, and cutting became entirely
automatic.
1976: After Vernon Rudolph’s death, Krispy Kreme became a
wholly-owned subsidiary of Beatrice Foods Company of Chicago,
Illinois.
1982: a group of Krispy Kreme franchisees purchased Krispy
Kreme back from Beatrice Foods.
1999, the Company opened its first store in California and began
its national expansion
April 2000, Krispy Kreme held an initial public offering of
common stock
December 2001, the Company opened its first international
store, in Canada, and began its international expansion.
The Company reacquires several franchise markets in the United
States in 2003 and early 2004, often at substantial premiums
Late 2003, average unit volumes began to fall leading to a period
of retrenchment characterized by over 240 domestic store
closings from 2004 through 2009.
In fiscal 2011, growth returned to the domestic business first
time since 2005.

6. QSR - Quick Service Restaurants
QSR Industry Grows Low Consumer
+3% 3% the last 10 years. Confidence
High Competition
Recession Proof
Less Disposable
Shift from Traditional Income
Restaurants
Increasing Prices
(Fuel, Commodities)

7. Develop and Test Domestic Small Shop Formats
Enhance Focus on Shop Operations
Develop, Test and Deploy New Products
Improve Off-Premises Business
Build On International Success
Enhance Franchisee Support

8. Mission
To share our superior classic taste and constantly enriching emotional
To touch and enhance lives through the joy that is Krispy Kreme
experiences.
To be the worldwide leader in sharing delicious tastes and creating
Be the world’s delicacy company and satisfy doughnut lovers through
Vision
joyful memories
our classic value bites.

9. 1 Environmental Regulation
Food Industry businesses need to be very careful in environmental issues such as waste management.
2 Certifications by Government Authorities
Certifications in terms of health, Safety and Sanitation issues are needed to operate in international level.
3 Food Industry – Related Regulations
Need for consistent ingredients approved by FDA & International organizations. New ingredients could be
banned so should be carefully developed & certified.
4 International Trade Regulations
Global Businesses face challenges such as the changing regulations in the countries they operate or want
to enter (such as employment laws, healthcare laws, tax systems).
5 Franchising-Specific Regulations
Licensing and cooperation with franchisees is administered and regulated differently in countries around
the world.

10. 1 Consumer Confidence is in decline
The bleak economic outlook causes consumers to cut spending
2 High Unemployment
Leads to Smaller Disposable Income and less visits to QSRs
3 Changing Consumer Trends
Work and life habits, types of businesses, shift in wealth, changes the way and the patterns people
consume food and related products
4 Currency Fluctuations and Inflation
Revenue generation from international business could be impacted
5 Record-Level high Prices
In commodities such as agricultural products (flour, sugar) and fuel

11. 1 Low-Calories Diet
Consumers are increasingly worried about the calories & nutritional value of their food.
2 Health-Conscious and CSR-aware public
Consumers are increasingly aware of the CSR notion and demand companies to give back to society.
3 Avoidance of unhealthy-perceived products
Doughnuts (like burgers) are included in food products considered unhealthy, causing obesity.
4 Focus is shifting towards freshly produced food
Like custom-made sandwiches from freshly delivered material.
5 Consumer is more demanding
There is a growing need to serve a broader spectrum of consumers by offering related products.

12. 1 Unique Equipment for Doughnut-Making Process
We manufacture the equipment for our doughnuts so any innovation will come from us.
2 Longer shelf life of products
To facilitate this, we need to find modifications in the production process.
3 Social Media Exploitation
Embrace the new marketing trend with social media campaigns to increase consumer reach.
4 Knowledge Sharing with Franchisees
Use information & communication technology to enable remote collaboration.
5 Mobile Applications Growth
More and more customers are using mobile smartphones to connect with their favorite brands.

13. LOW - MED
Threat of new
Entrants
LOW - MED
LOW
HIGH
MED
CompetitivePowerProducts
Risk of Substitute ofof Buyers
Bargaining Rivalry in Suppliers
Threat of new entrantsthe Industry
Bargaining Power
Market is of Consumers products are plentiful(biscuits, chocolates)
Suppliers has low capital is both substituted
Agricultural
New storehighly fragmented easilywith major players and local stores
Main product (Doughnut) requirements
Individual
LOW - MED
Bargaining Power ofare regulated occupied by leaders
HIGH
LOW
Fuelsweets/treats start be offer treats like doughnutsBargaining Power of
Key Store locationscategory dependRivalry impulse buy
The prices shops can Competitive on an
Local coffee Costs are Low Intensity
to
Switching
Suppliers Buyers
Leaders the sole economies mix concentratesecret and more differentiated
We are achieve supplier of key to successful sale
MajorQSR industry have more scalea& have
Convenience and location isof many small purchasesrecipes and in their
The competitors generated financial resources
specialized equipment in their arsenal
product line.
Consumer easily can switchby trends are used in KKD stores
We manufacture the machinery that QSR sub-category (burgers,
Sales are mostly affected to another occurrence
&
New entrantscompetitors are established (Mr. Donut, Donut King, etc.)
International other locally preferred fast key
sandwiches or must expect retaliation fromfood)players due to the
increased competitiveness of the industry (Starbucks case)
HIGH
Substitute Products

14. Critical Success Weight
Factors
Global Expansion 0,15 4 0,6 3 0,45 1 0,15
Customer Loyalty 0,1 4 0,4 3 0,3 3 0,3
Location-
Convenience 0,07 3 0,21 4 0,28 3 0,21
Advertising 0,05 3 0,15 4 0,2 2 0,1
Product Quality 0,1 4 0,4 3 0,3 3 0,3
Product Diversity 0,08 1 0,08 3 0,24 2 0,16
Customer Service 0,1 3 0,3 2 0,2 3 0,3
Financial Position 0,2 3 0,6 2 0,4 2 0,4
Market Share 0,08 4 0,32 3 0,24 1 0,08
Sales Distribution 0,07 3 0,21 2 0,14 2 0,14
Total 3,27 2,75 2,14

15. Internal Factor Evaluation (IFE) Matrix
Strengths W Score Weaknesses W Score
1 1 Over reliance on one product
Big Tradition & history 0,08 4 0,32 0,02 1 0,02
line
2 Centralized mix production and 2
0,05 3 0,15 Limited financial Resources 0,09 1 0,09
efficiency
3 High-off-premise availability 0,03 4 0,12 3 Quality of franchises 0,07 2 0,14
4 4 Growth dependent on new
Efficiency in store operation 0,03 3 0,09 0,05 1 0,05
store opening
5 5 Small Profit margin in off
Hub-spoke model 0,02 3 0,06 0,04 2 0,08
premises
6 Quality assurance 6 High cost structure in off
0,03 3 0,09 0,06 2 0,12
(mystery shopper) premises
7 7 Sole supplier of equipment &
Strong community bonds 0,02 4 0,08 0,07 1 0,07
mix concentrate
8 Doughnut Theater 0,07 4 0,28 8 Poor promotion & advertising
0,08 2 0,16
campaigns
9 Unique taste & recipe 0,09 4 0,36 9 Not paying out dividends / Stock
0,05 2 0,10
price is low
10 Original Glazed sign 0,03 4 0,12
11 Sharing Culture of consumers 0,02 3 0,06
Total Score 2,56

16. External Factor Evaluation (EFE) Matrix
Opportunities W Score Threats W Score
1 QSR sector sales up 3% over the 1 Disputes with franchisees
0,10 3 0,30 0,10 3 0,30
past 10 yrs possible
2 Grocery stores doughnuts sales 2 Profitability sensitive to changes
0,08 3 0,24 0,04 1 0,04
rise 1% in sales volumes of stores
3 Grocery stores doughnuts sales 3 Sales volume sensitive to
0,09 4 0,36
rise 2% seasonality and weather 0,03 2 0,06
4 New lines of supply of premium conditions
0,05 2 0,10
coffee varieties 4 Domestic small store operating
0,08 2 0,16
5 New store opening to target model not yet proven
0,07 1 0,07
global markets 5 Potential infringement of
0,01 4 0,04
6 Merge acquisition or co-branding trademarks in other countries
0,07 1 0,07
with local stores 6 Main competitors significantly
7 Utilize distribution network to bigger both domestically and 0,10 2 0,20
penetrate more convenience 0,07 2 0,14 internationally
stores 7 International consumers prefer
0,04 2 0,08
8 Penetrate local traditional food mostly local pastry shops
0,03 2 0,06
markets
9 Collaborate with NGOs for
0,01 2 0,02
promoting CSR Total Score 2,27
10 Modernize store facilities and
0,03 1 0,03
equipment

17. Strengths Weaknesses
[S3,O2,O3]: Develop off-premise business to penetrate more [O6,W1]: Combine co-branding opportunities with
groceries & supermarket by taking advantage of our distribution new product testing to reach a broader spectrum of
network. consumers and differentiate our product lines.
Opportunities
[S7,O9]: Promote value of social responsibility awareness through
[O10,W3]: Improve off-premise profit margin focusing
existing bonds with communities.
on enhanced packaging graphics, longer shelf life and
[S2,O10]: Adopt modern equipment by using cost savings from rationalized delivery routes.
our centralized production system.
[S2,O4]: launch new premium coffee lines to address new [O5,O6,W3,W1]: Empower co-operation with
consumer trends. franchisees by increasing support, training, providing
them with operational tools and giving them initiatives
to achieve guaranteed and consistent quality.
[S4,T2,T3]: Enhance shop operations (service quality, hospitality, [W8,T2]: Plan Cross-Market product awareness
waste management, labor force) to stabilize demand and reduce through special event programs, recruiting local
vulnerability to fluctuations in sales expertise with proven experience in the field.
Threats
[S1,S5,T6]: Use the unaided brand awareness and the economies
[T7,W7]: In markets with highly skewed preference
of scale achieved with the hub-and-spoke model in order to
towards local pastry stores, we can penetrate by
compete with larger and better-financed competitors globally.
exploiting our capability to provide them with
specialized equipment and mix concentrates creating a
potential of forward integration with some of them.

18. Key Factors Weight Alternative 1 Alternative 2
Opportunities
1 QSR sector sales up 3% over the past 10 yrs 0,10 2 0,2 4 0,4
5 New store opening to target global markets 0,07 1 0,07 3 0,21
6 Merge acquisition or co-branding with local stores 0,07 3 0,21 1 0,07
8 Penetrate local traditional food markets 0,03 1 0,03 3 0,09
Threats
1 Disputes with franchisees possible 0,1 1 0,1 4 0,4
2 Profitability sensitive to changes in sales volumes of stores 0,04 3 0,12 2 0,08
4 Domestic small store operating model not yet proven 0,08 4 0,32 2 0,16
Main competitors significantly bigger both domestically and
6
internationally
0,10 4 0,4 2 0,2
7 Intern. consumers prefer mostly local pastry shops 0,04 1 0,04 4 0,16
Strengths
1 Big Tradition & history 0,08 4 0,32 2 0,16
2 Centralized mix prod. and distribution efficiency 0,05 4 0,2 1 0,05
4 Efficiencies in store operations possible 0,03 4 0,12 3 0,09
5 Hub-spoke model operations 0,02 4 0,08 2 0,04
Weaknesses
1 Over reliance on one product line 0,02 2 0,04 3 0,06
2 Limited financial Resources 0,09 3 0,27 4 0,36
3 Quality of franchisees 0,07 2 0,14 4 0,28
4 Growth dependent on new store opening 0,05 2 0,1 4 0,2
7 Sole supplier of equipment & mix concentrate 0,07 4 0,28 3 0,21
Total Score 1,00 3,04 3,22

19. 1: Focus on Domestic Expansion 2: Focus on International Expansion
1. New markets unexplored (China, Russia, Brazil, India]
2. Prospective economic growth of new markets
1. Centralized structure
Advantages
3. Follow popular trend of food industry for globalization
2. Quality is in our control
and internationalization
3. Community Relationship are well-established
4. Global spread keeps shareholders more satisfied and
increases share prices
4. Hub-Spoke Model very popular
5. Tim Horton's not yet expanding internationally
Starbucks image has withered and is considered expensive
1. Small store model not yet proven
Disadvantages
2. Competition more intense 1. Global economic slowdown
3. Competitors very well financed compared to KKD 2. Service Quality Difficult to Monitor
4. Local expansion has already failed once 3. Limited Financial Resources

20. Offer a differentiated product line of complementary
tastes and beverages along with the flagship doughnut
products.
Expand cautiously in the US by using an efficient and
cost-effective model for both on-premise and
off-premise operations
Expand internationally by more than doubling the
number of our international shops over the next five
years

21. Rummelt’s Criteria
Internal External
Consistency: Consonance:
Factors International Factors The failure of the
expansion has domestic franchising
started in 2001 and model points
is our stable source toward strategic
of economic growth. repositioning.
Advantage:
Feasibility: The unique taste
An effective and and distinctive
proven growth features combined
model that is with our increased
followed by the top focus on franchise
corporations in the operations will make
industry. us the most
attractive choice

22. Resources: Hire experienced managers and
R empower the department devoted to franchising
Implementation: We cannot repeat mistakes of the
I past - use proven techniques and tools
Advantage: Our unique taste, secret recipe and franchising
A experience a guide for sure-footed success
Timing: The best time for expansion, as we experienced growth in
T the number of stores for the first time since 2005
Sustainable: We will strengthen our relationship with our long-term
S partners, the franchisees

23. International Stores
Evolution of Number of Stores 811
Domestic Company Domestic Franchise
Domestic (Total) International 417
334 298 Domestic Stores
229 258
207
144 165
93
68
83
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

24. 650
Evolution of Sales ($m) International Stores
483.2 510
Domestic Company
325.2
Domestic Franchise 330
274.6
Domestic (Total) 238.9
International
Domestic Stores
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

25. Human Finance & Research &
Resources Accounting Development
Franchisees may not endorse the Worldwide expansion could hurt We need to develop new products that
company culture initial financial figures are brand-relevant.
We need to follow the trend for
Worldwide expansion is a labor- and Recent examples point the need to healthy products
cost-intensive process minimize/transfer risk to franchisees
Different markets might have different
Possible need for transformation to There is a shortage of credit all over packaging needs
penetrate diverse countries/markets. the globe
We need to extend the shelf-life
New Training methods Conduct employee and consumer
Commission-based franchisee testing programs
New Franchisee Approval Procedure financing scheme
Research low-fat alternatives to our
Increase Resources devoted the
products
franchise operations Bonus Incentive payout
Localize packaging and seasonal
Hire New Executives From the
products (Christmas, Valentine’s
Market [new experience] Throttle cost savings from domestic day, etc.)
Franchisee Feedback company stores consolidation to
international expansion Experiment with the shelf-life of our
Increase Employee Participation off-premise produce.

26. Information
Marketing Operations Management
Systems
Increase customer appeal Efficiency must be at
Franchisees need help from
maximum levels while A global organization is more
Increase brand equity and our expertise in store
ensuring top-notch quality open to security threats.
awareness selection & starting up
Franchisees need help on Technology exploitation is a
Ensure store appearance We need to be actively
maximizing sales, profits and key strategic success element
perfection involved, not “distant”
brand equity
Modernize store
Implement Security-enhanced Increase developer associates
Improve Packaging Graphics equipment and facilities
Extranets with the Franchisees devoted to franchisees
Aggressive Advertising Provide new operational
Implement Daily/Weekly sales Dispatch company managers
New store design guides to tools
report from stores to help with store openings &
franchisees Provide know-how on deployment
Top-notch POS
Cross-market product improving shop economics
Use ERP for SCM and demand Implement regular Skype
development Introduce strict QA meetings & conferences
management
methods

28. Thank You!!!
Zoi Karakosta
Kyriaki Zafeiriadou
Strategy & Business Policy Efstathios Simeonidis
Assignment Kostas Takolas