How Krispy Kreme brought doughnuts to the UK

“We learnt to get local help – when we only had five stores we were still being quoted by the Minister for Health, because we’d established a profile,” said Don Henshall, UK managing director, talking to delegates at the Peach Conference about the success of the brand.

“We kept to our message – we had a treat, not a meal. No-one comes into Krispy Kreme for a meal, they come in to treat themselves. We had to stick to our message – it’s easy to forget that.”

Henshall shared the incredible success of a Krispy Kreme’s UK franchise, built from scratch in just six years through judicious use of local PR, a flexible approach to distribution channels and a consistent product. Krispy Kreme is now a brand whose recognition in the UK ranks alongside that of Caffè Nero and Pret A Manger. The company also stuck tightly to its business model, including the percentage of rent it was willing to pay and discovered early on that it needed to take control of its own sourcing.

Krispy Kreme UK was created as a private company by four private investors in November 2002. At that time in the UK doughnuts were no more than a commodity product and consumers had never heard of Krispy Kreme – in a company focus group only two out of 120 people had ever heard of the brand. Not only that but Dunkin’ Donuts had entered the UK market in 1999, and largely failed.

In the US the Krispy Kreme business has been going since 1937 when Vernon Rudolph bought a yeast-raised doughnut recipe from a French chef from New Orleans and began selling Krispy Kreme doughnuts to local grocery stores. Soon he was selling his Hot Original Glazed doughnuts directly to customers, which turned into a small chain of stores, each using the same recipe and making doughnuts from scratch. A distribution system was then developed to ensure consistency, delivering dry doughnut mix to each store, which were then cooked using the company’s own doughnut-making equipment.

In 1976, following the death of Rudolph, the American company was sold to Beatrice Foods Company, and then went very quiet for some 30 years. In 1982 it was revitalised when it was bought back by a group of franchisees. A period of rapid expansion in the US followed and its first UK store was opened in Harrods in October 2003.

“Since the mid 90s we have been focused on repositioning Krispy Kreme as a branded speciality retail concept. Our objective was to build the store around the customer experience, in contrast to our original stores, which were built to facilitate the production flow leading to back door distribution,” said Henshall.

Other key elements of the repositioning included increasing the size of the Krispy Kreme product by 40%, making the doughnut production process fully visible to the customer, bringing hot doughnuts into the customer service area and expanding the amount of seating. It also scheduled its hot doughnut production for peak retail times, both morning and evening backed up with the use of the group’s ‘Hot Doughnuts Now’ sign, which communicated to customers that hot Original Glazed doughnuts were being made.

Krispy Kreme has faced huge challenges in its first four years of operation. Not least the fact it introduced a product to the market of which there was no awareness. The UK property market differed to that of the US as it was landlord-driven and controlled. Not only that but there was a growing health trend in the UK, health warnings about trans fats in foods, and Government concern over obesity levels and that role that the catering industry played in that.

The company learnt very quickly that it needed to think local, to keep to its point of difference and to keep delivering its message. But it found in the UK it needed to remain flexible about its route to market, but also stick to its business model.

Krispy Kreme now boasts 100,000 customers per week through its stores and through the use of social media has 25,000 Friends of Krispy Kreme, 3,000 website visits per week as well as official sites on Facebook and Twitter. It has 10 concessions, nine cafés, six Hot Lights, 12 kiosks and a presence in six shopping malls, 176 Tesco stores and 27 Moto’s. UK sales are worth £30.7m.

Henshall put the success of Krispy Kreme down to the passion and great leadership – “a chairman who is an admiral not a captain’, strong partners and time spent building the brand. The company places much emphasis on looking after its own staff – having a policy of promoting from within where possible, recognising and rewarding success, an open hierarchy and regular performance reviews. “People who work for Krispy Kreme UK care,” he concluded. “It takes time to build a brand. It’s six years since we launched and there’s still a long way to go in this country.”