Krispy Kreme Re-evaluate Their Coffee Game

Come for the doughnuts and stay for the coffee.

That’s the philosophy that Krispy Kreme’s executives are hoping will see the company make further inroads to the North American market and they’re putting that to the test at a brand new store in Clemmons, North Carolina.

For ages the well-known retailer has struggled against slow growth and. At the moment, coffee represents just 5% of the company’s sales in the United States but Chief Executive Officer Tony Thompsons wants to see that figure double to 10%.

If successful, it could transform Krispy Kreme’s margins. Their most recent earnings reports have been rather underwhelming, missing analyst estimates in six of the past eight quarters.

“We’ve lost ground on coffee over time,” Thompson said.

“It’s kind of passed us open.”

The chain introduced a new line of house blends back in 2011, and added espresso-based drinks to their menus, but uptake has been slow and promotion rather thin. As such, they’ve lost mountains of ground compared to the likes of Dunkin’ Donuts who have forged part of their identity on their ability to offer a quick and inexpensive cup of coffee.

And that’s why Krispy Kreme’s trial outlet in Clemmons is so important.

“To really address coffee, you’ve got to do more than just have a new menu item, or just some new news.

“You need to have the overall experience be about coffee.”

It features all the hallmarks of a traditional store, but there are some very subtle (and some very obvious) differences. First, there’s free WiFi and a number of accessible plug sockets – to attract people to sit and stay- and then there’s the signage: Directly behind the doughnut ordering point there is a large chalkboard advertising their coffee offerings.

The sign is kept there because that is where most of Krispy Kreme’s customers head.

“We know people are coming to the case. So let’s up the POS there, let’s start where they do.”

The new store layout, with its emphasis on coffee, has received praise so far. But as the saying goes, the proof is in the doughnut.

Or should that be coffee?

photo: TranceMist (Creative Commons)