Founded in 1937, Krispy Kreme Doughnuts operates a network of more than 1,400 donut shops and cafes in the US and 25 other countries. You can find Krispy Kreme doughnuts in their store locations but also in supermarkets such as Target or Wal-Mart, convenience stores, and gas stations all over the United States as well as in Australia, Canada, United Kingdom, United Arab Emirates, Hong Kong, Philippines, Indonesia, Mexico, Japan, Republic of South Korea, Kuwait and many other countries.
Krispy Kreme Franchise – Brand History
Krispy Kreme was founded by Vernon Rudolph 85 years ago. He rented a building on South Main Street in Winston-Salem, North Carolina, what is now historic Old Salem, purchased a yeast-raised recipe from a New Orleans chef, and started to sell doughnuts to local grocery stores on July 13th, 1937.
But customers wanted to have these glazed snacks warm and super-fresh, so Rudolph started to sell hot doughnuts to individual clients who came to the bakery during production time, between midnight and 4 a.m. in the morning.
In 1939 the first Krispy Kreme bakery was opened outside the South in Akron, Ohio.
The all-hand-cut donut-making process was transformed into a smooth mechanized Krispy Kreme automatic donut cutter during the 1950s. The doughnut-cutting process was changed again in 1962. A pressurized dough hopper was introduced which pumped dough rings directly on trays.
In 1976 Krispy Kreme became a wholly owned subsidiary of Beatrice Foods Company of Chicago and in 1986 it was sold again to a small group.
Krispy Kreme company went public on April 5, 2000, on the NASDAQ, using the ticker symbol KREM.
Krispy Kreme opened its first store outside of the United States in December 2001, in Mississauga, Ontario, Canada.
In 2003 Krispy Kreme opened its first stores outside North America in London, United Kingdom, and Sydney, Australia. Since then they opened more than 700 locations in Turkey, Asia, Puerto Rico, Mexico, and the Middle East.
In 2016, Investment Company JAB Holding, the majority shareholder of coffee maker Jacobs Douwe Egberts, took over the operator of the Krispy Kreme Doughnuts chain for $1.35 billion. So, Krispy Kreme became a privately owned company.
Krispy Kreme Franchise Initial Investment and Cost
It is not that cheap to get into a Krispy Kreme franchise. If you want to open a multi-unit Krispy Kreme store, you must have a minimum of $440,500 in liquid assets. The initial investment to start operating a Krispy Kreme store is anywhere between $440,500 and $4.1 million, depending on the store format. For instance, a Fresh Shop would cost anywhere between $1,3 million and $2.8 million, the costs for a Tunnel Oven Shop are $560,000 to $1.5 million, and for a Fresh Shop you will need anywhere between $441,000 and $1.2 million, and, finally, the initial costs for a Commissary Facility would be anywhere between $1.7 million and $4.1 million.
All these retail stores have to pay a royalty fee and contribute to marketing on the national and local levels, which is a minimum of 2.5% of net sales.
The franchise fee for a Krispy Kreme store ranges from $12,500 to $25,000.
Also, franchisees should expect to pay 4.5% in net royalties, payable every week.
Other Information about Krispy Kreme Franchise
There are three types of franchise formats offered by Krispy Kreme:
- Fresh Shop which is a retail sales facility with no manufacturing capabilities or limited manufacturing capabilities, receives doughnuts from a Commissary Facility or Factory Store. These are “finished” for sale at the Fresh Shop.
- Factory Store which is a retail sales facility that produces and manufactures fresh doughnuts on-site.
- Tunnel Oven Shop is a retail sale facility that includes limited manufacturing capabilities and an impinger oven. Doughnuts are received from a Commissary Facility or a Factory Store and are “finished” for sale at the Tunnel Oven Shops.
It is important to mention that Commissary Facilities are not Krispy Kreme Stores, but manufacturing facilities that provide doughnuts and other food items to Fresh Shops and Tunnel Oven Shops. These facilities do not offer doughnuts for sale to retail stores.
The costs to open a Krispy Kreme Franchise are high, but it may be worth the investment thanks to its strong brand recognition, loyal customers, open territories, and commitment to innovation.