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Krispy Kreme restructures operations

WINSTON-SALEM N.C. Krispy Kreme Doughnuts, Inc. said it is realigning operations following the resignation of vice president of operations Jeff Jervik, who said he was leaving to pursue private business interests.

The troubled doughnut-shop operator and franchisor said current executives Jeff Welch and Steve Lineberger are taking on expanded operational roles as part of the restructuring.

Welch becomes senior vice president of global franchise operations and development. He most recently led Krispy Kreme's international franchise expansion into 10 countries. Welch is a former vice president of franchising and business development for Yum! Brands, Inc. and was vice president of international real estate with The Home Depot.

Lineberger becomes senior vice president and general manager of U.S. company operations. He previously was responsible for the company’s growth initiatives, including new product development and innovation, as well as refining the company's small retail concept. He is a former division chief executive with Sara Lee Corp.

Daryl Brewster, chief executive officer and president of Krispy Kreme, said the leadership of Welch and Lineberger would allow the company to continue its international growth and build on the strength of its southeastern roots while restructuring U.S. operations.

"These changes will result in a more responsive, leaner and focused field structure that we expect will help us drive same store sales, improve unit economics and reduce system costs," he said.

Earlier this week, Fullerton, Calif.-based Great Circle Family Foods LLC, once Krispy Kreme’s largest franchisee, filed for Chapter 11 bankruptcy protection. Its holdings have dwindled to 12 outlets, from 31 units in May 2004.

Krispy Kreme has been struggling to recover from a freefall that began in May 2004 when the company missed its per-share earnings for the first time. Management was later accused of manipulating earnings and overstating sales, leading to lawsuits and regulatory investigations. A number of franchisees filed for bankruptcy as the franchisor’s stock price plummeted.

In 2005 and 2006, the company closed numerous stores and halted new franchise agreements. This year, it filed a new Uniform Franchise Offering Circular, submitted up-to-date financial statement with federal regulators and settled its lawsuits.

The company and its franchisees now operate about 400 locations globally. Domestically, the units can be found in 41 states.

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