Krispy Kreme has been working on its total brand transformation — from doughnut bakery to the newly dubbed “doughnut logistics company” — for a couple of years now, and the overhaul is nearly complete. As Krispy Kreme continues to work on either closing underperforming stores or turning them into hubs to fulfill orders to grocery and convenience stores, the focus on the “Delivered Fresh Daily” strategy was a driving force of the 12.5% revenue growth for the first quarter ended April 2, as doughnuts are now available to a wider range of customers.
While Krispy Kreme continues to add global points of access to doughnuts through grocery and convenience store doors and more — with 600 PoA added this quarter — the company keeps closing traditional bakeries, with 29 shops closed or converted to distribution hubs last quarter. Global brand reach is only at 5%, CEO Mike Tattersfield said, so the company has a long runway for growth and doughnut access globally.
Besides adding points of access and continuing to convert its brand from a bakery-first company to an omnichannel brand, Krispy Kreme is also driving its success through consistent holiday promotions and brand partnerships. Last quarter, the company partnered with Biscoff and Hershey for two separate LTO menus, and this quarter is partnering with Chips Ahoy and Oreo cookie brands for limited edition doughnuts.
For each holiday, including Valentine’s Day, St. Patrick’s Day, and Mother’s Day coming up, Krispy Kreme offers a new lineup of themed LTO doughnuts and mini doughnuts, which has driven customer engagement both in-store and through other channels.
“I’m proud of our performance in the first quarter that continued to demonstrate the strength of our omnichannel model, which allows us to meet consumer demand with premium, fresh doughnuts in a capital efficient manner,” Tattersfield said. “Our global Valentine’s Day and St. Patrick’s Day campaigns and specialty offerings such as Biscoff Doughnuts resonated with consumers, showcasing the opportunities for premiumization as well as the gifting and sharing power of our brand.”
The first quarter of 2023 also represented the strongest quarter for e-commerce Krispy Kreme has ever seen, with a 23% boost driven mainly by Insomnia Cookies.
“We also achieved our best-ever quarter of e-commerce revenue, representing a higher mix of revenue than during the pandemic and we see a long runway for further growth in this channel,” Tattersfield said. “Krispy Kreme continues to be well-positioned to deliver another year of strong growth driven by our capital efficient DFD model and our global expansion plans.”
Moving forward, one of the company’s biggest goals is to become more technology efficient by adding better tech to drive-thru lanes and bakery hubs as demand grows. Krispy Kreme will also begin to add digital kiosks to the lobbies of stores across the U.S. to make the ordering experience easier for guests.
Krispy Kreme ended the quarter with $419 million in net revenue, and reported a loss of net income for the quarter, down from $6.5 million or $0.02 per share last quarter to $1.6 million or $0.00 per share for the first quarter ended April 2.
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