With 181 Krispy Kreme stores in 28 states, Krispy Kreme Doughnuts in 2001 was rapidly building something of a cult following for its light,warm, melt-in-your-mouth doughnuts. Sales were on an impressive
climb, exceeding 3.5 million doughnuts a day. The company's business
model called for 20 percent annual revenue growth, mid-single digit
comparable store sales growth, and 25 percent annual growth in
earnings per share.
Krispy Kreme had created a flurry of excitement with its expansion
into metropolitan markets outside the Southeast--its grand openings in
newly entered markets attracted long lines of customers and created
traffic jams around its store sites. The first new store in San Diego
racked up $365,000 in sales the first week, with 5 TV crews covering
the opening day event. The first store in Denver produced first-week
revenues of $369,000, drew 50,000 visitors, and had $1,000,000 in
sales the first 22 days; the crowds were so large that three off-duty
deputy sheriffs were hired to direct traffic from 5 a.m. to 11 p.m.
during the Tuesday-Saturday period of grand opening week--one