Businessweek

Krispy Kreme Doughnuts, Inc. engages in retailing and wholesaling doughnuts, complementary beverages and treats, and packaged sweets. The company owns and franchises Krispy Kreme stores, at which various doughnuts are sold and distributed together with complementary products, as well as an array of coffees and other beverages. Segments The company operates in four segments: Company Stores, Domestic Franchise, International Franchise, and KK Supply Chain. Company Stores The Company Stores segment comprises the doughnut shops operated by the company. These shops sell doughnuts and complementary products through the on-premises and wholesale channels and come in two formats: factory stores and satellite shops. Factory stores have a doughnut-making production line, and majority of them sell products through both on-premises and wholesale channels to utilize production capacity. Factory stores also include commissaries which serve wholesale customers. Satellite shops, which serve on-premises customers, are smaller than factory stores, and include the hot shop and fresh shop formats. As of January 29, 2012, there were 92 company shops in 19 states and the District of Columbia, including 72 factory and 20 satellite shops. Products Doughnuts and Related Products: The company makes and sells various doughnuts, including its signature Original Glazed doughnut. It also offers seasonal doughnuts that come in various non-traditional shapes, including hearts, pumpkins, footballs, eggs and snowmen, and which often feature complementary icings and fillings. In addition, the company offers various products through wholesale channels, including honeybuns, fruit pies, mini-crullers, and chocolate products, generally packaged as individually wrapped snacks or packaged in snack bags. The company also has introduced products in non-traditional packaging for distribution through grocery stores, mass merchants, and convenience stores. Complementary Products: The company has a beverage program which includes drip coffees, both coffee-based and non-coffee-based frozen drinks, juices, sodas, milks, water, frozen/blended beverages, and packaged and fountain beverages. The company is developing beverages, such as espresso, cappuccino, and hot chocolate. Domestic Franchise The Domestic Franchise segment consists of the company’s domestic store franchise operations. Domestic franchise stores sell doughnuts and complementary products through the on-premises and wholesale channels in the same way and using the same store formats as do company stores. As of January 29, 2012, there were 142 domestic franchise stores in 29 states, consisting of 102 factory and 40 satellite stores. International Franchise The International Franchise segment consists of the company’s international store franchise operations. International franchise stores sell doughnuts and complementary products exclusively through the on-premises sales channel using shop formats similar to those used in the United States, and also using a kiosk format. A portion of sales by the franchisees in Canada, the United Kingdom and Australia are made to wholesale customers. As of January 29, 2012, there were 460 international franchise shops in 20 countries, consisting of 118 factory stores and 342 satellite shops. The company offers Krispy Kreme Baked Creations products in the Philippines, Korea, Indonesia, Saudi Arabia, and Turkey. Beverage offerings at shops outside the United States include a program consisting of hot and iced espresso based beverages, frozen drinks, teas, juices, sodas, water, and bottled or canned beverages. Drip coffee is also offered in various international markets. The company is focusing franchise marketing efforts on new markets, including Europe, India, Russia, and South and Central America. KK Supply Chain The KK Supply Chain segment produces doughnut mixes and manufactures doughnut-making equipment, which all factory stores, both company and franchise, are required to purchase. In addition, KK Supply Chain sells other ingredients, packaging, and supplies, principally to company-owned and domestic franchise stores. The KK Su