Krispy Kreme Australia: The taste of success

Dale Benton
|Jun 3|magazine18 min read

As one of the world’s largest food franchises, with hugely successful operations across the world, Krispy Kreme’s decision to move into Australia was something of a no brainer.

In 2003, the American global doughnut company launched into Australia and soon established a national footprint, becoming the first country outside of the US to make the iconic Original Glazed Doughnuts.

At its peak, Krispy Kreme had more than 50 stores throughout Australia but in 2010, the company entered voluntary administration and a major restructure was on the menu.

"Krispy Kreme has excellent brand recognition and good turnover and profitability in its better stores," director John McGuigan said in a statement.

“However, several factors, including location, sales declines, high rents and high distribution costs, have meant that a number of stores are losing money."

Voluntary administration didn’t last too long however. Despite an initial closure of more than 25 stores, ranging from New South Wales to Victoria and Queensland, in December 2010 after just two months Krispy Kreme emerged from administration.

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Smarter

This new look Krispy Kreme emerged as a smarter, leaner business, ready to learn from its previous troubles including slumping sales, high rents and high distribution costs. Krispy Kreme was back, with 35 of its 59 stores across Australia remaining open.

“The remaining retail outlets all have strong sales and customer support, and the company can now continue trading without underperforming stores adversely affecting the business,” said McGuigan.

Just one year later, after a stable year that brought Krispy Kreme back on sure footing, the company announced a perfect match with the news that it had partnered with the Australian arm of the major international chain of convenience stores 7-Eleven.

The coming together saw 7-Eleven agree to sell Krispy Kreme doughnuts in each of its 600 stores across Australia. This represented a major milestone for the company, an opportunity for a huge increase in sales and customer traffic.

“We are thrilled that our partnership with 7-Eleven, an outstanding Australian retailer, will mean that Krispy Kreme fans will be able to buy our product from 600 additional locations,” said McGuigan.

“The combination of the Krispy Kreme iconic brand with Australia’s leading convenience chain is an exciting opportunity for both 7-Eleven and Krispy Kreme Australia,” he said.

Global footprint

Krispy Kreme Australia represents one of the many franchises around the world, with more than 70 percent of Krispy Kreme stores being located outside of the United States, cementing its place as a truly international brand.

As the company’s footprint continues to expand and grow, what level of strategic management is in place to ensure it remains as a market leader?

“Our focus remains on becoming an industry leader through the use of innovative new product platforms to extend our offering and make our products relevant over time to an ever-changing population,” says the company.

“We believe that our success is driven through a partnership with our franchise partners around the world. The combination of strong global and regional marketing support, along with local adaptation and execution, will continue to grow our iconic brand worldwide,”

Innovation

Krispy Kreme Australia owes its current stable state not only to the restructuring of processes internally, but also to the support and strategic partnership the franchisee consistently receives from its parent company.

That drive for innovation and new product platforms is exemplified through its online presence and its delivery service. In the world of e-commerce, ordering food online is nothing new, but Krispy Kreme has been investing heavily in its digital presence, customer loyalty and ecommerce capabilities.

In an interview with CMO, Russel Schulman, head of digital and ecommerce, goes as far as saying that Australia is leading the way with regards to digital innovation and ecommerce initiatives.

Krispy Kreme partnered with Temando, the global multi-carrier shipping platform for commerce. Through the partnership, Krispy Kreme transformed its order processing capabilities from a traditional manual order processing system to streamlined method.

Temando enables the company to have much more intelligent order routing, an increased visibility across its order process, reduce the overall headcount needed to process orders and reduce the costs associated in delivery.

According to a case study with Temando and Krispy Kreme, at any given time depending on the volume of orders, manual work could consume between 2-4 staff members entire days each week.

After just one month of working with Temando, Krispy Kreme had overseen a major increase, close to 300 percent, in transactions and a total of 7,152 extra doughnuts sold.

The major overhauling of its processes doesn’t stop there. In November 2015, Krispy Kreme partnered with Magento and Digital Arts Network Sydney, an online platform, to power its online distribution system via a new and improved web presence.

This innovative new website provides the opportunity for customers, either in a web browser of via tablet device, create their very own doughnut through dragging and dropping various flavours and alternatives. These custom doughnuts, which can be “shaken up” by physically shaking a mobile device, are stored and processed into real doughnuts ready for delivery.

"Krispy Kreme has seen massive improvements in engagement across the site with dwell time up 360 percent and repeat visitation jumping up by 252 percent,” says Schulman in a case study.

The new site also allows customers to have donuts delivered or arrange to collect the donuts in real time from any of Krispy Kreme’s stores across Australia, including its partner outlets 7-eleven.

The significance of ecommerce in the continuing success of the company cannot be ignored. When the company entered voluntary administration partly through having too many stores, this in turn reduced the quality of the product, made the operating costs difficult to manage and turned Krispy Kreme products into “too much of a commodity.”

Ecommerce continues to represent the best opportunity for Krispy Kreme to reach all of its customers and deliver the same level of service and cost effectiveness, all without sacrificing the overall quality.

Empowering employees

For any company, success simply cannot be achieved without the right people driving the company forward. This is not an area that Krispy Kreme has taken for granted, investing heavily in its talent assessment and acquisition.

Krispy Kreme Australia, as a direct result of its size and scope, receives applications in the 100s which proves difficult (and costly) to try and pin down the right candidates. This, almost inevitably, has led to mistakes and in 2013 the company has a 42 percent staff turnover.

Fast forward to the end of 2016 and significant investment in its staff acquisition and development, and Krispy Kreme has reduced staff turnover 37 percent.

The company offers a thorough development process to ensure that employees not only represent the best of the best for the company to its customers, but also a major boost for their personal development. This includes training in business strategy, hospitality, maintenance, production planning and execution alongside training in food preparation and handling.

To the future

It has been something of a roller coaster for Krispy Kreme Australia over the last decade, but the future is looking bright for the company. Only recently has the company announced that Krispy Kreme Australia is expanding into New Zealand in an $8million development, set to be constructed in South Auckland.

With an open date set for March 2018 Krispy Kreme Australia is fast proving that it still has the taste for success.

 

 

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