I am convinced that KREM today = McDonald's in 1965 or 1966.
Yesterday, I drove over to the East coast of Florida to see the other Krispy Kreme store (Ft. Lauderdale) that is vaguely close to where I live.
(I had previously visited the Miami store).
(Other than these two, the nearest one is in Tampa).
On the way to the Ft. Lauderdale store, I drove the following route (for the last little bit of the trip).
(I know this is boring, but it will be quick).
Exit off of I-95.
East on Sunrise Blvd. (Exit 30).
North on Federal Highway (also known as Route 1).
Arrive at Krispy Kreme store.
Total drive (since exiting I-95) was ... about 4 or 5 miles.
Important point : I passed two Dunkin' Donuts stores during that 4 or 5 mile drive !
When I was at the Krispy Kreme store, pretty much everything a KREM shareholder would hope would happen ... did happen.
The store was tiny, but so busy that there were about 5 or 6 or 7 employees working. (They were making doughnuts when I was there).
(It was a weird shaped building. It had a stainless steel exterior, like an old diner. It was a "drive thru," in addition to having a walk-in area).
When I arrived (around 2:30 P.M.), I had to wait in line to order.
While I was ordering, people showed up, and waited behind me.
While I was eating (my first batch of) doughnuts, more people showed up.
When I decided I had to order two more doughnuts to eat immediately, AND get another dozen to take home, there was no one in line ahead of me, but -- while I was ordering, more people showed up, and waited behind me.
A fundamental concept of people standing in lines at businesses is :
If there is almost always someone standing in line ordering stuff EVERY time you visit a business establishment, AND the length of time it takes to order and receive the stuff is relatively short, then ... there is a LOT of business being transacted at the place.
(Although this may sound obvious, lots of times people are stunned when they hear how much business takes place at certain businesses (like pizza restaurants or convenience stores)).
I exchanged "chit chat" with two groups of people while I was there : the people "scarfing down" some doughnuts at the table next to me, and the people behind me in line (the second time I was in line).
BOTH groups of people were just "gushing" all sorts of "these doughnuts are absolutely fantastic, I love this place, etc." type things.
The people next to me said (un-provoked by me) that after tasting Krispy Kreme doughnuts, they have never bought a single Dunkin Doughnut EVER; and ... would most probably not buy a Dunkin Doughnut for the rest of their lives.
I told them that this was EXACTLY what I said the first time I tasted a Krispy Kreme doughnut.
Then, they told me that they were originally from "up North," and had never even heard of Krispy Kreme doughnuts until this year.
I told them (again) : same exact story with me.
Anyway -- back to seeing two Dunkin' Donuts stores on the way to the Krispy Kreme store.
I worked at Salomon Brothers (New York headquarters office) (briefly) over twenty years ago.
At the time, the Salomon analyst who covered the fast food industry was (I thought) a really interesting, smart guy. He used to write up research reports on the industry that were very lively, fun to read, informative, etc.
One report I remember was titled something like "26 things we learned at the most recent presentation by McDonalds' management to Wall Street analysts."
(I cannot remember for certain if this report came out while I was working there (1979), or some time within the next few years, when I would occasionally see some Salomon research reports).
(I am bothering to mention this in case someone has a whole stack of old Salomon Brothers research reports, and determines that this particular report did NOT come out in 1979).
(If I ever get to my point, it will be obvious that the bullish case for Krispy Kreme is actually better if this research piece came out later than 1979 ...)
(I think it is time to say : "But ... I digress.")
Anyway, in this research piece (26 things we learned ...), I still remember that the last point was :
<<McDonalds' management was asked about worries that McDonald's may have already reached the "saturation point."
Management's answer was : They are tired of being asked the same question again and again.>>
I remember (when I read this) thinking : Well, how much longer can this McDonald's thing keep going ?
I had already seen the number of McDonald's (and other fast food outlets) rise dramatically in my home town.
And -- all of the fast food places on freeways.
And ... whatever.
Well, 1979 (or some time in the period 1979 - early 1980's) was NOT AT ALL "late in the game" for McDonald's.
And, I am sure the argument could be made that it is STILL not late in the game for McDonald's.
It is so unbelievably early in the game (now) for Krispy Kreme, that I think anyone focusing on accounting minutia (as it relates to Krispy Kreme) is looking in the wrong place.
Go to a Krispy Kreme store.
See what is going on.
Eat some Krispy Kreme Doughnuts.
(For a brief history of the early days of McDonald's, go to :
mcdonalds.com )
Jon. |
