AP News -- KK coming to New England and Boston.
Food fight in Boston
Upstart Krispy Kreme throws down the gauntlet in a 'holey war' with
Dunkin' Donuts
Monday, April 30, 2001
By GREG SUKIENNIK, Associated Press
QUINCY, Mass. — Dunkin' Donuts stores are crammed into this Boston suburb like
breakfast pastries in a box. There's a full dozen Dunkin shops in this city where
the chain was founded 50 years ago, a stronghold that has long been conceded
even by local competitors.
But now a doughnut war
may be rising and a
coffee battle brewing.
Krispy Kreme Doughnuts,
the expanding chain that
boasts of piping-hot
treats, plans to open 25
full-service shops in New
England over the next five
years, 16 of them in the
Boston area. And Quincy,
population 88,000 and
growing, is a location of
particular interest.
"We're looking for
high-density areas with
lots of people and high
traffic count," said Janice
Matthews, vice president
of operations at the Jan
Companies, a Cranston, R.I., firm hired to scout franchise locations for Krispy
Kreme.
Breaking into a community dominated by Dunkin' Donuts is not impossible. Krispy
Kreme, based in Winston-Salem, N.C., has done it in other cities, and Honey Dew
Donuts, based in nearby Braintree, has grown from a single shop to 150 — all in
Dunkin's backyard.
"Krispy Kreme is doing very well in Chicago, which is a very strong Dunkin'
Donuts market," said BB&T Capital Markets analyst Andrew Wolf.
The two companies share similar histories, beginning with common origins as
single stores run by entrepreneurs.
In 1948, Bill Rosenberg opened the Open Kettle, a lunch counter in Quincy. He
changed the name to Dunkin' Donuts in 1950 and five years later, he made its first
franchise deal. By 1979, the chain had grown to 1,000 shops in the United States
and abroad. Last year, the 5,000th shop opened.
Krispy Kreme's roots date back to 1933 in Paducah, Ky., where founder Vernon
Rudolph bought a doughnut shop — and with it, a secret doughnut recipe.
Rudolph opened his first retail shop in Winston-Salem in 1937 and began opening
more across the South. There are now more than 170 stores.
Doughnuts are big business. Dunkin' Donuts, since 1990 owned by British food
and spirits conglomerate Allied Domecq, reported sales of $2.3 billion in the fiscal
year ending Aug. 31. Krispy Kreme had sales of $448 million in the fiscal year that
ended Jan. 28, up 40 percent over the previous year.
What Krispy Kreme lacks in size, it makes up for in dedicated followers.
Aficionados swear by the company's glazed doughnuts, particularly when they're
available hot.
"They're not just doughnuts," says Stewart Deck, 38, of Arlington, Mass., who
has a "Krispy Kreme appreciation page" on the Internet. "When you bite into one
it's like biting into a sugary cloud."
Krispy Kreme touts the impulse buys generated by its "Hot Doughnuts Now"
signs, which light up when pastries roll off the assembly line.
Dawn Scartissi, a customer at a Dunkin' Donuts in Quincy, had heard all about
Krispy Kreme, but had never been to one.
"Oh yeah, it's a big fad, right?" said Scartissi, 29, who was making a mid-morning
coffee run for co-workers at a nearby hair salon. "I hear the doughnuts are
supposed to be great."
Would she try them? "Oh yeah, definitely," she said.
Publicly, both companies downplay notions of a food fight, saying their
businesses have different aims. Dunkin' Donuts says it has succeeded by
diversifying its menu to include bagels, breakfast sandwiches and coffee drinks.
Meanwhile, Krispy Kreme sees itself primarily as a bakery.
"We're not really looking at Dunkin' Donuts as competition," Matthews said. "Lots
of people go to those stores and get a cup of coffee and maybe a doughnut. When
they come to (Krispy Kreme), they're getting a dozen doughnuts and maybe a
coffee. I think there's room for all of us."
Ken Kimmel, a spokesman for Dunkin' Donuts, agrees.
"What Krispy Kreme has done for the doughnut business is terrific," Kimmel said.
"We're closely watching their entry into the market. We think we'll be able to
compete across a large number of locations."
It now appears Krispy Kreme is also gearing up for coffee competition.
Earlier this year the company bought Digital Java Inc., a Chicago-area coffee
roasting company that also distributes coffee and espresso machines. Chief
Executive Officer Scott Livengood said Krispy Kreme intends to increase its
coffee business and develop espresso-based drinks and frozen beverages.
But Kimmel noted Dunkin' Donuts already sells 650 million cups of coffee a year.
"We feel our expertise in that area is second to none," he said of the coffee trade.
"Honestly, what they need to do is not anything that's ever going to change the
way we approach it."
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