Chain bakeries don’t often attract hours-long queues. But when Krispy Kreme’s first Irish store opened in a Dublin suburb, tailbacks at its 24-hour drive-through went on so late into the night it had to scale back its opening times. People even queued for three hours at the ribbon-cutting of a new Krispy Kreme shopping centre kiosk in Kent.
The company is not selling anything particularly groundbreaking or exclusive. It’s among dozens of doughnut brands, from the hipster Crosstown to global giant Dunkin’, that consumers can choose from today. Its treats are also sold in more than 1,000 supermarkets and petrol stations across the UK and Ireland. So what’s behind the hype?
“Krispy Kreme is one of those brands that to some degree you might call alchemistic,” says the company’s UK and Ireland president, Jamie Dunning, by way of explanation. “You do not know what has gone into it to make it what it is.”
How to turn customers into fanatics
But it’s not magic dust: the company has carefully crafted its image over decades. Founded in North Carolina in 1937, the company went through rapid expansion in the 1990s (“shrieking fanatics” were queuing for doughnuts back then, too, Fortune reported). Its retro-styled dozen-doughnut boxes appeared in everything from Sex and the City to Fight Club.
Krispy Kreme’s first UK outlet opened in 2003 at swanky department store Harrods. That choice set the tone for the “sense of occasion” and “emotional connection to the purchasing experience” the brand hopes to create around every visit to one of its 125 stores in the UK and Ireland, Dunning says.
That is something he has more experience of than most. Before joining Krispy Kreme in 2022, Dunning headed up M&M’s World – a multi-storey candy superstore that has become a destination for the sweet-toothed at its seven global locations, including London’s Leicester Square.
There, he learnt “the effects of immersing a consumer in a brand rather than just advertising to them,” he says, pointing to Apple, Nike and Lego as the pioneers of such retail experiences.
At Krispy Kreme, that looks like the daily “hotlight hour” at some stores, when customers can buy freshly cooked and iced doughnuts straight off the production line. At smaller locations, gleaming trays of doughnuts are displayed within a kiosk designed to look like a dozens box opening invitingly towards you.
Those boxes have “always been the heart of the brand experience”, Dunning says. “Very little of Krispy Kreme is consumed singularly … it is largely bought for sharing or for gifting.”
Indeed, gifting is so important to its brand that Krispy Kreme, not without controversy, has rewarded US fans with free doughnuts for voting or getting a Covid-19 vaccine. In the UK, people can buy cost-price boxes to resell at charity events.
The problem with making in-store purchases special is that many of the company’s doughnuts are sold in supermarkets, petrol stations or through its website. So how do you keep that feeling of excitement and exclusivity in more mundane locations?
Dunning has been “wrestling” with this since he joined, he says. “Those cabinets are not just average wooden boxes, they are beautifully aesthetic merchandised units, illuminated, and we continue to invest in making them look better. The latest ones have full digital content in them.”
But he thinks customers are aware of the wider brand even if they just pick up a doughnut or two with their weekly shop. “About 70% of consumers who buy from Krispy Kreme in a supermarket also engage with us either online or in one of our stores once a year. And that for me is a really important part of extending that memory bank…
“When [customers] go to the cabinet in their local Tesco they are carrying a sense of affinity and attachment to the brand that makes it more than just transactionally picking up the box and taking it to the checkout.”
The challenge of inflating prices (and waistlines)
Those kiosks pose another problem as UK anti-obesity laws tighten. A basic glazed doughnut has 195 calories and 15 grams of fat, while more elaborately filled and iced options can have more than 400 calories a pop. That puts Krispy Kreme squarely in the crosshairs of the high in fat, salt or sugar (HFSS) regulations being phased in, which restrict where such products can be sold and advertised.
Global CEO Mike Tattersfield came out swinging against HFSS earlier this year, telling the Financial Times: “I don’t see the world changing to kale cake for their break every single day. No disrespect to kale, but it’s not that much fun to share.”
Dunning agrees. “It [the new regulations] unquestionably changes the game, and you have to adapt to the game,” he says. “In no way would I say I disagree with the regulations or that it’s the wrong thing to do. But I think we should never lose sight of consumer choice, and I ultimately believe well-informed consumers will make the right choices.”
The typical customer buys Krispy Kreme three to four times a year, he argues. (He allows himself just one per week.) “That is not in any way going to make a difference to people’s calorie intake over a year.”
The brand has made some concessions, however, such as launching a lower-calorie range and bite-sized ‘doughnut holes’ (45 calories each, but sold in packs of eight).
Also in Dunning’s in-tray is the inflation crisis, which has been hitting high street food and drink particularly hard. Krispy Kreme UK’s latest accounts show that although four new stores led to a 9% increase in revenue, EBITDA fell by almost a third due to an increase in input costs.
With a glazed dozen starting at £14.95, cash-strapped consumers are likely weighing up continuing to treat themselves with the many cheaper options available. Dunning, however, is undaunted.
“People have less money in their pockets now. There will be winners out of that situation and there will be those that don’t survive,” says Dunning. “Those that don’t will be those that chose to hold on to what worked before and deny that the world has changed – and Krispy Kreme is not in that latter set.”
