KRISPY KREME DOUGHNUTS, INC.

The current strategy of Krispy Kreme at a general level focuses on building brand value. The business model applied by the company to implement this strategy includes the following elements:

Sales directly to consumers through company-owned stores

Royalties derived from the operations of franchised Krispy Kreme stores

Sales of doughnut mixes and specialized equipment to the franchisors of Krispy Kreme stores

Krispy Kreme management assesses the effectiveness of the company's operations within the context of specific performance objectives established for the company. These performance objectives are as follows:

15 percent (approximately) same store annual sales growth

Over the period from 1997 through 2001, the company failed to meet the 20 percent revenue growth objective in the first three years (although they came close in 1998 with 19.7 percent revenue growth. In both 2000 and 2001, however, revenue growth was well above the objective. Revenue growth over the five-year period was 153.5 percent. Thus, there is evidence (not incontrovertible) to indicate that the company's strategy is working in relation to revenue growth. Same store sales performance followed the same general pattern of revenue growth as that of the company overall.

With respect to earnings growth, the company also had a spotty record in the first three

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Approximate Word count = 1064
Approximate Pages = 4 (250 words per page)

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