🍟 11/20/2023 – The Rise & Fall and Rise Again of Krispy Kreme


The Donut Theatre

Krispy Kreme was the hottest IPO of the early 2000s. But an SEC investigation would wipe out $2.7B of shareholder value just a few years later.

After declaring bankruptcy, they’ve been acquired and are now back on the public markets.

Here’s the story of the famous donut theater…


Krispy Kreme was founded in 1937 by Vernon Rudolph. A North Carolina invention, Rudolph procured their secret yeast recipe from a French chef.

Food historians say mashed potatoes could be a secret ingredient but regardless:

The brand says TASTE as their #1 differentiator. 

Another core differentiator? Doughnut “theater”. Rudolph teamed up with engineers to invent and build doughnut making machinery.

This way, folks could see and smell fresh doughnuts being made as they waited for their order.

Signs outside light up when new batches are ready.

Expansion…and Trouble

Let’s loop ahead on the ‘ol Krispy Kreme conveyer belt to when the company starts expanding Things don’t get juicy until 60 years in. They open in NYC in 1996; California in 1999.

In 2000, they’re on the stock exchange; their public offering fueling their expansion further.

In 2000, they have 142 stores, then by 2004 they have 357 stores. Just 4 years later, they launch 215 *new* stores.

Revenue rises from 200M to 700M+ and they’re poised as the next big fast food thing.

But that’s when things turned…

This is the period that SEC led an investigation into their explosive growth, ultimately finding $25.6M in accounting errors.

Krispy Kreme struggled to meet earnings expectations. They updated past reports and delayed quarterly reports, so as to avoid disappointing investors.

But delivering 0 earnings and discrediting previous reports did far more damage.

Their stock fell to its IPO price of $5.25 (split-adjusted), wiping out nearly $2.7B in shareholder value.

A 20% decline in store sales led to the closure of 25% of their stores.

In 2005, Krispy Kreme couldn’t produce audited financial statements, risking default on its $150M credit line.

As company value plummeted, they had to file for Chapter 11…by 2015 they had less than 300 locations

But 1 year later they were given a lifeline…


In 2016, major food & beverage player JAB Holding acquired Krispy Kreme for $1.3B. Proof of their recovery, up from $5.25 to $20/share.

In 2018, Krispie paid $139.5M for a majority stake in Insomnia Cookies. In 2021, they go public again at $17/share, with a $2.7B market cap.

The key to their rebirth? Tapping into new markets.

Krispy Kreme is set to be in 35+ countries shortly, with a focus on their “Delivered Fresh Daily” (DFD) business.

They’re prioritizing hubs that deliver fresh doughnuts and cookies to access points over stores. 

As of June, there are 12K+ global access points. Their long term goal? 75k.

They’re already in Walmart, Publix, Walgreens, Costco, being piloted in McDonald’s, and tested in Target.

In fact, eCommerce now accounts for 1/5 (19.6%) of total retail sales, with room to grow.

Meanwhile, Q1 2023 net revenue increased by 15.8% to $372M, with organic revenue growth of 15% to $370M.

Sure, ~300M isn’t ~3B if you recall the height of Krispy Kreme’s hyped market cap in the early aughts.

But it’s still pretty damn tasty.


Subway® Names Jeff Shepherd as Chief Financial Officer

Subway, announced the appointment of Jeff Shepherd as Chief Financial Officer (CFO). Shepherd will report directly to Chief Executive Officer (CEO) John Chidsey and oversee Subway‘s global finance organization, responsible for managing and optimizing the brand’s global financial performance and information security. Shepherd succeeds Ben Wells who will retire at the end of the year after a 46-year career.

“Jeff has a well-earned reputation for driving strong financial results for global brands, bringing nearly 30 years of financial and accounting experience to our organization,” said Subway CEO John Chidsey. “As we welcome Jeff to Subway, we also thank Ben for his significant contributions. Since joining the company in December 2019, Ben has been a key driver of our brand’s global financial stability and strategic growth, contributing to 11 consecutive quarters of positive sales results.”

Another Big Burger King Franchisee Files for Bankruptcy, the Third This Year

A large Burger King franchisee filed for Chapter 11 bankruptcy, the third time this year a sizable operator in the system made such a move.

Premier Kings filed in Alabama district court on October 25, marking continued financial difficulties for the company since the death of its owner, Manraj “Patrick” Sidhu. Less than a year after Sindhu died in May 2022, his other company, Popeyes franchisee Premier Cajun Kings, filed for bankruptcy.

Disclaimer: This Content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. Nothing contained on this site constitutes a solicitation, recommendation, endorsement, or offer to buy or sell any franchises, securities, or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the franchise and/or securities laws of such jurisdiction.

All Content in this email is information of a general nature and does not address the detailed circumstances of any particular individual or entity. Nothing in the email constitutes professional and/or financial advice, nor does any information in the email constitute a comprehensive or complete statement of the matters discussed or the law relating thereto. You alone assume the sole responsibility of evaluating the merits and risks associated with the use of any information or other Content in this email before making any decisions based on such information or other Content.