Krispy Kreme Swot Analysis

I. INTRODUCTION Krispy Kreme Doughnuts, Inc. (KKD) is an international retailer of high-quality sweet treats, including its signature hot skipper Glazed pack. It began as a sm in either bakery in Winston Salem, NC on July 13, 1937. Since then, the comp any(prenominal) has built a global reputation for serving the highest-quality doughnuts and largish tasting coffee. Krispy Kreme Doughnuts is part of the Quick Service Restaurant (QSR) Industry, which includes al to the highest degree all companies in the fast food manufacture. Our goal in this report is to character various tools to analyze KKD and recommend strategies for them to gain more competitive good in the food market.First, we go away ob march the operational characteristics of KKD. These factors will show constructive indications of growth in Krispy Kreme. We will look at how many stores they start currently, how many they be planning to add (in the U. S and internationally), and the training and technology tha t differentiates them from others in the QSR industry. We then will evaluate the performance metrics, such as inventory turnover and solar days of inventory ratios, to comp ar how KKD comp bes to their competition. In swan to find by how efficient Krispy Kreme is operating, our group intends to dentify where the QSR is positioned according to the industry living cycle. We will observe the stand up analysis, then we will analyze their competitors to figure where KKD stands in relation. This will confine us the basis to develop recommendations nigh their current strategies. We begin the SWOT analysis by assessing KKDs strengths, weaknesses, opportunities, and threats. II. SWOT ANALYSIS The fol pitiableing SWOT analysis is intended to examine KKDs internal strengths and weaknesses so we dope link them to external opportunities and threats with the aim of developing a strategy they should pursue. STRENGTHSStrengths are characteristics of the business or project that give it an advant ripen over other competitors. As a global disposal, KKD has establish a ho personahold name as theyve branched into grocery and stratagem stores and make doughnuts readily accessible. KKD offers a product that keisternot be matched by any competitors when referring to taste, snappyness, and the finest ingredients. Their affordable, high-quality doughnuts create a pissed visual appeal and one-of-a-kind taste. virtually of the name strengths offered by KKD are * You are able to get a fresh out of the oven doughnut in the store.Consumers are allowed to watch the process of the doughnuts macrocosm made and can buy doughnuts immediately after they are made so they are as hot and fresh as possible. * KKD is a vertically integrated company. They use specialized doughnut making equipment and special(prenominal) doughnut mixes in each store. Vertical integration ensures a rattling high-quality product. * Market research shows appeal extends to all major demographic groups including age and income. * Consistent expansion Krispy Kreme is now in 21 countries. * Product exchange at thousands of supermarkets, convenience stores, and retail outlets through U.S. This raises product awareness to the uttermost number of target consumers. * Fundraising Organizations are able to use Krispy Kreme for fundraising. They allow consumers to use their donuts to help raise money for different philanthropies. (Ex Krispy Kreme run) * Offers unthaw doughnut day once a year to increase gross sales. This day allows people who moderate been reluctant to spend money on the donuts to get a free taste and therefore increases their amount of consumers. WEAKNESSES Weaknesses are characteristics that place the firm at a disadvantage relative to others. well-nigh apparent weaknesses Krispy Kreme might get are * Limited amount of healthy selections. * Limited visiting card neglect eat items. * Limited amount of non- snack food items. * Not innovative. * No major publicizi ng 100% reliance on reputation. * Opening additional locations but no focus on increasing current store performance. * internationalistic differences/preferences. * Lack of knowledge of what the customer wants (demographics, psychographics, behavioral segmentation). OPPORTUNITIES Opportunities are elements that the company can doing to its advantage.Most internationally located stores purchase their ingredients from local merchants rather than the Krispy Kreme Supply Chain. If KKD can find a approach impressive way to provide these ingredients, they can capitalize on supply chain efficiencies to make a profit. Some opportunities for Krispy Kreme to leverage for growth would include * Emerging markets and expansion abroad International expansion has proven to bring better returns than expanding domestically. Asia and the Middle East both(prenominal) offer KKD a good market because of high levels of consumer sweet goods utilization and the popularity of Western brands in these I nternational markets. Partnerships with sports teams and convenience stores. * Development of new identity card items. * Add breakfast/healthier options to compete more directly with Dunkin Doughnuts, etcetera * Innovation. * Product and services expansion. * Local free kiosks and in-store locations in airports, bookstores, and other retail outlets. * Product Diversification. New Markets. * Significant co-branding opportunities with local sports teams and movie theaters. * Increased snack consumption During the past 20 years, more Americans are going out to eat. In todays busy world, there is less cadence to prepare meals anymore.KKD believes theres an opportunity in this trend that will increase the growth of doughnut sales. THREATS Threats to an organization are described as elements in the environment that could cause trouble for the business or project. Some threats facing Krispy Kreme are * Competition Only 694 KKD stores compared to 10,000 Dunkin Donuts and 20,000 Starbuck s Increasing competition from large and small doughnut chains, Krispy Kreme market share erodes slightly in exceedingly competitive markets. * Price Wars In the doughnut and pastry shop ndustry, determine wars are generated in attempts to take away revenue from other restaurants and hold open growth. * Economic slowdown External changes (government, politics, taxes, etc. ) * Ordering through the meshwork More and customers are society online, but Krispy Kreme does not offer online ordering of their donuts. They offer accessories online, such as coffee mugs and t-shirts. Dunkin Donuts offers more accessories including coffee, but no donuts. * Healthy food trends Krispy Kreme must constantly be aware of allayer products from many different areas of the market place.Such substitutes learned today include healthier menu items include zero trans fats in all products. Going organic or using 100% natural ingredient items. III. INDUSTRY ANALYSIS functional Characteristics Today, Kris py Kreme and its one-of-a-kind acerb Light which is a light that hangs inside the store window for people to know when the doughnuts wipe out just come out of the oven. This Hot Light can be found in approximately 694 locations rough the world and is in 234 locations in the United States.In 2002, KKD shipped their first international load up of doughnut mix to Australia, and since then hold in added locations in over 20 countries. All KKD ingredients and store supplies are shipped from the companys distribution warehouses in NC, IL, and CA. The KKD distribution center supplies all of the products needed to operate retail stores, from doughnut ingredients (mix, filling, glaze, sprinkles, etc. ) to cleaning supplies and uniforms. Production is done in the factory stores and solely automated, which cuts overhead costs and provides consistency in the products.KKD shops generally operate sevensome days a week, excluding some major holidays. Traditionally, domestic sales have been slower during the winter holiday season and the summer months. KKD opened cardinal new company operated small retail shops in fiscal 2012 and cardinal new company-operated shops in fiscal 2011, all of which were hot shops. They plan to open five to ten small retail shops in fiscal 2013, consisting in the first place of small factory stores, all in the Southeastern United States. In the past three years, they have opened 92 stores (See Figure II).The force to accommodate a drive-thru window is an important characteristic in most new shop locations, including both factory stores and satellite shops. Of the 85 shops, which serve on-premises customers, 79 have a drive-thru. Traditional factory stores generally are located in freestanding suburban locations generally ranging in size from approximately 2,400 to 8,000 square feet. The average size is 3,000 square feet. The stores typically have the capacity to produce between 2,800 and 16,000 dozen doughnuts daily. KKD is also invest ing in more technology to support the business.In 2012, KKD purchased new point-of-sale hardware for all of the company stores and implemented a new computer hardware dust for all company and franchi weigh locations. KKD encourages team members to be courteous, helpful, knowledgeable and attentive, focusing intently on employee training. High levels of customer service and the principal(prenominal)tenance of quality standards are enforced by frequently monitoring stores through a var. of methods, including random quality audits, known as mystery shoppers and a toll-free consumer telephone number.KKD offers a comprehensive manager training program for both position in the store, covering the critical skills required to operate a Krispy Kreme store and a training program. The manager-training program includes classroom instruction, computer-based training modules and in-shop training. The main competitors for Krispy Kreme are other quick service restaurants, such as Dunkin Donuts, Starbucks, Panera Bread, and originator Noah Bagels. Performance Metrics A company can measure its tokenish inventory investment by its inventory turnover.This is the level of customer demand satisfied by the supply on hand. The inventory turnover tells an organization how many times they sell through the entire inventory in one year. The average days supply of inventory that is on hand tells you how many days your current inventory will closing curtain based on your sales levels. If a company is short on inventory, the warehousing costs will be lower, but theres a risk of running out. In order to figure these determine you need to figure your average inventory and know your costs of goods interchange for the year.For the past three years (since 2010) Krispy Kreme has an inventory turnover ratio of 21. 26. They have average days where inventory is 16. 89 (see figures III and IV). Industry heart Cycle Most businesses evolve from the entry stage, to the growth stage, maturenes s, and decline. It is important to extrapolate the evolution of the Quick Service Restaurant (QSR) Industry that KKD competes in to accurately assess the strengths, weaknesses, opportunities, and threats speeding or slowing the firms growth. The introduction stage is dominated by the marketing of an innovation for the first time.Competition is marginal and returns are negative, as most companies must catch up on their investments in RD, marketing, and manufacturing. The growth stage is characterized by high win and competition. During this stage organizations begin to differentiate their products based on value and quality. The maturity stage shows high sales accompanied by very strong price pressures. Profit margins often shrink as the customers begin to see the product as homogenous (always the same). The decline stage is shown by minify profits and many companies have to decide whether to stay in the industry or cut their losses.Based on these key factors, we believe the QSR industry is in the maturity stage of the industry life cycle. This is due to a low level of innovation, fluctuating profit margins, and global expansion. IV. RECOMMENDED STRATEGY Krispy Kreme must stop competitive in the Quick Service Restaurant (QSR) Industry. To be effective at this we believe the first thing they should focus on cost leadership. Cost leadership is based on high volume sales of low margin products/services (i. e. Wal-Mart). To achieve this, KKD must focus on increasing their sales.This can be done by analyzing their target markets key buying habits at the lowest cost to Krispy Kreme. Next, KKD should pass their prices and adjust RD, marketing and manufacturing to create a cost scatter so they can save some money. KKD can leverage their economies of shell (complete automation of the doughnut making process, added capacity, and TQM) to create a long-term sustainable cost gap. We believe if KKD executives focus on cost leadership in the QSR industry, the company will benefit from increased revenues, retail operations, and increased cheer in the brand name of Krispy Kreme.