Stan Parker Interview
(Vice-President of Marketing - Krispy Kreme Donuts)

Q – At last, I get to talk to the guy behind Krispy Kreme…..
A – (Laughs). Oh, there’s a lot of guys and gals behind Krispy Kreme.

Q – There must be a secret recipe used in the making of the Krispy Kreme doughnut. How do you insure that it will remain secret?
A – Well, it is a secret recipe, but, it’s actually kept in a safe inside a vault in our mix plant. Each Krispy Kreme store gets a shipment at least once a week of mix and everything else they need to run the store with. So, actually all the mix comes from one of two places. We have two mix places now. And, that’s how we control it. So, the secret is in the mix.

Q – How many different kinds of doughnuts do you make?
A – We have about 25 or 26. A typical Krispy Kreme store would carry 16, but, a typical Krispy Kreme store would produce 220-230 dozen an hour. Now, the production in our mobile store is smaller in order to fit it on the trailer. It only produces about 110 dozen an hour.

Q – Speaking of the mobile unit, it was on the grounds of the New York State Fair a few years back, before you opened a store in Syracuse. There had to have been a couple dozen people running it. Do you have to put all those people up at local hotels?
A – Yeah, there’s a group that travels with the mobile unit and they do stay in local hotels.

Q – Were you aware of the fact that you sold 221,760 doughnuts during the run of the New York State Fair?
A – Is that right? We did sell a whole lot. I remember that. It was a great event.

Q – The paper here said it was the best event that your mobile unit had been at.
A – That’s correct. I have to tell you, by far the New York State Fair was the most successful in terms of just the number of people who visited the store.

Q – Just how expensive is it to run one of those mobile units?
A – We don’t talk about the cost of operating that store or any of our stores. We’ve got 10 people assigned to it and another 3 travel with it, with a co. that helps us transport it and set it up. I don’t know if you know where this whole idea came from. We went public in April of 2000. We were on the NASDAQ. About a year later, May 17th 2001, we moved to the New York Stock Exchange, they allowed us to block off the street in front of the Exchange and set up doughnut-making equipment and make doughnuts out on Wall Street and gave away 40,000 doughnuts that day and 17,000 cups of coffee. We said it would’ve been a lot easier if we could’ve just driven up and plugged in. The event was so successful-----and we really did it overnight. It wasn’t a mobile unit. It really led to wanting to do the mobile store so we could take the “hot” doughnut experience across the country to places that didn’t have it yet. So, we launched the store back in March 2002. In fact, our first event we went to Norfolk, Virginia. The U.S.S. Theodore Roosevelt was having it’s homecoming back to the Norfolk Naval Base. They were the first aircraft carrier group to come in after 9-11. We were there with 20,000 folks, friends and family and gave away doughnuts to everyone who got off the ship. And then, we went on to sort of these tours of festivals and fairs.

Q – How is it determined where Krispy Kreme will open a store? What kind of market research goes into that?
A – We look at a number of factors. We’re looking at population in the area, both residential population and daytime population. You look at traffic patterns. There certainly has to be an availability of sites. Is it on the side of the road that goes with the traffic patterns? So, there’s a number of factors that go into it. People often ask who our customers are and it really is everyone. We did some surveys and when we looked at the demographics it really came back that we have a very broad customer base. We really look to where people are, so they have easy access to the store.

Q – Do you scout for a city or does a city contact you?
A – In most of our new markets, we have franchise partners there, and what they bring is real local knowledge. We will share with them the experiences of our most successful stores and populations, trends, and all the data points around a successful store. They will overlay that with the local knowledge they have and between the two of us we begin to identify sites and do site visits, look at the cost of the land. We’ve got to have the right size parcel. Sometimes, we’re having to go into buildings and re-model an existing building. Sometimes we’re building from scratch, stand-alone stores. Permitting is important. We need to be able to have our neon signs that say “Hot Doughnuts Now”. That’s very important to us. So, we have to be in a location that allows for that. We need to have drive-through. It’s just a myriad of factors that go into it. But, the local knowledge is extremely important that we get from our franchise partners.

Q – How do you determine who to grant a Krispy Kreme franchise to?
A – We look for, broadly speaking, 3 things: one, a person with food service operating experience. We look for someone who has experience with brands. And, we look for someone who has a real understanding for and passion for the Krispy Kreme brand. So, that’s sort of out of the gate, what we’re looking for in our partners. A lot of our franchise deals are area developer agreements. So, we grant someone the rights to a fairly large territory. So, they have the rights to develop all the retail and wholesale business within that territory. So, it ends up not so much being one franchisee, one store as some franchise models are. We typically will have partners who have agreements for multiple units.

Q – Do you have company owned stores that you pay people to manage and run or is everything franchised?
A – No. We have what I would say are 3 types of stores in terms of ownership. We have company owned stores that are for the most part in our Heritage markets which is the Southeast; we have franchised stores that are 100 percent franchised. And then we have other franchise agreements where we are equity partners in those franchise agreements.

Q – Who is your competition? I know Dunkin’ Donuts is, but is there anyone else?
A – Well, I think one thing you may find surprising is that about half of our business occurs in the evening. A Krispy Kreme store has the hot light on in the morning and evening. In the morning it will be from 6am to 11am and in the evening from 5:30-6pm to 11pm or midnight. Basically, our business splits fairly evenly between the AM part and the PM part. In the morning I think we’re competing against other breakfast foods whether it be doughnuts or muffins or bagels. In the evening I think we’re more of a dessert, pastry. So, we may be competing against ice-cream or frozen yogurt, that type of thing. So, I think we have multiple competitors just depending on the time of day which is unusual. Most doughnut shops have just the morning business.

Q – Is there a special division at Krispy Kreme devoted to celebrity requests?
A – No. I think some celebrities really enjoy our product and sometimes they talk about it, but, there’s nothing we do that sort of cultivates it. So, we’re just fortunate that some of these folks like our doughnuts and sometimes talk about it. (Laughs).