Financing

Krispy Kreme's competitors are not who you think

The doughnut chain is an “affordable luxury” that people gather to enjoy. Its competitors are not just Dunkin’ and other doughnut concepts but cake makers and even florists.
Krispy Kreme
Krispy Kreme competes with chocolate makers, bakeries and even florists for celebratory occasions. | Photo: Shutterstock.

What would you rather have for Mother’s Day: A dozen roses or a dozen Krispy Kreme doughnuts?

For some, it’s the latter. And that makes your local florist every bit as much of a competitor as Dunkin’ or another doughnut shop. That, at least, is according to executives with the Charlotte-based chain.

“I don’t just compete against the category,” Mike Tattersfield, CEO of Krispy Kreme, said at the CL King & Associates Best Ideas Conference on Monday, according to a transcript on the financial services site Sentieo/AlphaSense. “I compete against the chocolatiers. I compete against the cake occasion. I compete against the flower occasion and Mother’s Day, etc.”

Most of the customers who get Krispy Kreme doughnuts do so for occasions, he said. “Eighty percent of our doughnuts are shared,” Tattersfield said.

That makes the doughnuts an important part of various occasions. “When you start to get into the gifting, whether it’s Halloween, you’re getting into Thanksgiving, you’re getting into the Christmas holidays, the opportunities are there,” Tattersfield said. “And it’s not just a trend that’s American. It’s a global trend. It is working in every country that we operate.”

For Krispy Kreme, the opportunities mean the chain could avoid problems that come with a weakening economy.

Many economists expect consumers to cut back on dining, and there are signs they may already be doing so. Americans must start paying their student loans after a three-year break, for instance. Credit card debt surged over the past year as inflation hit consumer pocketbooks which, along with drained pandemic savings, mean people are watching their spending more carefully.

But consumers have proven a willingness to enjoy small treats during such periods. Cookie and pretzel concepts did well during the Great Recession, for instance, because consumers considered them small indulgences.

“We’re still an affordable luxury,” Tattersfield said. “We’re just an affordable, amazing brand that people want to gather with.”

He said the company’s U.K. business is starting to come back after the economy worsened there and restaurant chains watched sales slow. Brutal inflation hammered consumer spending power in the country, which hurt the local economy.

Tattersfield said that good brands are able to make consumers “feel resilient.” The brand in the country focused on pricing, marketed dozens of doughnuts and menu innovation to get consumers excited about going to one of its shops or kiosks. “It’s up to us to make sure they feel resilient,” he said.

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