For Krispy Kreme, Big Gains Come In Small Packages

Krispy Kreme happily announced a strong fourth quarter, reporting a 6.7 percent increase in company same-store sales, and a 9.9-percent increase in domestic franchised stores. During Wednesday's earnings call, CEO James Morgan elaborated on the positive numbers, saying sales growth is driven by foot traffic and is among the strongest in the industry. For the fiscal year, Krispy Kreme surpassed the $1 billion milestone in system wide sales.

It's apparent that the company's coffee is what lures their customers through their doors recently, and not their doughnuts. Although, Krispy Kreme's "Hot Doughnuts Now" neon sign is sure to lead hungry passerby's into their stores. The company is currently on a hot streak of 21 consecutive positive reporting quarters after a near fatal fall from grace which started in 2004 and saw Krispy Kreme stock trading at just $1.08 per share.

Krispy Kreme will continue to focus on the expansion of small factory shops and grow their retail beverage business including coffee and finish their model off by offering occasion based marketing. Krispy Kreme has been a leader in social media based marketing, marketing their eClub loyalty program, Hot Light smartphone app and maintaining local relationships. Krispy Kreme currently has two promotional days where they give a big push for customers to come into the stores, National Doughnut Day and Talk Like A Pirate Day. Krispy Kreme is intent on creating one or two more days per customer indications during surveys.

In 2011 Krispy Kreme launched their retail coffee line, the focus on retail beverages will be under spotlight in the near future. In October 2013, Krispy Kreme announced they will be selling packaged ground coffee through Sam's Clubs across the US and by this coming fall they will offer a K-Cup option for Keurig brewing systems in many big box retail locations throughout the US. Morgan states, "If we can get them accustomed to drinking our coffee at home, we think it will become a bigger part of their life when they visit our stores."

Krispy Kreme's goal is to open 1,700 stores by 2017. The company opened seven of its new small factory shops in 2014, and more franchisees are signing up for the store model. CFO Doug Muir said of the open stores two are "home runs" and four others are exceeding expectations. The new store models have averaged $30,000 per week in sales. A typical freestanding store averages $35,000 per week with much higher operating costs. New horizons lie ahead for the company.