It's 1937, and Vernon Rudolph is broke.
He's got $25 to his name, an old Pontiac, and a secret recipe from a French Pastry Chef...
84 years later, the company he founded is valued at $2.62 Billion.
THREAD: The rise, fall, and resurgence of Krispy Kreme.
He's got $25 to his name, an old Pontiac, and a secret recipe from a French Pastry Chef...
84 years later, the company he founded is valued at $2.62 Billion.
THREAD: The rise, fall, and resurgence of Krispy Kreme.
1/ Our story begins in 1933 when Rudolph, while on a trip to New Orleans, had a chance encounter with a French Chef named Joe LeBeau.
LeBeau had a secret.
A yeast-raised doughnut recipe that would become legendary, although neither man knew it at the time.
LeBeau had a secret.
A yeast-raised doughnut recipe that would become legendary, although neither man knew it at the time.
2/ Rudolph, only 18 years old, was an enterprising young man.
He purchased the recipe along with the rights to the Krispy Kreme name & returned home to Paducah, KY.
There, Rudolph was an employee in his Uncle's dry goods store, where doughnuts were one of many items they sold.
He purchased the recipe along with the rights to the Krispy Kreme name & returned home to Paducah, KY.
There, Rudolph was an employee in his Uncle's dry goods store, where doughnuts were one of many items they sold.
3/ But times were tough.
It was the end of The Great Depression & many businesses, including Rudolph's uncle's store, were struggling to survive.
They needed a new plan...
The men closed up shop and headed south toward Nashville.
It was the end of The Great Depression & many businesses, including Rudolph's uncle's store, were struggling to survive.
They needed a new plan...
The men closed up shop and headed south toward Nashville.
4/ The idea?
Open a new store, in a larger city, focused around what?
You guessed it.
Their new secret doughnut recipe.
Over the next couple of years, the business would prosper and Rudolph knew what he had to do...
Open a new store, in a larger city, focused around what?
You guessed it.
Their new secret doughnut recipe.
Over the next couple of years, the business would prosper and Rudolph knew what he had to do...
5/ There comes a time in every man's life when he must make his own way.
For Rudolph, the time was now.
In 1936, secret recipe in hand, he struck out on his own.
For Rudolph, the time was now.
In 1936, secret recipe in hand, he struck out on his own.
6/ Landing in Winston-Salem, NC. Rudolph began selling his doughnuts...
Out of his car.
Yes, that's right.
The original Krispy Kreme's were sold not from a storefront, but rather, a delivery rack placed in the back of Rudolph's car.
Out of his car.
Yes, that's right.
The original Krispy Kreme's were sold not from a storefront, but rather, a delivery rack placed in the back of Rudolph's car.
7/ As word spread and demand for his product grew, Rudolph needed an upgrade.
He rented a building and on July 13, 1937, the original Krispy Kreme location opened its doors.
He rented a building and on July 13, 1937, the original Krispy Kreme location opened its doors.
8/ Up to this point, Rudolph's primary customers had been local grocers, but something changed when he opened his store.
That smell... People couldn't resist.
For the first time, passers-by were able to smell the doughnuts as they rolled hot off the production line.
That smell... People couldn't resist.
For the first time, passers-by were able to smell the doughnuts as they rolled hot off the production line.
9/ Driven by the delicious scent, people began walking up to Rudolph's store requesting to purchase his product directly.
Rudolph saw an opportunity.
Let's give the people what they want!
Rudolph saw an opportunity.
Let's give the people what they want!
10/ He proceeded to cut a hole in an outside wall, thus allowing himself to sell to customers on the sidewalk.
Demand was overwhelming.
Time to innovate and expand...
Demand was overwhelming.
Time to innovate and expand...
11/ Throughout the 40's and 50's Rudolph and his family members would begin to open additional stores.
Each location used the same secret recipe and made their doughnuts from scratch, however, the finished product lacked the consistency Rudolph desired.
He had an idea...
Each location used the same secret recipe and made their doughnuts from scratch, however, the finished product lacked the consistency Rudolph desired.
He had an idea...
12/ Why not build his own factory?
All of the dry doughnut mix could be produced in a singular location, then distributed to the stand-alone stores.
Thus ensuring the taste profile Rudolph and his customers had come to expect.
And so it was, Rudolph would do just that.
All of the dry doughnut mix could be produced in a singular location, then distributed to the stand-alone stores.
Thus ensuring the taste profile Rudolph and his customers had come to expect.
And so it was, Rudolph would do just that.
13/ The plan for the perfect mix secured, what they needed now was to dial in their manufacturing.
As with the taste, Rudolph wanted all of the doughnuts to be made using the same process and equipment.
As with the taste, Rudolph wanted all of the doughnuts to be made using the same process and equipment.
14/ With that, he and his team of engineers, set about designing Krispy Kreme's own doughnut-making machinery.
Throughout the remainder of the 50's, the team would continue to focus on standardizing and automating its process.
What happened next?
Throughout the remainder of the 50's, the team would continue to focus on standardizing and automating its process.
What happened next?
15/ The 60's were characterized by continued expansion across the southeast and an increased focus on consistent store design.
In the early 70's however, things changed.
Rudolph would pass away in 1973 and sales would begin to slow as the company was prepped for sale.
In the early 70's however, things changed.
Rudolph would pass away in 1973 and sales would begin to slow as the company was prepped for sale.
16/ In 1976, Krispy Kreme would become a wholly-owned subsidiary of Beatrice Foods, an American food processing company founded in 1894.
However, this relationship was short-lived.
Just 6 years later, in 1982, a group of early franchisees would buy the company back.
However, this relationship was short-lived.
Just 6 years later, in 1982, a group of early franchisees would buy the company back.
17/ With new ownership came a new plan and a new focus:
Step 1: Increase expansion efforts across the United States.
Step 2: Focus on highlighting the "hot doughnut experience."
Over the next several years, the company did just that.
Step 1: Increase expansion efforts across the United States.
Step 2: Focus on highlighting the "hot doughnut experience."
Over the next several years, the company did just that.
18/ By 1992, they had introduced the first "hot light."
A neon signed designed to notify customers from the street that hot & fresh doughnuts were rolling off the line.
In 1996 they would open their first store in NYC followed 3 years later by the inaugural California location.
A neon signed designed to notify customers from the street that hot & fresh doughnuts were rolling off the line.
In 1996 they would open their first store in NYC followed 3 years later by the inaugural California location.
19/ On April 5, 2000, the corporation went public.
Using the ticker symbol $KREM, they were listed on the NASDAQ at an IPO price of $21/share.
The public offering gave the company the resources needed to implement its aggressive expansion plans.
The next 4 years were insane.
Using the ticker symbol $KREM, they were listed on the NASDAQ at an IPO price of $21/share.
The public offering gave the company the resources needed to implement its aggressive expansion plans.
The next 4 years were insane.
20/ In the year 2000, Krispy Kreme had 142 locations.
By 2004, that number had increased to 357, over a 150% increase!
Let's put that in perspective...
In their first 63 years, they had opened a total of 142 new locations.
Between 2000 and 2004, they opened 215!
By 2004, that number had increased to 357, over a 150% increase!
Let's put that in perspective...
In their first 63 years, they had opened a total of 142 new locations.
Between 2000 and 2004, they opened 215!
21/ Revenue skyrocketed as well.
Over these same 4 years, sales increased from $300M to near $700M.
In 2003, the company's stock now listed on the NYSE, hit an all-time high of $50/share.
But all was not well, the SEC was about to come knocking.
Over these same 4 years, sales increased from $300M to near $700M.
In 2003, the company's stock now listed on the NYSE, hit an all-time high of $50/share.
But all was not well, the SEC was about to come knocking.
22/ The next few years were marred by scandal.
Allegations of improper accounting practices, among other things, plagued the company.
By 2005, earnings had started to decline, an SEC investigation was underway and the stock price had lost 75-80% of its value.
Allegations of improper accounting practices, among other things, plagued the company.
By 2005, earnings had started to decline, an SEC investigation was underway and the stock price had lost 75-80% of its value.
23/ By March of 2009, the SEC would issue a cease a desist order against the company.
Alleging that illicit activities were believed to have been implemented in an effort to inflate revenue and beat earnings estimates.
The stock price dipped below $2.
Alleging that illicit activities were believed to have been implemented in an effort to inflate revenue and beat earnings estimates.
The stock price dipped below $2.
24/ Despite all of their troubles, somehow they survived.
In the years following the SEC case, the company has risen from the ashes.
From 2009-2015 their stock price, revenue, and number of locations increased every single year.
In the years following the SEC case, the company has risen from the ashes.
From 2009-2015 their stock price, revenue, and number of locations increased every single year.
25/ In 2016, JAB Beech, a German Investment firm whose subsidiaries include Panera Bread and Keurig Dr. Pepper, offered to purchase the company for $1.35B.
The transaction closed in July of 2016, making Krispy Kreme a private brand once again.
So where are we today?
The transaction closed in July of 2016, making Krispy Kreme a private brand once again.
So where are we today?
26/ As of July 1st, 2021, Krispy Kreme is back on the market.
After operating the business the past 5 years, JAB has taken it public once again.
Listed as $DNUT, the company's new valuation this week? ~$2.7 Billion.
Where they go from here?
Only time will tell! ππ»β»οΈππ»
After operating the business the past 5 years, JAB has taken it public once again.
Listed as $DNUT, the company's new valuation this week? ~$2.7 Billion.
Where they go from here?
Only time will tell! ππ»β»οΈππ»
27/ Thank you!
Enjoy this? Want more like it?
ππ» Follow me @blakeaburge
π₯ Retweet and Share: I'd be grateful!
ππ» Quote Tweet / Comment - Let me know your thoughts!
I write 1-2 threads/week. You can find them all below. Check it out ππ»
Enjoy this? Want more like it?
ππ» Follow me @blakeaburge
π₯ Retweet and Share: I'd be grateful!
ππ» Quote Tweet / Comment - Let me know your thoughts!
I write 1-2 threads/week. You can find them all below. Check it out ππ»
https://twitter.com/blakeaburge/status/1402371228179091472?s=20
Back To The Top ππ»
https://twitter.com/blakeaburge/status/1412034324975685639?s=20
β’ β’ β’
Missing some Tweet in this thread? You can try to
force a refresh
γ
