My first taste of a Krispy Kreme donut was on a sponsored promotional run for a local car club. So luring was the promise of Krispy Kreme donuts (this was before a store had opened) that two of my housemates had come along seeing as the promotion promised us a box for each person that came.

They had absolutely no interest in the cars or the car club.

Although tasty, this is the only time I’ve ever eaten a Krispy Kreme donut. Like everybody else, when the first stores started popping up in Australia I heard about the insane queues. Traffic stopping queues that spanned multiple blocks wasn’t something I was going to withstand just for a donut or two.

Despite the initial hype and demand though it seems the novelty of Krispy Kreme has long since worn off.

Recently Krispy Kreme abandoned their ‘fresh’ donut marketing strategy in Australia and has started to market their donuts via Woolworths and various petrol stations.

On the retail side in Australia last year saw a sales slump of 20% and Krispy Kreme’s latest annual report warned that

we have experienced declines in revenues and have incurred net losses in each of the last three fiscal years and may experience further declines and losses in the future.


For a product seemingly in such demand it seems strange Krispy Kreme is yet to post a profit in Australia.

Surprisingly this downtrend appears to be echoing in other countries;.

• Krispy Kreme Hong Kong peaked at 6 stores but went into liquidation just two years after opening.
• Canada had 32 stores planned of which only 18 actually opened. Out of those 18 stores just four are left.


In their largest market, the US (Australia is second) a similar story appears to be unfolding. Various states have seen a sharp decline in stores and a complete ceasing of availability in others.

In New York there used to be nine Krispy Kreme donut stores but now just one. Things appear to have gotten so bad over there that Krispy Kreme ‘temporarily cut off their supplies last month‘ and the store ‘cooked up their own recipe when they ran out of key proprietary Krispy Kreme ingredients‘.

We’re not talking secret herbs and spices here either, it’s alleged the store ran out of flour. I’m no chef but flour sounds pretty integral to the production of donuts… things mustn’t be going to well if Krispy Kreme are cutting the flour supply.

Regardless, Krispy Kreme have decided to take the owners of their last New York store to court over ‘trademark violation after moving to cancel the franchise agreement over $310,000-plus in unpaid fees and debts‘.

Again, not exactly confidence inspiring. Additionally Krispy Kreme’s share price has plunged forty percent over the last five years.

With their Australian stores running at heavy losses and their US business seemingly fragile, it appears Krispy Kreme’s two largest markets are in trouble.

Why?

For me personally I’ve never actually bought a donut because of the reported wait times. By the time the queues had dwindled I’d mostly lost interest and long forgotten about the taste. I was never a big donut buyer prior to tasting Krispy Kreme and for the most part that hasn’t changed.

The most I ever got into donuts was the weekly purchase of five donuts from the hot jam donut van at the Queen Victoria Market. This went on for about 2 months before I realised the satisfaction of my taste buds was being outweighed by the grumbling of my stomach each Saturday afternoon ride home.

Writing this article however has seen me develop a severe craving but luckily Krispy Kreme never opened in Taiwan.

My reason aside I guess there’s probably other reasons too as to why Krispy Kreme’s business appears to be failing. The company itself claims that

Our sales have been, and may continue to be, affected by changing consumer tastes, such as health or dietary preferences that cause consumers to avoid doughnuts in favour of foods that are perceived as healthier.


This makes sense in theory but doesn’t add up when you take into consideration that 62% of Australians are now overweight or obese.

If anything Krispy Kreme should be making bucketloads of money in Australia. No doubt their latest marketing effort to penetrate the supermarket and petrol station sector will bring in a bit of money but surely not that much.

I mean for me the novelty of buying donuts is that they have to be hot and have that ‘just made’ feeling. I certainly wouldn’t pay a premium to purchase Krispy Kreme in a supermarket if they’d been sitting in a box all day (or night if made earlier).

One can only wonder just how much longer Krispy Kreme’s franchisees can stay in business if current profit reports and revenue continue to drop. As much as I hate fat people I would miss them if they went bankrupt.

Even if I’d probably never become a regular customer, it’s nice to have the option of being able to eat something so ridiculously fattening and tasty when the need arises.