Krispy Kreme looks to expand through delivery

A produxt shot of Krispy Kreme donuts.

Written by James Shea

Donut company Krispy Kreme is looking to expand through delivery in the United States and Mexico, according to a transcript of the company’s earnings call.

The company wants to expand its e-commerce capabilities and started a pilot delivery project in the UK through 50 ghost kitchens. Krispy Kreme said the pilot was a success and is looking at other ways to expand delivery and e-commerce in the United States and Mexico, according to Mike Tattersfield, Krispy Kreme president and chief executive officer.

“This will allow us to expand our e-commerce capabilities in a capital-efficient manner from our existing hubs,” Tattersfield said. “Our dark shops will piggyback on existing spoke routes, which ensures a fresh doughnut distribution daily and opens up further access to more customers. We believe these initiatives will generate double-digit organic revenue growth this year.”

The delivery model will help the company improve efficiencies and increase the reach of its network. The production hubs will better be able to manage fixed costs associated with donut production.

“We can drive the business sometimes up to 50% increase just in e-commerce,” Tattersfield said.

He noted that people add gifts and other items to the shopping cart when shopping online. This adds to the overall margin for e-commerce for the North Carolina-based company. Tattersfield said he foresees cookies and other gift items being offered on an e-commerce site.

“The e-commerce channel where you can now get the doughnuts because you’re not— you’re 20 minutes away from our shop, and you wouldn’t be necessarily getting that delivery from the business,” Tattersfield said. “And to make sure you can then maximize that, you get to the dark shop, which is basically thinking of that as another spoke that then uses a cabinet that is primarily just for delivery, which is what a dark shop can do.”

The company plans to use third-party delivery to operate the delivery channel.

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