Krispy Kreme moving westward to sell sugary treat

Saturday, Sept. 26, 1998 | 10:12 a.m.

Yep, Krispy Kreme, a fixture in the South for 61 years, is expanding west to body-beautiful California. Neon store signs declaring doughnuts are hot, fresh and ready are scheduled to blink on in the next six months in Los Angeles, Sacramento, Houston, Dallas and Chicago.

Krispy Kreme outlets have sprouted in such major markets as Manhattan, St. Louis, Omaha and Las Vegas in recent years.

After an expansion from 78 stores to 135 since 1987, Winston-Salem-based Krispy Kreme is moving toward 400 stores in five years under chief executive Scott Livengood's plan.

During the same 11-year span, Krispy Kreme's annual sales have nearly doubled from $114.2 million to $203.3 million - despite America's health-food and dieting craze. Promotional spots in movies or television - including NBC's Today Show, ER and the film Primary Colors - have increased, as have Krispy Kreme logos plastered across T-shirts, caps and coffee mugs.

The brand awareness has built despite the company's choice to do virtually no TV or radio advertising. The company also doesn't pay for product appearances in movies or television.

Livengood says the company's popularity is a result of the foundation built over decades.

"Our success comes back to having been part of people's lives for 61 years," Livengood said. "That has engendered a lot of loyalty. We have a product that has not changed, a product that has remained consistent ... Other companies that have been around tend to change a lot."

Livengood's goal is to have stores in each major U.S. market of at least 250,000 people within four years.

Long term, he is weighing international expansion in Europe, Asia, Mexico and Canada.

As the national exposure grows and earnings increase about 20 percent annually, executives say, customers increasingly ask about buying stock in the company. It isn't available; Krispy Kreme is privately owned by 51 investors.

Krispy Kreme relies heavily on franchisees in opening its typical $900,000 stores. Each franchisee must clear an evaluation of up to 18 months, complete four weeks of training at a company school in Winston-Salem - billed "Krispy Kreme University" - and train 120 hours in doughnut shops.

"We entrust these people with the brand," Livengood said. "It is really like what a parent goes through in determining a baby sitter for their children."