Milling & Baking News - January 7, 2014 - 26

Donut Update 

Chains make gains in U.S. expansion

onut chains, while not forgetting the international market, see
room for growth right here at home. Krispy Kreme Doughnuts,
Inc., Winston-Salem, N.C., and Dunkin' Brands, Inc., Canton,
Mass., are expanding their number of stores and their geographic
reach in the United States, and both chains will be active in Texas.
Krispy Kreme Doughnuts, Inc. in fiscal year 2015 expects to open
10 to 15 company stores, 20 to 25 domestic franchise stores and
about 85 international franchise stores. Krispy Kreme on Dec. 2, 2013,
had more than 240 shops in the United States. About 150 were franchised. The company also had 560 locations in 22 other countries.
In the United States, the company will focus on small, freestanding
factory shops, Jim Morgan, chairman, president and chief executive
officer, said in a Dec. 2 earnings conference call.
"These small footprint stores are very important to our future
growth," he said. "We are pleased with the overall results we are seeing since opening our first store in January (of 2013), with the possible
exception of one store where we are already making some adjustments
in case the sales levels don't catch up to that of other locations.
"We view refining our small shop model as an ongoing process
and are continually examining ways to reduce
operating costs without
sacrificing the consumer
experience, as well as
ways to lower the investment cost, as we gain additional experience building the box. Still, the early
results give us confidence
in the model, and we are
recommending that franchisees include the small
factory shops in their development plans."

In Texas, Dulce Restaurants, L.L.C. operates three Krispy Kreme locations in Dallas and plans to open 15 more shops in Dallas through
2018.
Meanwhile, the number
of Dunkin' Donuts outlets
in the United States may
double.
"With 222 net new openings year to date, we now have
7,500 Dunkin' Donuts restaurants
in the U.S., and the demand by
existing and prospective franchisees to grow with us has never
been stronger," said Nigel Travis,
chairman and c.e.o. of Dunkin'
Brands Group, Inc., Canton,
Mass., on Oct. 24, 2013. "We
continue to believe that we can
have 15,000 Dunkin' Donuts restaurants in the U.S., including approximately an additional 3,000 east
of the Mississippi and 5,000 in the western part of the country."
On Sept. 16, 2013, Dunkin' Donuts announced the signing of agreements with two franchise groups to develop 17 restaurants in Texas.
Niknud L.L.C. plans to develop eight traditional Dunkin' Donuts restaurants and three Dunkin' Donuts/Baskin-Robbins combination units
in Abilene, Amarillo, Lubbock and San Angelo. Alamo Donuts L.L.C.
plans to develop five traditional Dunkin' Donuts restaurants and one
Dunkin' Donuts/Baskin-Robbins combination location in San Antonio.
A Canadian chain, Oakville, Ont.-based Tim Hortons, also has a U.S.
donut presence. The company had U.S. revenues of C$132,687,000
for the nine-month period ended Sept. 29, 2013, which was up
from C$120,837,000 in the same time period of the previous year.
Nine-month Canadian revenues were C$1,927,361,000, up from
$1,923,928,000 in the same time period of the previous year. MBN

All others

21%

Bimbo
Bakeries USA

13%
McKee Foods

Private
label

14%

22%

Hostess
Brands

10%

23%

Tasty Baking 5%

Krispy Kreme

All others

Krispy Kreme

29%

14%

Bimbo
Bakeries USA

14%

15%

52 weeks ended Dec. 2, 2012

52 weeks ended Dec. 1, 2013

U.S. retail market share for donuts

20%

Private label

McKee Foods

Sales cover US. multi-outlets with convenience stores, including supermarkets, drug stores, mass market retailers, gas/convenience stores, military commissaries and
select club and dollar retail chains.
Source: Information Resources, Inc.

789,268,000 marked a 6% decline.
The absence of Hostess Donettes on
the retail level for about a six-month
period undoubtedly had an effect.
Hostess Brands, Inc. closed down in
late November 2012.
A private equity group led by Apollo Global Management L.L.C. and C.
Dean Metropoulos & Co. eventually
bought most of the Hostess snack cake
26 / January 7, 2014 Milling & Baking News

business, and a new company, Kansas
City-based Hostess Brands, L.L.C.,
was formed. Hostess Donettes finally
returned to retail shelves on July 15,
2013. By Dec. 1, sales had reached
$72,035,160, still 80% down from the
previous 52-week period.
Hostess Brands expects a warehouse
distribution strategy, as opposed to
direct-store delivery, to help it gain

market share in donuts and other snack
treats. An agreement with Dollar General, Goodlettsville, Tenn., will help, too.
Dollar General on Nov. 25, 2013, said
the majority of its 11,000 retail locations
will carry five Hostess products. They
include Hostess Donettes powdered
mini donuts as well as CupCakes, Ding
Dongs, Twinkies and Zingers. MBN
- Jeff Gelski
bakingbusiness.com / world-grain.com

http://www.bakingbusiness.com http://www.world-grain.com

Milling & Baking News - January 7, 2014

Table of Contents for the Digital Edition of Milling & Baking News - January 7, 2014