I shed a sad, sugary tear when I heard Krispy Kreme’s announcement about their plans to save the company: Cold ice cream.
They are going to add ice cream to the menu.
On a brand who’s #1 brand asset is the idea of HOT NOW.
Even worse, they are removing the on-site baking machines from new
stores. So you’ll never have a hot doughnut again at a Krispy Kreme.
Brands are build on one clear idea. One simple position
in the mind. For Krispy Kreme, it was the idea that you’d wait in
endless lines, jump through hoops, or drive across town to be there at
the moment the doughnuts came out hot.
Their legendary word of mouth is based on people dragging their
friends and kids to see the doughnut machine and taste the amazing
fresh taste.
And then it started to go bad. Why? Because they went cold. You
could buy them cold in the grocery store, cold in the gas station.
Nobody tells their friends about food you can buy in a gas station.
Overexposure was part of what started the collapse of Krispy Kreme,
but the real cause is that they lost their brand message, their
identity, and their word of mouth motivator.
This latest move is the exact wrong thing to do. Any last hope of
saving the brand lies with reclaiming their position as the one and
only super special HOT doughnut. Cold ice cream and cold doughnuts are
the last thing you need.
How to save Krispy Kreme:
- Read The 22 Immutable Laws of Branding by Al and Laura Ries. Bring them in for emergency intervention.
- Read Word of Mouth Marketing by Andy Sernovitz (that’s me) and bring him in for emergency intervention.
- Read Tribal Knowledge by John Moore and bring him in for emergency intervention.
- Refocus on HOT HOT HOT.
- Kill any product that isn’t around a HOT doughnut.
- End any retail deal that sells cold doughnuts.
- Shut any store that isn’t making HOT doughnuts on site.
Result:
Within weeks, people will begin lining up outside the hot stores again.
They’ll be telling their friends that it’s time to get one of those
rare hot doughnuts, they’ll be bringing their kids to see the machine
(and their kids will be begging to come back).
Be special again.
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Wow. How the mighty have fallen. They used to give you a free one right off the line when the “Hot Now” sign was lit, and we’d go out of our way to bring the kids for that. Now they not only have done away with the freebies, but they’re removing the one major appeal – seeing the things made? Dumb. And it’s not like there aren’t enough places that specialize in ice cream already – why try to boost sales by competing in an already-crowded market? Can’t see this working…
Companies seem to forget that their core purpose (their reason for being) creates their brand perception. When that core purpose changes, their brand perception returns to near-zero.
Meanwhile, in North Carolina–the birthplace of Krispy Kreme–it’s easier to find a Dunkin Donuts than a KK shop. So much for the regional pride angle.
I read the article but I didn’t see where the were “getting rid of” the factory stores. It just said they were going to be building newer stores. Apparently this is to compete with Dunkin Donuts which although doing well financial is not focused either. I hate Dunkin Donuts. I’d rather eat a cold Krispy Kreme Donut that an stale cakey Dunkin Donut anyday but I seriously doubt Krispy Kreme is going to get rid of all the factory stores. They have to make he donuts somewhere and the ones in our area are definitely made and shipped from the local “factory store” as seen by all the trucks and dock out back.
I’m sorry but I don’t make a donut shop a destination for an egg white sandwich, cup of coffee or a smoothie as crazy ‘ol Dunkin does.
Fortunately you can revive a Krispy Kreme donut in the microwave after a very short time (they even give the instructions for how long on their box) but a headed Dunkin Donuts Donut still tastes like week old dry crud.
Arbitrary rules are meant to be broken. The idea (and the book is great, btw) that there are “immutable” laws of branding is a powerful idea. I think that the laws should be respected much of the time. I have to call bullshit on the notion that these laws are immutable, though.
Maybe donuts were not bringing in enough dough so they want to make some cash off ice cream. It is better than holding on to dear life to some brand idea that is not quite working any more.
Maybe there is good money to be made in ice cream. Maybe on a hot day, people would rather have a cold ice cream than a hot donut.
This creates an opportunity for a competitor to do what you are recommending, and capitalize on the negative word of mouth that will ultimately fester due to this bad decision.
Here’s my post on how Netflix did just that to Blockbuster (note: I wrote three parts to this story):
http://www.bazaarblog.com/2007/01/17/netflix-vs-blockbuster-round-three/
I am just speculating but my money is on the possibility of their being an accountant behind all of these twisted decisions. When you place short term profits in-front of everything else – you end up with a terrible product.
Wow. This is weird. The LAST place I would think to buy my kids ice cream is Krispy Kreme…or is it “kreme” is the new Ice Kreme. This is nutty. Stick to the knitting, guys! Or close up shop.
Richard
Heck, who doesn’t love krispy ice kreme?
That’s the situation when management are loosing the strategy. Greediness and pressure to grow are the biggest enemies of focus and long-term success.
The resolution? I 100% agree on the Andy’s list. Especially on “Refocus on HOT HOT HOT”.
While I agree to a certain extent, I would say that one of the ultimate reasons behind the downfall of KK is the fact that people in the past 5-10 years or so have become much MUCH more health conscious and KK donuts are incredibly unhealthy.
I actually passed by one of the last remaining KK in Canada today and was astonished at just how large their stores. Having said that, their brand is built around large stores so as to house the machines that make the donuts. Eliminating them is tantamount to eliminating the entire KK brand.
I’m with you, the health awareness trend is probably putting a damper on the cult following that Krispy Kreme once had. Instead of clinging to past glories, they are seeking to diversify a bit.
Realizing that salad does not fit at all, they came up with ice cream. It may not be hot, hot, hot but if hot, hot, hot is not filling your coffers with enough cash you augment with cold, cold, cold.
It may seem irrational to us outside observers but I doubt they just stumbled on this idea without thinking about their brand. These are pretty smart people who built a solid following…
That’s pretty sad that they are TOTALLY veering away from their brand in order to “save” it. It’s strange… one year all I could hear was “Krispy Kreme this! Krispy Kreme that!” Then there was this sudden lull and I haven’t heard anything about them since… crazy. What goes up, must come down.
Another example of a company not knowing what business they are in. Krispy Kreme had a nice niche providing hot, fresh donuts and an entertaining show. This is what grew their word of mouth business, not the donut itself. They moved out of their niche to become huge and lost focus on what they were doing. This move to ice cream (or Kreme as someone aptly suggested) shows that the folks in charge are grasping at straws. Too bad.
Back in the late 1970s, I used to be in Winston-Salem almost every other month to see a client there (L’eggs, a unit of Hanes Corp.). There was a Krispy Kreme right across the street from the motel where I’d stay, so I remember many late nights when, out of boredom in the room, I’d venture across the street for a KK.
I remember all the fuss when KK came up to New York, and then when they went public. Honestly, I never thought the donuts were all that great — it was a fantastic marketing and p.r. job that someone did.
Dunkin Donuts are tastier, to my mouth anyway.
But back to marketing… I don’t know if adding ice cream is a bad move. It gives people another reason to come in, if their craving is for something cold instead of a donut. Isn’t it a bit like Starbucks adding CDs? It’s one more reason to come in, and one more option for people to buy once they are inside.
KK started falling when Atkins and other low-carb diets started coming in vogue. Is this coincidence? I’ve heard from other companies (and not just those that sell cookies, doughnuts and cakes) that such diets had a measurable impact on consumption of all types of food. I have a hard time believing such a fad would have such a dramatic impact on consumption unless something else was afoot.
I think you nailed it.
KK’s success was largely based on its unique value proposition, as you say, but I wonder how much scarcity played into it.
After all, as David pointed out, the doughnuts are okay. They’re sweet. They’re filling. They’re moist. In short, they are what doughnuts are supposed to be.
Especially when they’re hot.
But they weren’t everywhere. People liked being a part of the HOT NOW story that took place at water coolers and PTA meetings.
“OH, you got Krispy Kreme? I’m so jealous. I don’t have one near where I live. Did you get a hot one? Did you have to wait in line?”
When they’re everywhere, everyone can get one, and it’s less remarkable.
And then they decided AGAINST keeping one of the chief reasons (HOT NOW) they had been remarkable.
I don’t understand it.
Is it possible that HOT NOW simply ran out of steam? Is it really that exciting to anyone any more?
Nothing lasts forever. When that happens they either pack up and go home or find other sources of revenue.
“Is it possible that HOT NOW simply ran out of steam? Is it really that exciting to anyone any more?”
It’s possible that doughnuts are not that exciting to anyone anymore.
I’m biased, of course. Until I get to have one again, a hot doughnut is going to sound pretty darned tempting. So hard to be objective.
But you’re right. It had a lot of steam when it was scarce. But they embarked on a course of action that both divorced itself from the concept that made it remarkable (selling in grocery stores) and made the concept less remarkable (franchising KKs everywhere).
I agree with Cam. Krispy Kreme started to have problems with the advent of the low-carb craze.
Dunkin’ Donuts managed to save itself, however, by focusing its marketing efforts on promoting coffee, rivaling and sometimes beating the pants off of Starbucks; one of the rare cases where switching strategies works. When was the last time you saw a DD ad with the line, “Time to make the doughnuts?”
Ice cream is the absolute WRONG way to go. The ice cream market is so crowded and scarier still, crowded with brands that are synomomous with ice cream. This is going to be a catastrophe for KK.
As said earlier, the need to get back to the basics of what made them a household name: hot doughnuts. To borrow a lesson from Al and Laura Ries, they own the word HOT. Stick with that and they’ll earn a new generation of Krispy Kreme disciples and stockholders.
There were three locations that I could drive to within 15 minutes. All large operations to sell a small donut for $1.50. Knew they wouldn’t last and they didn’t. Gone within a year. When do people think of eating a donut – the morning – best time, right? How does one sell donuts at 4 p.m.?
Mebs -
I think they’d have to rely on a high rate of pregnancy.
Last time we went to our local Krispy Kreme, not only did they lack hot doughnuts, they were completely out and wouldn’t have any for an hour and a half! It was just a lazy Saturday afternoon — no good reason to be out. Pitiful.
http://www.bizzobuzz.com/2008/08/krispy-kreme-without-doughnuts-is-like-burger-king-without-burgers/
Please add a warning: Andy Sernovitz is bad for those on diets.
Am salivating after reading your post, remembering how we used to buy three hot donuts for 20 cents in Australia and they were so hot you could barely hold them.
Do cold donuts elicit the same response? Nup.
umm…am I the only person who’s never seen a Krispy Kreme store or Hot Now marketing? I don’t live under a rock, and I thought they were gas station donuts! (Just to check, I used their store locator. The nearest is 50 miles away. I live in the midwest.)
I was in Belgium recently and had the good fortune of walking on the main street in Antwerp and smell waffles as they were being made. Yup, you can buy a small one in the street, just like you’d buy an ice-cream cone. But the smell is what is attractive, even more than the taste – although I know Kris Hoet would object to the taste comment
There is a story associated with a certain experience. For example, fresh pastries in Italian cafes. After a certain time in the morning, you find none. Once the experience becomes commoditized (pastries all day), the story goes.
Make a brand promise – hot KK – and keep it.
We might very well sell the complete demise of Krispy Kreme; heck, it’s been imploding for some time. Of course, wait a year. If their ice cream idea takes off and does wonders for business, we’ll all be cooing over the bold genius they exhibited.
Keep Focus on your Objective: KK–Targeting individuals/families not society. To gain success-stay focus on product,customers and maintain balance.
Thanks!!
Keep Focus on your Objective: KK–Targeting individuals/families not society. To gain success-stay focus on product,customers and maintain balance.
Thanks!!
Keep Focus on your Objective: KK–Targeting individuals/families not society. To gain success-stay focus on product,customers and maintain balance.
Thanks!!
Levon,
How come, when something goes wrong, someone blames the accountant?? What did we ever do to you??
As an accountant, it’s my sad duty to hold people to their numbers. It’s called accountability.
If a donut operation isn’t making the forecasted profit, you can bet that I’ll be there, red pen in hand, reporting on the results. But the LAST thing I’d do would be to suggest a new product line. Why would I stick my neck out? I’d have to be an MBA to do that.
$Bill
Hmm, Krispy Ice Kreme…
Maybe they could use this as a venture into new innovative products, something like a Fried Ice Cream, where the outside is crispy and wonderful and the inside is a fantastic melty Kreme-iness. The donut could still be a part of the mix…has anybody tried a hot KK with vanilla ice cream? It’s actually really good. Offering ice cream donuts at 4pm might help solve some of those time of day issues. Yeah you can get ice cream anywhere, but fried or with a donut?
It deserves a test market…
This is more of a case of a company needing to reinvent itself. I guess I don’t get the impression HOT NOW when I think of Krispy Kreme….I think original, fresh donut. Adding ice cream does not seem to be a large deviation from their donut in my opinion. It could work if they focus on freshness!
Or read “How Would You Save Krispy Kreme” from my blog post of January 22nd