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Is Krispy Kreme a Southern Company?
It was started here. It grew here. North Carolina still tries to claim it as its own. But as the doughnut company prepares to go public (again), is it REALLY ours?
Your opening thought:
Time is a flat, doughnut-shaped circle.
My first reaction, upon hearing that Krispy Kreme was going to hold an IPO was, wait, didn’t they already do that? Yes! They did! Some 21 years ago, the company started selling shares and, during a three-year span, was the best-performing IPO on the market. Because, who doesn’t like doughnuts?
Well, it turns out that people like doughnuts, but maybe not that much. In 2004, when the company started having financial troubles, the CEO at the time blamed the Atkins Diet (although notably, Dunkin’ Donuts didn’t seem to have a similar fad diet-related dip). The more plausible reason for its money problems: The company got too big too fast. A detailed 2005 article in CFO magazine laid out the other reasons why Krispy Kreme ran head-first into issues after its meteoric rise:
Krispy Kreme would place too many franchises in a city to maximize profits at the corporate level, but that meant that franchise owners saw their profits drop. Think about if Major League Baseball finally gave into Charlotte’s fever dream and put a team in uptown. Then, a few years later, seeing the widespread support and fandom, decided to put another team in South End.
The prices to buy Krispy Kreme’s proprietary doughnut-making equipment and mixes was really steep, which also made the parent company profits by squeezing franchises even more. KK was getting high off it’s own supply … of batter. Amirite?
Krispy Kreme started selling doughnuts everywhere, in grocery stores and gas stations and the like, which meant that people didn’t have to go into a Krispy Kreme shop to get the doughnuts. Again, bad for franchise owners!
There was some shady accounting slight of hand going on as well, and a major Krispy Kreme franchise owner went bankrupt in 2005. After that, the company sort of puttered along, and opened stores internationally since they were mostly handcuffed from expanding in the United States. That influx of foreign money helped get Krispy Kreme back on its feet. It was taken over by private ownership a few years back, and is now going to start selling stock again soon! Under the ticker name DNUT (get it).
So what’s up with Krispy Kreme now?
One of my favorite journalism things to do is to get ahold of official documents to see what’s going on with your favorite neighborhood conglomerate. To that end, I learned some stuff about Krispy Kreme:
It bought Insomnia Cookies! BIG COOKIE AND BIG DOUGHNUT ARE IN CAHOOTS.
Free doughnuts are the key to free press, and they gave free ones to all sorts of folks that needed a pick-me-up, like health care workers and high school grads who couldn’t have a ceremony. Hence, that Get-A-Vaccine-Get-A-Free-Doughnut campaign wasn’t, as you might imagine, done entirely for altruistic reasons. Its most recent SEC filing said that the promotion earned them SEVEN BILLION media impressions in just ten days.
Krispy Kreme did just fine during the COVID-19 era, hitting record high sales during the last fiscal year and bringing in $1.1 billion in net revenue. You all ate a lot of pandemic doughnuts.
Despite those record sales, the company ended up operating at a loss over the last three years. They need to grow again and open more stores, and offering some stock might be the way to raise the cash to do it.
There are a few other interesting tidbits in the filing, including the fact that literally every Krispy Kreme doughnut in the southeast is made from mix that comes from one factory on Ivy Avenue in Winston-Salem.
So, are they Southern or not?
Well, maybe. Yes, the company was famously founded in 1937 by Vernon Rudolph, who started a doughnut factory in Old Salem. People nearby told him they loved the smell, so Rudolph ended up cutting a hole in the outside wall to sell doughnuts to people on the sidewalk. Thus, the hot doughnut business model was born, and Krispy Kreme shops opened across the southeast. The company started expanding nationwide in the 1960s and today has more than a thousand doughnut shops in North America. It’s still headquartered here in North Carolina, for what that’s worth. It moved from Winston-Salem to Charlotte in 2019, where there’s now a doughnut vending machine in South End.
Plus, it always shows up on the short list of Very North Carolina Things:
Krispy Kreme certainly recognizes where it came from. “Driven by our heritage as a North Carolina brand, we continue to have an area of regional strength in the Southeast,” it says in its S-1 filing, which came from its owner, the JAB Holding Company, a multinational conglomerate.
But are Krispy Kreme doughnuts still a Southern thing anymore? I thought a lot about mass-produced Southernness a few years ago when I wrote a big ol’ story about Bojangles’, which itself tried to expand beyond its Southern roots. In 1982, a company executive tried to explain to The New Yorker why people in Manhattan would enjoy dirty rice. “I don’t necessarily call it a Southern food,” he says. “I call it an American food from another part of the country.”
But there, we’re talking about chicken ‘n’ biscuits. Pepsi was born in New Bern (Original name: Brad’s Drink!), but people don’t see you drinking one and say “Oh, what part of North Carolina are you from?” Texas Pete is a Winston-Salem born product as well but … it has Texas in the name. Cook Out, Cheerwine, and Mount Olive pickles are all made here and function as southern totems. But as things spread (Like Chick-fil-A, for example), they start to shed the quirky aura of regionalism. Take, again, Bojangles’ one-time dream of manifest destiny:
So if Bojangles’ goes coast-to-coast, will its chicken-and-biscuit charm become diluted? “As these dishes start to spread, I think they start to lose their Southern identity,” says Adrian Miller, author of Soul Food: The Surprising Story of an American Cuisine, One Plate at a Time. For example, he says, look at sweet tea, a Southern staple that’s now sold in all types of restaurants nationwide.
Doughnuts aren’t just a Southern thing, after all, they’re an American thing. They work everywhere. The South. Los Angeles. Texas. Everywhere. The nation has now been given the gift of Krispy Kreme, a company that’s become part of the national zeitgeist. After all, what other doughnut is getting name-dropped in a J. Cole song? As in: “Krispy Kreme dreams, sometime my dawgs wanna kill 12” I hear you, J. Cole. Me too.