Krispy Kreme targets small stores to aid expansion

Global doughnut brand Krispy Kreme has identified small stores as an area to support its growth ambitions across the UK.

The firm currently has 120 stores across the UK, alongside 1,100 in-store cabinets in Tesco, Morrisons, Costco, forecourts and leisure outlets. Krispy Kreme UK managing director Jamie Dunning told Better Retailing the company has targeted doubling the number of Krispy Kreme locations, with independent convenience potentially aiding the plan.

He added: “If you take the kind of formats, we think we have to be available in, it is the smaller store format. We are close to having a new model available to us that will allow us to expand into the convenience space and that will change the narrative quite a bit.

“I deeply believe being more available in different kinds of shopping missions is important to our growth. We are not available in the top up shopping mission and that’s where we see a lot of growth.”

The doughnut cabinets in existing partners measure 3ft by 1ft. However, new cabinets as part of the upcoming model would be smaller to suit stricter space requirements in small stores.

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Dunning stressed the new model is still in its infancy and would be part of a two-year development plan while it examines which partners would be right for it. The right partner would also be determined on whether they have the capacity to take deliveries of fresh products each day. Krispy Kreme is also examining whether supply would be direct or through a wholesaler.

Commenting on potential commercial arrangements, Dunning said: “Krispy Kreme as a brand is a proven footfall driver and a reason many customers will go to a store. The returns are attractive.

“Retailers just take the cash and don’t have to worry about waste, forecasting or maintaining the standards of cabinets. We would want to continue this when we extend the network. We know what share of margin works for both parties and we don’t spend too much time playing around with that.”

Available products in Krispy Kreme’s range include the classic ringed doughnut and more premium options with icing, filling and sprinkles. Prices start from £2.65 for the single option. However, Dunning highlighted an opportunity for customers to trade up in stores, with 70% of Krispy Kreme sales coming from larger sharing boxes of eight to 12, priced between £15 and £30.

He said: “wherever we show up, choice in the broadest sense is available. We tend to focus on occasions such as office or birthday gifts. We also have lower 50 calorie options, whereas there are more indulgent doughnuts if someone wants to go all in.”

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