The number of foreign Krispy Kreme Doughnuts franchise stores nearly doubled in 2005, in stark contrast to the fortunes of the company’s U.S. locations.
Krispy Kreme executives spent much of their time in 2005 buying out franchisees and shutting down poorly performing stores, mostly in the United States. But the company’s growth abroad gives investors a taste of what Krispy Kreme’s future growth plans are, at least until it clears up its various accounting and legal issues.
In a lengthy filing with federal regulators last week, Krispy Kreme executives disclosed that its growth hinged on increasing the number of franchised locations, especially in Western Europe, the Middle East and Asia.
The filing also revealed that the company was developing a concept for a smaller, and presumably less expensive, factory store.
The filing provides the most comprehensive look at what’s happened at the Winston-Salem doughnut maker since questions first arose about its finances, accounting practices and business model two years ago.
The document, an annual report, or 10-K, for Krispy Kreme’s 2005 fiscal year, portrays a company that has been through tremendous turmoil and is still struggling with major changes. Once a darling of Wall Street and the media, the company has closed dozens of stores, seen its annual sales plunge by nearly $170 million per year and finally, this spring, hired a new CEO. It is still the subject of several lawsuits and government investigations.
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