Krispy Kreme
Is Closing 10 Locations

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One popular doughnut shop has been having some recent financial difficulties.

Krispy Kreme stated it will be closing around 10 stores after reporting declining profitability for the second quarter and forecasting lower-than-expected sales for the year.

The 85-year-old doughnut behemoth blamed its failure to maintain profitability on the closure of its stores.

To ensure maximum donut freshness, the industry has adopted a "hub-and-spoke" distribution model in which bigger stores with manufacturing plants supply donuts to smaller outposts.

However, there are 118 stores in the United States that do not have access to these warehouses.

Krispy Kreme says hubs without spokes had 5% slower revenue growth.

To keep the momentum continuing, Krispy Kreme will acquire a midwestern franchisee, adding seven more stores with the potential to develop more than 100 low-cost DFD outposts.

How do you drive a typical doughnut store to a hub-and-spoke system? That's the model's peculiarity.

In the previous three years, Krispy Kreme has bought more than 100 franchisee units, reducing franchisee locations from 205 in 2019 to 66 in 2021.

The approach aims to speed the change to the hub-and-spoke model, which works better under corporate management.

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