Saturday, April 28, 2001

Doughnut chains brace for sweet struggle

Krispy Kreme plans expansion into Dunkin' Donuts' strongholds

By Greg Sukiennik
The Associated Press

        QUINCY, Mass. — Dunkin' Donuts stores are crammed into this Boston suburb like breakfast pastries in a box. There's a full dozen Dunkin shops in this city where the chain was founded 50 years ago, a stronghold that has long been conceded even by local competitors.

        But now a doughnut war may be rising and a coffee battle brewing.

        Krispy Kreme Doughnuts, the expanding chain that boasts of piping-hot treats, plans to open 25 full-service shops in New England in the next five years, 16 of them in the Boston area. And Quincy, population 88,000 and growing, is a location of particular interest.

[photo] Krispy Kreme workers Sung Hyun Lee (left) and Lorena Castillo box doughnuts in Alexandria, Va. The Winston Salem, N.C.- based chain plans to expand into New England, a stronghold of rival Dunkin' Donuts.
(Associated Press photo)
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        “We're looking for high-density areas with lots of people and high traffic count,” said Janice Matthews, vice president of operations at the Jan Companies, a Cranston, R.I., firm hired to scout franchise locations for Krispy Kreme.

        Breaking into a community dominated by Dunkin' Donuts is not impossible. Krispy Kreme, based in Winston-Salem, N.C., has done it in other cities, and Honey Dew Donuts, based in nearby Braintree, Mass., has grown from a single shop to 150 — all in Dunkin's back yard. Both chains have stores in Greater Cincinnati.

        Krispy Kreme and Dunkin' Donuts share similar histories, beginning with common origins as single stores run by entrepreneurs.

        In 1948, Bill Rosenberg opened the Open Kettle, a lunch counter in Quincy. He changed the name to Dunkin' Donuts in 1950 and five years later, he made its first franchise deal. Last year, the 5,000th shop opened.

        Krispy Kreme's roots date to 1933 in Paducah, Ky., where founder Vernon Rudolph bought a doughnut shop — and with it, a secret doughnut recipe. Mr. Rudolph opened his first retail shop in Winston-Salem in 1937. There are now more than 170 stores.

        Doughnuts are big business. Dunkin' Donuts, since 1990 owned by British food and spirits conglomerate Allied Domecq, reported sales of $2.3 billion in the fiscal year ending Aug. 31. Krispy Kreme had sales of $448 million in the fiscal year that ended Jan. 28, up 40 percent over the previous year.

        What Krispy Kreme lacks in size, it makes up for in dedicated followers.

        “They're not just doughnuts,” says Stewart Deck, 38, of Arlington, Mass., who has a “Krispy Kreme appreciation page” on the Internet. “When you bite into one, it's like biting into a sugary cloud.”


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