Krispy Kreme Looks For Sales In Competitive Coffee Market
Krispy Kreme Doughnuts is stepping into the coffee wars in a big way with three new signature coffees debuting this week, and a new marketing campaign set for Friday.
The 669-unit, Winston Salem, N.C.-based chain will offer its signature house blend, dark roast, and house decaf varieties just as the competitive coffee market is dominated by the likes of Dunkin' Donuts, Starbucks, and McDonald's.
"I have little doubt that we can significantly increase our coffee sales," Krispy Kreme chief executive Jim Morgan said in June, when the company first discussed its coffee plans. Total beverage sales account for 12 percent of sales, while coffee alone accounts for 4 percent of sales, the company has reported. For its latest year ended in January, estimated U.S. systemwide chain sales totaled $483 million, according to Nation's Restaurant News Top 200 survey.
A Krispy Kreme marketing push, with a tagline "Worthy of our doughnuts," will begin Sept. 2. Dennis Lombardi, executive vice president, foodservice strategies, for Columbus, Ohio-based WD Partners, said coffee is pivotal for any brand that wants to increase market share in the breakfast daypart.
"In terms of a tactic and strategy, coffee is such an important part of the decision-making process for the consumer," Lombardi said. "When was the last time that someone said he went to dinner because of the coffee? But it's just the opposite for breakfast. People go to breakfast where they give a good cup of coffee."
Fellow industry consultant Darren Tristano said Krispy Kreme's entry into the coffee wars makes sense, but he questioned why the move took so long for the chain. "They are late to the market with pushing coffee," Tristano, executive vice president of Technomic Inc., a Chicago-based market research firm, said. "Coffee tends to be a driver for routine visits to restaurants. I don't know why it took so long to move coffee up at Krispy Kreme."
Tristano expects the new coffee offerings to prompt more visits from existing and new customers looking for the convenience and quality of good coffee, which will likely increase sales of Krispy Kreme doughnuts.
A cup of Krispy Kreme's new coffee sells for $1.72 for a small, $1.93 for a medium, and $2.04 for a large in Tampa, Fla. Krispy Kreme executives were not available for comment at press time.
— Alan Snel