Krispy Kreme to enter 18th foreign market; plans to open shops in Dominican Republic

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Oct 21, 2009 (Winston-Salem Journal - McClatchy-Tribune Information Services via COMTEX) -- KKD | Quote | Chart | News | PowerRating -- Krispy Kreme Doughnuts Inc. is entering its 18th foreign market with plans to open 14 shops over five years in the Dominican Republic.

The company said today it has reached a franchise development agreement with Dominspec, S.A., which also operates Burger King and Papa John's restaurants in the Dominican Republic.

"Having an experienced and successful franchise partner like Dominspec, S.A. introduce Krispy Kreme in the Dominican Republic is a great opportunity for Krispy Kreme," said Jeff Welch, the president of Krispy Kreme's international division.

Once Krispy Kreme begins operating in the Dominican Republic, it will have shops in 18 countries: United States, Australia, Bahrain, Canada, Indonesia, Japan, Kuwait, Lebanon, Malaysia, Mexico, the Philippines, Puerto Rico, Qatar, Republic of Korea, Saudi Arabia, Turkey, United Arab Emirates and United Kingdom.

The company also has announced a franchise development agreement for China.

Eight years ago, Krispy Kreme's plan to sell glazed doughnuts outside the United States was met with skepticism about how well the company's product would translate to foreign consumers.

Now, the company's growing international sales could be the key ingredient in keeping Krispy Kreme independent.

All of which means that the jobs of 3,593 employees, including 428 in Forsyth County, another 76 in the Triad and 828 overall in North Carolina, are riding on Krispy Kreme's ability to make its doughnuts a lifestyle choice rather than an occasional treat in markets as diverse as China, Kuwait and Turkey.

About 84 percent of Krispy Kreme's stores are operated by franchisees, and 59 percent of its 548 stores are based outside the United States, as of Aug. 2.

Kristin Graham, a senior analyst for The Motley Fool, a financial-services company, said earlier this year that she questions whether Krispy Kreme will be able to survive because of the level of debt it took on during its ill-fated domestic expansion strategy under a previous top executive, Scott Livengood.

"But if there is a life preserver for Krispy Kreme, it would be its international sales," Graham said. "If they can expand and establish the brand correctly overseas, it could be enough to carry them through 2009."

The company plans to open at least 89 stores in just China, Dominican Republic, Malaysia and Turkey by 2013.

"If international sales fail to grow, the company probably will fail overall," Graham said.

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