Krispy Kreme Fan? Eat Them And Own Them.

For late sleepers, Deliveroo will often have run out of freshly baked Krispy Kremes by the time you wake up and a trip to a few nearby outlets or ‘cabinets’ will likely show the same result: all Krispy Kreme’s doughnuts are sold out for the day.

Is Krispy Kreme having a moment or is it just clever marketing? Whichever it is, it works. Sold out may be bad news for your doughnut craving, but good news for your wallet. Krispy Kreme will (very) soon do an IPO and list its shares on the Nasdaq, enabling you to own shares in your favourite doughnut company. So the more they sell and the quicker they sell out, the more your share could be worth.

Across the world we munch through 1.3 billion Krispy Kreme doughnuts a year, and of all doughnuts sold, more than half are the original glazed sugar-coated variety, which is everybody’s favourite. The Krispy Kreme doughnuts originate from North Carolina and were based on a secret recipe bought from a local French chef by a certain Vernon Rudolph, who started his bakery business in 1937.

From the very start the (now well-known and dominant) sweet baking smell of fresh doughnuts attracted buyers. Heaps of them. Anecdotally, when Krispy Kreme was still freshly produced at London’s Harrods only a few years ago, residents complained bitterly about the permanent malodour (not so ‘sweet’ then) that hung in the streets and campaigned successfully for the Krispy Kreme kitchen to be relocated.

Krispy Kreme did not open its own stores until more than 50 (!) years after it was founded, but then wasted no time. It opened its first shop in 1989 and by 2015 the business opened its 1000thstore. Today Krispy Kremes are sold in a total of 5000 (mostly franchise) outlets in the US, whilst in the UK the company now runs 116 stores and 1200 cabinets.

In 2000 Krispy Kreme listed on Nasdaq (ticker: KREM) at $21 a share and switched to the New York Stock Exchange a year later (ticker KKD) and started cranking out doughnuts. It baked about 3 billion doughnuts every year and its stock price reached an all-time high of $50 a share. But from 2004 onwards, there was trouble. Revenues declined and some of Krispy Kreme’s US franchisees filed – due to accounting troubles – for bankruptcy in 2005. Although this concerned a relatively small US franchise chain, it prohibited Krispy Kreme from further US expansion after 2005 and the company had to look elsewhere, across the borders.

The share price collapsed from its heights and never properly recovered, despite a new CEO, a successful international expansion, new tastes AND a better and more consistent doughnut quality. In 2016 the company made the unusual move of delisting from the exchange as it was bought out by a private company, the Europe-based JAB Holdings for $1.35 billion.

Five years and a pandemic later, things are definitely looking up. The pandemic pounds we added last year slipped on through many a Krispy Kreme doughnut and the company passed an annual sales milestone of over $1 billion in 2020 – and the first quarter of 2021 looks very promising too.

But when will the company list and what is the predicted price per share? The ticker (already allocated) is a no-brainer at DNUT, but the price, the time and the number of shares to be issued are still slightly hazy. It will certainly be exciting when it happens.

One thing is for sure; next time you wake up and the Krispy Kremes have sold out, you may decide to buy the shares instead. Sometimes it is better to own the doughnut than to eat it.

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