Krispy Kreme targets malls for its South African venture

SOUTH AFRICA – Global doughnut and coffee retailer Krispy Kreme opens its first store in South Africa this week — marking the company’s first venture into Africa, as it steps up efforts to expand in developing markets.

A more brand-aware middle class with rising incomes is attracting other US consumer-facing giants such as Burger King, which already has outlets in South Africa, and Starbucks, which has plans to set up shop here soon.

“Krispy Kreme is a strong emerging market brand in countries that have similar demographics to ours…. There is also no one playing in the sweet treat space in South Africa,” Krispy Kreme Doughnuts South Africa CEO Gerry Thomas said.

The New York Stock Exchange-listed group is due to open stores in Myanmar, Bangladesh, Cambodia and Guatemala.

In May the company signed a master licence agreement with Fournews and John & Gerry’s Brands for an undisclosed sum to open 31 Krispy Kreme shops in South Africa. Fournews is a restaurant franchisor that owns brands including News Café, Moyo and Smooch, a frozen yoghurt chain. The joint venture between Fournews and John & Gerry’s will hold the Krispy Kreme licence for five years with an option to renew for a further five years.

The first chain will open in Rosebank, Johannesburg, on Wednesday.

The store produces hot doughnuts in front of customers, and along with a commissary (factory) in the Linbro Business Park in Sandton, will serve as a manufacturing and distribution hub for other stores in Gauteng.

The Rosebank store can produce up to 110 dozen doughnuts an hour when operating at 100% efficiency, while the Linbro Business Park commissary can churn out 270 dozen doughnuts in an hour.

“Our roll-out strategy is mall-based because the South African retail landscape is dictated by malls and that is where you mitigate your risk and you know you will get the right foot count coming into your stores,” Mr Thomas said.

“However, we would in the future like to look at the possibility with our franchisor of supplying other retailers and forecourts.”

In other countries the group has standalone stores, drive-through outlets and kiosks, and also sells its products in grocery and convenience stores.

Along with marketing and executive training, Krispy Kreme’s training team from the Philippines and members from the US team have been in South Africa to help out on the operational side for the Rosebank opening.

Sixteen doughnut flavours will be on sale — the top 10 bestsellers in the world and six flavours unique to the South African market.

While the group will import the “secret” doughnut mix, making it vulnerable to currency swings, other ingredients such as sugar, shortening, packaging and toppings are being localised.

Stores in KwaZulu-Natal and the Western Cape will be opened in 2017 and 2018.

November 30, 2015; http://www.bdlive.co.za/business/retail/2015/11/25/krispy-kreme-targets-malls-for-its-south-african-venture

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