Krispy Kreme doesn’t want to be Starbucks. However, the chain is drawing inspiration from coffee shops as it looks to the future.
In October, the doughnut chain opened a new location in Clemmons, North Carolina with some serious coffee shop vibes, including vintage signs, natural wood, free WiFi, and a redesigned ordering system and seating area.
The concept store represents a major step forward in Krispy Kreme’s plan to increase coffee sales, which currently make up 5% of sales — a figure that CEO Tony Thompson told Business Insider he believes the company could double.
“We love to hear, ‘We used to go to Starbucks, but this is pretty cool too,'” says Thompson on customers, especially younger ones, he meets at the Clemmons concept shop. “[Krispy Kreme is] not trying to go be a Starbucks. What we want out of this is, people are coming for the doughnut. We want to attach [coffee].”
Here’s how the new shop is trying to do just that — and what it means for the future of the brand.
The aspect of the new location most likely to show up at your local Krispy Kreme is the coffee-centric ordering system.
When customers come to a Krispy Kreme, they are drawn straight to the doughnut case, like moths to a flame.
However, the traditional ordering system -- order doughnut at the case, then go pay at the register -- often reduces the chance of customers getting a beverage to go with their sweet treats. So, with the new location, ordering coffee and doughnut is finally linked.
'We know people are coming to the case. So, let's up the POS there, let's start where they go,' says Thompson. 'Don't push them to do something different -- you know where they're going to go.'
Krispy Kreme is already working on retrofitting the new ordering system at some existing locations, as well as select new shops.
The company isn't ready to share the exact figures, and it's not replicating the entire store, but different locations are expected to take on aspects of the Clemmons ordering system.
In some areas, the company will add a barista and a manual espresso machine. In others, it will be a matter of rearranging the doughnut case and point of sales system to fit the new customer flow design.
The location has soft seats and high-backed chairs, free WiFi, and more plugs along the wall for customers looking for somewhere to plug in their laptops and sit for a while.
'To really address coffee, you've got to do more than just have a new menu item, or just some new news,' says Thompson. 'You need to have the overall experience be about coffee.'
Down the road, some aspects of this new experience may become the norm at Krispy Kreme locations, as the company continues to collect data at the Clemmons shop.
The new location keeps the iconic window through which Krispy Kreme customers can see the glaze waterfall at work.
With the new store, one of Krispy Kreme's major concerns was alienating long-time customers.
'You do not want (customers) saying, 'This is not the Krispy Kreme we grew up on,'' says Thompson.
As a result, the company worked hard to establish and maintain visible signs that people associate with Krispy Kreme: the window where people can see doughnuts being glazed, the iconic hot light alerting customers that fresh doughnuts are ready, and several vintage touches, such as old-school wooden Krispy Kreme boxes.
Krispy Kreme has focused on growing coffee sales in the last few years, in large part because the company needed to play catch up in the category.
According to Thompson, until the last few years, Krispy Kreme's coffee innovation was stuck in the 1970s and 80s.
'Coffee changed over time, and we didn't change with it,' says Thompson.
Coffee progress was further stunted by the company's financial struggles in the early 2000s, as the chain expanded too quickly and the SEC investigated executives for cooking the books. In the same years, Starbucks was swiftly growing its coffee empire in the US and internationally, and Dunkin' Doughnuts was increasingly moving into the beverage market.
However, more recently, Krispy Kreme has been making some much needed changes when it comes to coffee. In 2011, the company launched its new signature blends. Krispy Kreme coffee products are now available in grocery stores in the form of K-Cups, iced coffees, and packaged ground coffee.
Ultimately, even though the company wants to increase coffee sales, Krispy Kreme is all about the doughnut.
Even if coffee grows to reach Thompson's goal of 10% of Krispy Kreme's sales, he says doughnuts will stay 'center of plate.'
The new design is attempting to make coffee a more common add-on, or provide a reason for customers to come to the chain more often -- not transform Krispy Kreme into a coffee shop. At the end of the day, the company's success depends on the classic doughnut. Boosting coffee sales, while important for growth, would be the icing on the doughnut.
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