By Patrick McGuigan
Iconic US doughnut brand Krispy Kreme plans to double its number of stores in the UK in the next five years and increase sales through Tesco, as part of a massive £12m expansion plan.
The company, which launched in the UK in 2003 and currently operates 42 stores, intends to open a further 40 outlets in the next five years, starting with a factory shop in Bristol in August, after securing a £12m lending facility from Santander. It also plans to double the number of Tesco stores it supplies, from its current base of 180 outlets.
"We went from zero to 40 shops between 2003 and 2009, but decided to take a break in 2009 because of the economic climate," chief financial officer Rob Hunt told British Baker. "We actually had quite a good year in 2009 from a trading perspective, which has given us confidence to continue the expansion."
Rather than using a central production unit, Krispy Kreme’s ring doughnuts are made in regional factory shops large retail outlets comprising a 25-30 cover café and manufacturing facility that is visible to customers. These sites make fresh doughnuts each day, which are delivered to other smaller Krispy Kreme shops and Tesco stores in the local area.
The company currently has eight factory shops in the UK and aims to open a further 10, at a rate of two a year, with Scotland being a target in 2011, followed by the north east, Yorkshire and the East Midlands.
Krispy Kreme UK saw sales increase by 3.5% to £30m in the year to 31 January 2010. Profits hit £1m, up from an underlying loss of £500,000 the previous year.