July 1, 2022
In an earnings call earlier this year, Krispy Kreme executives discussed the expansion of “dark shops”—or low-cost delivery points for donuts and sweet treats. Following the company’s “hub-and-spoke” model—in which large, regional bakeries stock products in smaller retail distribution outlets—the dark shops will act as delivery points for the baked foods, requiring lower operating costs than a traditional retail location and accessible only to e-commerce delivery drivers, reports Food Business News.
The concept was piloted successfully last year in the United Kingdom, with more than 50 delivery-only dark shops expanding consumer access to fresh donuts. Krispy Kreme plans on bringing the concept to U.S. and Mexico markets in 2022, following customer feedback that freshness is a key factor in sweet treat purchasing decisions.
“Our dark shops will piggyback on existing spoke routes, which ensures a fresh donut distribution daily and opens up further access to more customers,” says Michael J. Tattersfield, president and CEO of Krispy Kreme. “We believe these initiatives will generate double-digit organic revenue growth this year.”
Krispy Kreme has seen promising growth in the e-commerce sector since the 2018 acquisition of Insomnia Cookies, a late-night fresh cookie delivery business that operates out of retail storefronts. Total revenue for Insomnia Cookies in 2021 increased by more than 30% overall and nearly 20% excluding new store revenue, says Tattersfield.
With the promising success of Insomnia’s delivery-centric model, Krispy Kreme hopes to capitalize on the appeal of freshness and convenience delivered directly to customers within a 20-minute range of a dark shop.
Research contact: @FoodBizNews