The Secret Ingredient Behind Krispy Kreme’s Success

A favourite of Madonna and Beyoncé, the brand has been in business for an impressive 84 years. What is the secret behind the doughnut maker’s mouth-watering popularity?

The Secret Ingredient Behind Krispy Kreme’s Success

by Alastair Cole

Posted on 10-07-2017

Krispy Kreme is the story of one man—Vernon Rudolph. In 1933, at the height of the Great Depression, his family bought a yeast-based doughnut recipe and the Krispy Kreme brand from a French chef in New Orleans.

The brand has endured for 84 years—an impressive run, given the average lifespan of an S&P 500 company was 33 years in 1965 and is forecast to shrink to 14 years by 2026.

Krispy Kreme’s success is due to the relentless entrepreneurial drive of its founder and the company’s ability to remain relevant. As well as practicing the five key behaviours I wrote about recently, it has consistently innovated.

Bold Risk-Taking

The Rudolph family worked hard to get the business started, and opened a handful of stores across the Southern United States.

In the summer of 1937, determined to own his own shop, Vernon set out with two friends, the name Krispy Kreme, and $200 in his back pocket. They arrived in Winston-Salem, N.C. with just $25 left and needed those last few dollars to rent a space on Main Street, taking the ingredients and equipment on credit.

The rented space served as a wholesale bakery, and cooking was done in the early morning, between midnight and 4 a.m. This meant the smell of fresh doughnuts was still lingering as people were going to work on Main Street.

Attracted by the intoxicating aromas, passers-by came in off the street, asking to buy whatever they were making. Ever the improviser, Rudolph acted quickly, cut a hole in the wall, and started selling direct—the beginning of Krispy Kreme’s retail operations.

Smart Marketing

The company has never spent much on advertising, relying, instead, on word of mouth, often generated from free samples. Giving away products at carefully timed moments is one of the company’s ingrained marketing tricks.

It has been supporting community fundraising since 1955 and co-operating with charities wanting to raise money and individuals looking to hit sponsorship targets. The brand allows people to buy boxes of doughnuts at cost price, and then sell them for a profit, as long as it’s for a good cause.

Many of these organisations are schools or children’s groups such as Scouts and Guides, which is a genius idea. Raise money for charity, while getting kids to sell to other kids, and make brand advocates of a whole new generation of doughnut-eaters. You can even request hats and balloons for your event!

Automation Differentiates

Under pressure from competitors and driven to make the highest-quality products, Rudolph created three innovation business units in 1947. Staffed with engineers and machinists, the equipment department began manufacturing its own doughnut-making equipment within two years.

The Ring-King Junior was highly efficient, saving not just space and time, but also ingredients used. This helped deliver Rudolph’s vision of making consistently top-quality products as well as reducing costs.

This push towards mechanical automation was sweeping the U.S. at the time—in the same way that the current revolution in software automation is transforming today’s workplaces.

The machines that make doughnuts are often on view—they’re part of the store’s front window. What customers see is a transparent demonstration of the product being made, which builds trust.

Hot Light

When these production lines start working, many branches had the ability to turn on their Hot Light—a red neon sign that stands outside franchises. Launched in 1992, these illuminated calls-to-action let passers-by, and drivers, know that hot, fresh doughnuts are being made … right now.

When the iPhone first launched in 2007, other companies rushed to create mobile apps—many of which were little more than their website in a native wrapper. Krispy Kreme bucked that trend and created the Hot Light app, a digital take on the original concept that has been delighting customers since 2012.

The app is synced with the physical store signs, and automatically notifies customers when the light is turned on. It provides directions, helping customers get to stores while the doughnuts are still hot. And it can be personalised—users can choose their favourite store and set notification preferences.

And this app demonstrates all 5 behaviours I believe ambitious brands need to win:

Last Bite

Hard work, a family atmosphere, and commitment to quality—and what emerges is a company that is at the top of its field and beloved by its customers. Publicly traded since 2000, Krispy Kreme has more than 1,000 locations in 29 countries.

It’s an organisation that has remained true to its mission of making top-quality products and delivering customer service excellence. From the very beginning, it has actively evolved to meet the changing needs of customers, and it remains as relevant today as it was in the 1930s.

The result is a brand that has long been part of popular U.S. culture—including cameo appearances on “Sex and the City” and “The Sopranos,” and with well-publicised fans such as Madonna and Beyoncé.

Companies starting out today—and those who aspire to Krispy Kreme’s longevity—could do well by mirroring the innovative approach of Vernon Rudolph.

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