Merchant Innovation

Can Krispy Kreme Compete With Starbucks?

Krispy Kreme rode itself to brand fame off the backs of its decadent doughnut products. Now, though, a shift in the consumer landscape has them chasing Starbucks to offer a luxurious experience with a non-confectionery menu item: their coffee.

Bloomberg Business reported that Krispy Kreme has begun outfitting test stores in North Carolina with new equipment and policies to offer a Starbucks-like experience for customers looking for a cup of joe to go along with their sugared circles. CEO Tony Thompson explained why he believes that even though Krispy Kreme has ceded ground to other coffeehouse chains over the past several years, changes such as referring to employees as baristas, taking customer orders by name and using hand-ground methods to craft personalized lattes can help recapture consumers.

“They’re coming in for doughnuts, but all of a sudden they see: ‘Wow, they’re pretty serious about coffee,’” Thompson said.

Fortune reported that while Krispy Kreme’s renewed focus on creating a coffeehouse atmosphere might seem unusual, it’s at least more intuitive than a chain like fast-food franchise Chik-fil-A, which revamped its coffee menu last year — swapping machine-poured coffee in favor of artisanal offerings — and is now enjoying a 75-percent boost in ice coffee sales as a result.

“We weren’t focused on it, and customers weren’t as excited for the coffee as they were about the other menu items we’re known for,” David Farmer, vice president of strategy at Chik-fil-A, told Fortune. “It became clear we needed to do something about our coffee.”

Starbucks is made of more than just hand-crafted lattes that customers don’t mind sticking around in-store to drink, but moving away from fast-food-style styrofoam cup coffee is never a bad idea for brands that need to supplement food sales. And if Krispy Kreme can make a solid run out of their coffee business, they might have an in-grown advantage against Starbucks on the doughnut front.

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