With Generation Z disproportionately relying on online platforms to pick where they order food, Krispy Kreme is investing in digital to grow penetration with young consumers.
The sweet treats brand, which has 2,100 shops and more than 13,000 points of access around the world, shared in its third-quarter 2023 earnings results that eCommerce has grown to make up 19% of sales, with its digital business growing $4.8 million.
On a call with analysts, Krispy Kreme Global President and Chief Operating Officer Josh Charlesworth discussed how the brand is focusing on social media — for instance, partnering with influencers popular among Gen Z — to reach these digital consumers.
“Our brand continues to grow and over-index with valuable younger consumers, with 18- to 34-year-olds now representing 40% of our U.S. consumer base, up from 33% a year ago,” Charlesworth said. “This is a big contributor to the success of our Strawberry Glazed Doughnut partnership with Hailey Bieber, which sold out quickly every day we ran it in early September.”
Charlesworth added that partnerships of these kinds enable the brand to reach consumers outside of typical seasonal occasions, particularly these “more social media and digital savvy consumers” in younger generations.
Many millennial and Gen Z consumers tap social media and other digital platforms to make decisions about where to eat. According to the June edition of PYMNTS Intelligence’s exclusive Connected Dining report, “Connected Dining: Word of Mouth in the Digital Age,” which drew from a survey of more than 2,200 U.S. consumers, 37% of diners search for restaurant information by accessing content from a restaurant’s social media page. That share jumps to 42% for Generation Z and 46% for millennials.
Additionally, the November edition of the report “Connected Dining: Tracking the Impact of Digital Tools on Food Tourism and Travel Preferences,” which was based on a September survey of more than 2,000 U.S. consumers, revealed that 73% of Gen Z consumers always use apps or websites to find restaurants in their daily lives, as do a similar share of millennials.
One of the ways that Krispy Kreme has grown its digital penetration is by harnessing the expertise in the space of its Insomnia Cookies subsidiary, acquired in 2018, which the company recently put up for sale.
“[We] acquired Insomnia Cookies five years ago to help us strengthen our eCommerce and digital platform,” Krispy Kreme President and CEO Mike Tattersfield said on the call. “Digital orders now represent approximately 20% of consolidated retail sales. … [We are] exploring strategic alternatives for the company to enhance both brands’ growth trajectories and enable Krispy Kreme to focus on our core strategy of producing, selling and distributing fresh donuts daily.”
Additionally, Charlesworth noted plans for further “improving eCommerce and loyalty programs” going forward to boost purchase frequency.
There is strong consumer demand for such loyalty programs. The March edition of the Connected Dining study, “Consumers Like the Taste of Discount Meals,” found that 51% of consumers reported using a restaurant loyalty program and that adoption of quick-service restaurant programs had grown 15% year over year.