I think you nailed it - too few stores. The donuts get distributed to supermarkets, used in fund-raising, but the coffee, drinks, ice cream, etc...only available at the stores which are too remote for many people. And because of this, revenue growth through product variation appears to be rather limited.
Although, an idea just came to mind that could possibly have a huge positive effect, although it could have a negative effect on the other company's cookie sales, but having KKDonuts available in those remote areas could be a lure for more customers to walk into the other company's stores. Hmmmm, I think it will work!