I live in Chicago. A friend and I went up to visit another friend in Gurnee, IL last Saturday and stopped at the Krispy Kreme there.
Now, it is important to point out where this Krispy Kreme is. It is right off of Interstate 94, across the street from Six Flags, and on the other side of the highway is a major outlet mall. It was a sunny, cloudless day, and there were A LOT of people going to Six Flags and the mall. In short, it was the perfect location on a perfect (although hot) day.
When we pulled up to the Krispy Kreme at about 10:30 AM, we thought that there might be quite a few people at it...given the large number of cars in the parking lot. However, those cars must have belonged to the employees, because there was only a family of 3 (husband/wife/toddler) in the store sitting at a table. (The Hot Donuts light was on.)
My friend ordered a HOG...I ordered a cruller. Although he had the OGs before, he had never had them hot. As we walked out of the store, he took a bite and was utterly repulsed by all the grease. (I explained that all hot doughnuts taste like that before the grease is absorbed.) My cruller had too much glaze, and I had to pick off quite a bit of it.
We drove back by an hour later. The Krispy Kreme still had the same number of cars on the outside, and I couldn't see any customers on the inside. In contrast, the Chucky Cheese and Wendy's on either side of the Krispy Kreme were packed. (The Six Flags and the outlet mall (Gurnee Mills) appeared packed, too.)
Since Krispy Kreme investors like to invest according the size of lines and customer counts, my "hot tips" are Chuck 'E Cheese (CEC), Wendy's (WEN), Six Flags (PKS), and Mills Corporation (MLS)...and avoid Krispy Kreme (KKD).
No Camping out on LI. That's for the retards of this country. We have more to do with our lives then wait for a KKD opening. When the best thing that can happen for a town is a KKD opening... lookout sheep!
I think that KKD is doing poorly in the entire SF Bay area mkt, and from what Montie has said they're not exactly tearing the doors off the stores in the Chicago area either. Now what about Los Angeles? KKD has been in these three major markets for a few years now and these locales must be the heart of the national strategy. If it is detected that the wind has gone out of the sails in these three major markets, then Krispy Kreme has some bigtime problems. (Anyone from LA have any info for us?). I fully X59 to leap through the screen in defense of KKD (his clients?). I don't claim to know anything except for that which I've seen with my own two eyes here in East Bay. I also believe what Montie and others have had to say. I suspect that KKD is doing poorly not only in the SF Bay Area, but in several other major national markets.
>> If it is detected that the wind has gone out of the sails in these three major markets,
then Krispy Kreme has some bigtime problems.<<
Wait a minute... I thought KKD's "bigtime problems" were going to be due to the west coast sexual discrimination lawsuit.
Or, no, I thought KKD's "bigtime problems" were going to be due to competition from DD, Horton's, the new 7-11 doughnut, MacD's new doughnut, and every other doughnut manufacturer in the world, including local supermarkets.
Or, no, KKD's "bigtime problems" were going to be due to bookcooking.
Or, no, KKD's "bigtime problems" were going to be due to insider trading.
Or, no, KKD's "bigtime problems" were going to be due to overvaluation.
Or no, KKD's "bigtime problems" were going to be due to....what will it be next week?
"Bigtime problems" caused by the usual drop after earnings?
>> If it is detected that the wind has gone out of the sails in these three major markets, then Krispy Kreme has some bigtime problems.<<
Mississauga (Toronto) a few weeks ago on Sunday evening had about 3 cars in drive through, and 15-20 people in the store, but only one in line. From what I understand this is the best of the stores in Canada.
I Live in Oxnard, CA aprox. 35 miles north of LA. We have a factory store in town on Rose Ave. I drove thru the parking lot today @ 9:30 AM on my way to the bank and as always a couple of cars in drive thru and about 8 to 10 people inside. Store has been open for about 2 1/2 years now and always has customers in it. I am long @ 47.25 & 46.85 I like the doughnuts and love the stocks growth prospects.
Oxnard has a population of about 110k and seems to keep kkd very busy, however they have caused 3 other local mom & pop doughnut shops to close up. With only a few hundred stores nationwide I think they have a lot of room to grow.
Yeah, I knew that one would come back to bite my ankle. :-)
Actually, the choice was among several baked items, all of them excellent. The spinich dip was thrown in for the vegetarians in the bunch.
Next week Im heading down the road from Western NC mountains through Greenville SC to Savannah and ultimately Sarasota , Fl. If someone will give me the locations using Rts 74 ;26 95 301 and 75 I'll be happy to take some time and give detailed time and factual assessments, but please don't ask me to eat any as I see them as poison.
They sell donuts. Its not a restuarant. People go in and out at given momements of the day. Saying that no people are having a hot donut meal is absurd. We have Dunkin Donuts in my town and I never see more then 3 people in there at a time. Think about it.
<They sell donuts. Its not a restuarant. People go in and out at given momements of the day. Saying that no people are having a hot donut meal is absurd. We have Dunkin Donuts in my town and I never see more then 3 people in there at a time. Think about it.>
Take out the no in the third sentence.
Quite a bit of research, there.
Bu....were any employees sitting down at any time?
Did they wash their hands after leaving the washroom?
Did any of them seem to be of Hispanic descent?
Were there any customers of Hispanic descent?
Was the inner diameter of the crueller the same as the inner diameter as the HOG?
Were the temperatures of the two items within 5 degrees F of each other?
Most importantly, did you speak with the manager?
Much more to learn about that location!!
I personally don't believe your antedotal evidence amounts to a hill of beans. The FACTS are 47.2% EPS growth for the past 5 years and 33.8% growth for the next five. Please go hang out at your neighborhood KK and have a cup of coffee and a couple of donuts and then report back to me.
<< The FACTS are 47.2% EPS growth for the past 5 years and 33.8% growth for the next five. >>
As others have pointed out, the 33.8% growth figure is pure conjecture, and certainly not fact. KKD's own estimate for near-term growth is considerably below that figure (I believe they estimated 25-30% growth this year, if memory serves. I'm sure x_5_9 will be quick to pour over the data and gleefully point out my amazingly poor memory if I am wrong, so it's a good bet that I'm correct if he doesn't.)
But even allowing the generous assumption that the 33.8% figure might come true, and if we are again generous and base our calculations on next year's FORWARD earnings estimate of $1.16/shr, and if we are AGAIN generous and add a penny for each future quarter to account for their pattern of beating the street by a penny, we STILL extrapolate a fair value price of $40.56 in order to maintain a neutral PEG of 1.
IMO, these assumptions are overly generous. But as I said before, momentum and bubble mentality are powerful forces in the short term. Still, it's best not to confuse momentum with long-term value; they are not the same.
<<I personally don't believe your antedotal evidence amounts to a hill of beans.>>
--I don't put much weight on anecdotal evidence, either. However, many gullible longs do. Have you ever noticed the posts surrounding grand openings (i.e., long lines and traffic)? Some seem to think that every Krispy Kreme is packed, but I can tell you that is not true.
<<The FACTS are 47.2% EPS growth for the past 5 years>>
--Yes...but revenue growth hasn't kept up recently...hmmm.
<<and 33.8% growth for the next five.>>
--Just projections...not a fact. Every company has rosy projections. (Enron did.)
<<Please go hang out at your neighborhood KK and have a cup of coffee and a couple of donuts and then report back to me.>>
--The nearest KK to me is 10 miles away. (Chicago is a big town.) However, I can buy Krispy Kreme's at the nearby grocery stores. (They have already largely saturated the off-site market.)
Thanks Montie. Good report. We'' add Gurnee to our list. You would think saturday morning would be prime time.
Atlanta Georgia: extra quiet (Sun am)
Nashville (relatively good business)
Concord, CA: always dead (five visits)
Pinole CA (similalrly always very quiet)
Antioch CA (very quiet on 3 visits)
Portland, OR (new store, very busy)
Medford, MA (new store, very busy)
(town?) New Jersey (new store, mixed reports)
Aside from my report of the KKD store on Cobb Parkway (Atlanta, GA), let me report about another store on Ponce de Leon (downtown Atlanta). This store is actually less than a mile away from where I work, and I drive by occationally. Actually, I drove by that store about 3 weeks ago and noticed that it was closed due to renovations! I wish I had placed more attention to what the store looked like before renovations. But I will find out later what the renovations consisted of. Back to reporting activity at this store in the past, I have driven by this store several times between around 10 am and 4 pm. I would say on the average I see maybe 1 car in the drive-thru every 3-4 times I drive by, the most I remember is 3 cars waiting in line. In terms of customers inside, probably no more than 2-3. I don't think this store can be considered to be "busy" by any means. And if it is busy, must be very early in the morning, or late at night, who knows.
Also, a couple of years ago I went to Destin, FL, there is a KKD store on the main road parallel to the beach. I remember driving by a couple of times and there was absolutely no activity in the store. I mean, not even a single car parked outside (but I doubth the store was closed), wondered if the empoyees weren't allowed to parked their cars there. It was very hot back then, so I had a difficult time imaging someone wanting a hot donut say between 10am and 6pm.