Starbucks makes a lot more sense than Wendy's! Starbucks is losing share to McDonald's big time. They need something to capture the "breakfast" crowd. This will allow them to compete with McD breakfast crowd as well as the Dunkin Donuts crowd.
I suspect that the first thing they'll do is run Starbucks coffee through KKD outlets. That is a win-win. KKD customers are fanatical about these donuts (camping out for new store openings in new markets, etc). The brand loyalty is huge. Starbucks has -- albeit to a lesser intensity -- brand loyalty as well.
Doing the reverse (KKD donuts through Starbucks outlets) probably wont go over as well. But I could be wrong. They'll certainly pilot that concept somewhere at the very least.
KKD is a strong brand with an operations that was grossly mismanaged! They seem to be fixing the operations problems, but they have a road to haul yet. Same store sales increase of 5% is extremely "comforting". Again, shows the brand strength.
As they continue to pay down debt to reasonable levels and get their house in order, this stock should pop. And if they start paying dividends when "the books are fixed", watch out -- could be a 7 to 10 bagger. From here, you'll have to hold the stock at least 3 years, presuming no takeover, to make big $$$.
They do need to be careful with overseas markets though. Recognizing that the brand loyalty/value over there may (or may not) be as strong. I hope they are doing their homework before willy-nilly putting in stores and get right back into a mess.
I would certainly put this stock as a strong buy, recognizing that short term horizon could see it go down to maybe $2.50 before people buy into the company's turnaround success.