Krispy Kreme Doughnuts, Inc. (KKD) is set to open its new store in Carolina, Puerto Rico in collaboration with its franchise partner Caribbean Glaze Corporation. This opening will mark the company’s 600th international store. In order to celebrate this grand opening, the company will distribute complimentary shirts for its first 600 fans on the opening day and arrange fun activities.
Spread over an area of 2,800 square foot, this store will feature Krispy Kreme’s iconic Hot Light and Doughnut Theatre. The Iconic Hot Light is the red light located in front of the store and acts as a siren call for Krispy Kreme fans. Apart from being an icon of the Krispy Kreme brand, it acts as a medium to drive traffic. The Doughnut Theater, on the other hand, allows customers to watch the process of preparing doughnuts.
The company has been working with Caribbean Glaze since 2008 when it opened its first outlet in Caguas, Puerto Rico. Since then, Krispy Kreme has been capitalizing on Caribbean Glaze’s extensive knowledge of the local market to expand its doughnut and other offerings in the market. It currently operates in five additional locations which include Guaynabo, Dorado, Ponce, Mayagüez and Hatillo.
Krispy Kreme is looking to accelerate its presence in high-growth potential international markets mainly through franchising. We believe franchising a large chunk of its system facilitates the company’s earnings and return on equity growth by reducing capital requirements. The company’s franchised business model allows it to generate strong free cash flow, thereby helping it to maintain a healthy balance sheet.
Currently, Krispy Kreme has more than 800 retail shops in more than 20 countries in North America, Latin America, the Asia/Pacific region, the Middle East and Europe. By fiscal 2017, the company targets to have 900 international franchises.
Krispy Kreme presently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the sector include Buffalo Wild Wings Inc. (BWLD), Burger King Worldwide, Inc. (BKW) and Carrols Restaurant Group, Inc. (TAST). While Buffalo Wild Wings sports a Zacks Rank #1 (Strong Buy), Burger King Worldwide and Carrols Restaurant hold a Zacks Rank #2 (Buy).