Winston-Salem, North Carolina-based leading doughnut maker, Krispy Kreme Doughnut Inc. (KKD), has been expanding internationally, especially in the emerging markets, for quite some time. The company currently operates more than 790 restaurants worldwide, of which 546 are located in the international markets like Latin America, the United Kingdom, Russia, the Asia Pacific and the Middle East.
In a bid to further strengthen its presence in the overseas market, the restaurateur recently declared that it is set to debut in Singapore on Oct 12, 2013. Strategically positioned at Tangs Orchard Basement 1, the new 1,200 square-foot restaurant is expected to attract huge traffic, going ahead.
The latest opening came in the wake of the signing of a development deal between Krispy Kreme and Star360 Group in Oct 2012. As per the franchisee agreement, the company will launch 14 more restaurants in Singapore by 2017.
Star360 has been operating in the Southeast Asian food and beverage service market for more than 20 years. The group has superior local market knowledge and has also established its presence in the premium retail industry of Singapore, Malaysia, Indonesia, Hong Kong, Philippines, Thailand, Taiwan and Japan. Hence, we believe that Krispy Kreme’s collaboration with Star360 reflects its intent to successfully spread its famous Glazed doughnuts and freshly-brewed coffee among brand-conscious consumers in Singapore.
Singapore is one of the fastest growing economies in Southeast Asia and it is one of the Four Asian Tigers countries. Increasing disposable income has enabled the residents to spend on branded food items. We believe these factors have caught the attention of Krispy Kreme.
The recent store opening supports Krispy Kreme’s goal of opening 900 international units by 2017. In late September, the company inked a franchise development deal with IRCC Ltda., a Bogota-based restaurant operator, to enter into the flourishing South American market. Following the deal, the restaurateur will launch 25 restaurants across Colombia’s key cities such as Bogota, Medellin and Barranquilla by 2018.
Other Stocks to Consider
Krispy Kreme holds a Zacks Rank #3 (Hold). Other players in the restaurant industry that look attractive at the current level include AFC Enterprises Inc. (AFCE), Cracker Barrel Old Country Store, Inc. (CBRL) and Domino's Pizza, Inc. (DPZ). All these stocks carry a Zacks Rank #2 (Buy).