Krispy Kreme’s UK franchise market has remained flat during its second quarter ended 2 July 2023, albeit the brand has seen strong double-digit retail sales growth, according to chief executive Mike Tattersfield.
Tattersfield was speaking on an earnings call following the doughnut and coffee chain’s Q2 update, which saw net revenue grow 9% year-on-year to $408.9m and organic revenue by 11.4%, led by the US.
“Our international franchise markets grew more than 20% in the last quarter,” Tattersfield said. “The UK was flat however.
“We did see strong double-digit organic retail sales growth but this was offset by DFD.”
Tattersfield was referring to Delivered Fresh Daily, where the brand is ‘optimising price pack architecture’ alongside deploying loyalty programs and pricing and cost control initiatives.
“The team [in the UK] has taken actions to broaden the value proposition and bring more choice to the consumer,” he added. “In markets like the UK where we’ve put through price increases, we’re getting the feedback that we’re still offering value to consumers.
“Therefore we’re still an affordable treat in context of price increases. We don’t see price variation as a driver of performance.”
Krispy Kreme has not ruled out further price rises across markets, despite some easing in cost inflation.
It is still seeing elevated prices for items such as sugar, which means the brand will need to be ‘flexible’ with pricing for those commodities it cannot hedge, according to Tattersfield.
“We’re confident of the applicability of the model around the world.”
The company plans to launch its late night cookie concept Insomnia Cookies in the UK later this year.
CEO Mike Tattersfield commented: “I am proud of the results we delivered in the second quarter, which were bolstered by our continued focus on expanding our hub and spoke model as we leaned heavily into our omni-channel and DFD capabilities as well as our international expansion strategy. We executed the strongest and largest National Doughnut Day in our history, which we now celebrate in a dozen countries. We are also pleased with our continued global expansion, as we opened three new markets during the quarter in Chile, Jamaica, and Costa Rica, all exceeding our revenue growth targets.”
“We look forward to capitalizing on a strong start to the year in the back half of 2023 and delivering profitable growth as we focus on our capital efficient hub and spoke model and omni-channel strategy. We continue to expect to open in three to five additional markets in 2023, and recently opened in Switzerland which marked our first opening in Continental Europe to be followed by France before year-end. Overall, we remain on our path to grow Global Points of Access and become the most loved sweet treat brand in the world.”
