Krispy Kreme Director of Marketing Jim Rogers believes the company enjoys one
key advantage in the region - its open doughnut kitchen.
"I think that's very important, typically to the Asian cultures, to see food
prepared in front of you and that's why we think it has such great success
opportunities here and in other Asian markets," Rogers told The Associated
Press.
The Chinese are known for their affinity for freshness. In Hong Kong, chicken
and fish are killed on the spot in restaurants and wet markets. Local eateries
display racks of barbecued pork and duck behind large windows in kitchens at the
front of the restaurant.
There's also Krispy Kreme's trademark fresh glazed doughnut, which unlike the
conventional dry doughnut, offers a sugary softness that resembles a Chinese
red-bean filled dough-like dessert.
Brian Parfitt and his younger brother Wayne, Hong Kong-based restaurateurs
from Queensland, Australia, hold the Hong Kong franchise rights; Brian Parfitt
says he's considering introducing local flavors, with one possibility being the
popular Chinese red bean.
The Parfitt brothers have pulled out all stops in trying to generate buzz for
the shop's Hong Kong debut, handing out free samples and hiring workers to carry
a big countdown sign near the outlet.
Legislator Tommy Cheung, who represents the restaurant industry in Hong
Kong's legislature, said locals are quick to embrace Western foods they once
resisted.
"I don't dare to offer a negative prediction (for Krispy Kreme)," he said.
Krispy Kreme Senior Vice President for Development Jeffrey Welch said the
company was also drawn to the region by intense interest from potential
franchisees.
"A lot of it is also just the pull," he said.
As for the next frontier, mainland China, executives say the current focus is
on already confirmed expansions, including its plans in Hong Kong, where the
franchise deal calls for the Parfitts to open about 20 shops in the next five
years.
Rogers confirmed that businessmen have approached Krispy Kreme about opening
shops in China, but said the company isn't prepared to talk specifics.
Still, Welch said, "China's a market that you can't ignore."
"That's something that's on my radar screen, but we go in when it's
appropriate," he said, adding he will factor in its experience in other Asian
markets.
Krispy Kreme's foreign expansion comes as the company tries to rebuild after
a slew of corporate troubles. Once a hot stock, it reported its first-ever
quarterly loss two years ago and has since suffered sagging sales, store
closings, layoffs, lawsuits and an investigation by US stock market regulators.
One lawsuit alleges that executives inflated wholesale sales figures.
Krispy Kreme, which fired its chief executive last year, reported a net loss
of US$198 million (euro154.78 million) for fiscal 2005, which ended January 30,
2005, in a restatement issued in late April. It hasn't yet released its fiscal
2006 results and said in June it expects a loss for the first quarter of fiscal
2007.
