Filed under: Products and services, Marketing and advertising, McDonald’s (MCD), Krispy Kreme Doughnuts (KKD), Burger King Hldgs (BKC)
Troubled business Krispy Kreme Doughnuts (NYSE: KKD) wants to use one of America’s favorite treats — ice cream — to help bring it back to its glory days. The ice cream will be a soft-serve concoction, and the hope is that it will add another dimension of value for Krispy Kreme’s patrons beyond the core doughnut portfolio. I guess the former pastry star thinks that if you’re not in the mood for a doughnut, maybe you’re in the mood for ice cream. (Full disclosure: I don’t like ice cream!)
You know, I can’t really criticize the effort. Seems like a simple enough way for Krispy Kreme to expand its base of offerings. But will it suddenly set the company on a path of unfettered growth? I can’t say I see that. From an investor’s point of view, Krispy Kreme is the same stock to be avoided as it was before I read about this ice-cream initiative. In fact, it was only recently that I took a look at the company’s earnings and realized that I remained a bear on the business. I still think investors would be superior off looking at ideas such as McDonald’s (NYSE: MCD) and Burger King (NYSE: BKC) before Krispy Kreme. Yeah, they’re not massive on doughnuts, but they do well with burgers and fries, and they’re a superior way to play chains that sell less-than-healthy foodstuffs.
The ice cream plan is definitely a worthwhile experiment. But if management is just going to throw it on the menu without launching an aggressive advertising campaign in support, then I’m not sure how much good it can actually do. I’ve seen turnaround plans before that try to exploit some new product or project but fail to give it a proper push. We’ll have to see what kind of push Krispy Kreme goes for with its ice cream, but I’m still not a buyer of the stock.
Disclosure: I don’t own any company mentioned; positions can change at any time.
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