After announcing declining second-quarter profits and lower-than-expected revenue projections for the year, Krispy Kreme stated it would close about ten locations.
The 85-year-old doughnut king claimed that the closures were due to the company's inability to maintain profitability under its present business strategy.
The "hub-and-spoke" system is made up of bigger stores with production facilities called "hubs" that send donuts to more compact outposts called "spokes" in order to maximise donut freshness.
However, 118 stores do not currently have these distribution points in the United States. Nevertheless, a lot of them have been doing well.
According to Krispy Kreme, hubs without spokes saw a 5% slower rate of sales growth than hubs with spokes.
With the potential to develop more than 100 low-cost DFD outposts, the donut brand will be purchasing a midwestern franchisee in order to maintain its momentum. This will add seven more stores to Krispy Kreme's portfolio.
With franchisee outlets falling from 205 in 2019 to 66 at the end of 2021, Krispy Kreme has acquired more than 100 units from them over the past three years.
The strategy's goal is to hasten the switch to the hub-and-spoke model, which has proven to be more effective when operated by corporations.