Krispy Kreme Looks To Ice Cream

Krispy Kreme is hoping its new soft-serve ice cream will pull it out of a three-year sales slump, the Associated Press reported.

Krispy Kreme Doughnuts’ latest turnaround plan includes launching a new ice cream as well as opening smaller stores and expanding overseas, though some suspect it still may not be enough to help the chain climb out of its hole, the AP reported.

"They’re trying to reposition themselves as more of a treat concept" that offers consumers desserts and indulgences, Bob Goldin, executive vice president at Technomic told the AP. But "it’ll be hard to argue it’s a growth business" given trends toward eating healthier, he said.

The AP report continued:

The Winston-Salem, N.C.-based Krispy Kreme replaced its chief executive with its chairman, James H. Morgan, to try to revitalize the management team, a move that came after years of losses and allegations of mismanagement. Morgan said Krispy Kreme will begin opening smaller locations that are less expensive to build than its older "factory-store" model that allowed consumers to watch the doughnuts being made.

The company plans to open the first of those stores in North Carolina and Tennessee during this fiscal year. Spokesman Brian Little said the company is expecting the stores to perform well, particularly since it has used the model in its international locations and sales have been "very positive" there.

Internationally, the company has been expanding aggressively, adding 58 stores since February. More than half of its stores are now located outside the U.S.Another key part of the plan is the company’s new Kool Kreme soft serve, which will be featured with a toppings bar. The product is being tested in several stores around the country.

Whether the new offering will boost sales remains to be seen, but analysts have yet to be impressed, especially as Krispy Kreme’s competitors are trying to attract health-conscious customers with egg-white sandwiches and whole-grain pastries.

"There’s no question that Americans are changing their attitude about health as a way to add good things to your diet," said Harry Balzer, vice president of consumer research firm NPD Group.

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