Krispy Kreme confirmed plans to discontinue the production of its CPG snack, Food Dive reported. Upon removing these items from the snack aisle business, the company will close its North Carolina facility, resulting in 102 job layoffs, according to a notice filed with the North Carolina Department of Commerce.
“Our fresh daily doughnut business is strong, profitable and growing quickly. This is the area where we are focusing our investments and resources,” an emailed statement from Krispy Kreme said. “Because of this, we chose to exit our underperforming, extended shelf-life snack aisle business and cease production at our manufacturing facility in Concord, North Carolina, where these snack aisle products were made.”
Krispy Kreme’s fresh delivery strategy has kept the company afloat. The method's success is reflected by a 10% increase in fresh delivery sales at each location in 2022 alone, according to the company’s most recent earnings report. The brand will continue prioritizing its daily fresh delivery doughnut operations as it prepares to implement another strategy to sell its baked products in grocery stores.
“While center-store baked goods have a great deal of popularity, they are different than their fresh counterparts,” a Food Dive report states. “Center-store CPG snacks need to be able to last longer and they also may face stiffer competition from established brands.”
Krispy Kreme donuts are sold across 5,741 locations across the U.S. and Canada. According to a presentation recently hosted by CEO Michael Tattersfield at the Bank of America Securities 2023 Consumer & Retail Conference, the company expects to have 20,000 fresh-delivery locations worldwide by the end of this year.
“From a business standpoint, Krispy Kreme has been turning more attention toward growing sales through its DFD program, which stands for delivered fresh daily,” the Food Dive report stated. “This program utilizes what the company calls a hub-and-spoke business model in which Krispy Kreme bakery locations are the hubs, and the locations they deliver the fresh-baked doughnuts to for sale are the spokes.”