Interview: Jamie Dunning, MD of Krispy Kreme UK & Ireland
Customers visiting the new ‘Hot Light’ store of Krispy Kreme on London’s Oxford Street can now enjoy its famous glazed doughnuts hot and freshly cooked throughout the day in a first for the business that could be replicated in other major cities around the UK.
Speaking to The Retail Bulletin, Jamie Dunning, MD of Krispy Kreme UK & Ireland, says the post-Covid-19 environment involves increased competition from boutique super-premium brands through to the likes of Greggs, Tesco, Dunkin’ and Tim Hortons attacking the mainstream. And we now have the news that iconic Los Angeles brand Randy’s Donuts is coming to the UK.
Untouchable proposition
Krispy Kreme has needed to address this influx and the new store is providing something of a “kicker” for the brand, according to Dunning, who says: “The fresh, all-day proposition is untouchable.”
He is using some of his skills from a previous role at Mars with M&M’s Retail, with immersive retail now coming into play on Oxford Street through the production line of doughnuts in full view of customers through a glass screen. The process of dough being shaped and fried before being coated in sugar/glaze is reminiscent of the scene at many seaside towns but Dunning is quick to point out that in contrast to the coastal variety of donut the dough at Krispy Kreme is only lightly fried and the calories of its classic glazed variety clock in at 195 calories versus 350 for a croissant.
The new site covers 1,800 sq ft and although it is the eighth Hot Light outlet in the UK it is the first to only provide walk-in – the others are more diner style units – and most importantly is provides a constant flow of hot doughnuts off the production line. The equipment is capable of producing 36 dozen per hour, equating to 7,000 per trading day.
“The other Hot Lights have hot doughnuts available for only two or three hours per day. This is the first walk-in-only store specifically for hot distribution. The footfall here on this site makes it work. Birmingham and Manchester would be similar. We’d like this to be our city centre format that provides a unique halo for the brand. If it does the numbers [on Oxford Street] then it’s a winner,” says Dunning.
Developing a new model
This new site represents a very different model to that of the existing 140 UK & Ireland stores and the impressive partnerships Krispy Kreme has with the likes of Tesco, Sainsbury’s and Road Chef that covers a further 1,650 sites. These are all supplied daily from 16 kitchens via a hub & spoke system. Any unsold doughnuts are then returned and entered into the animal food chain the next day.
The trading model is incredibly flexible with a mere 80 sq ft – involving a cabinet and a till – enough to offer the basic service, right through to 1,500 dine-in versions. New stores are being opened at a rate of 10-15 per annum and Ireland has been a focus of late but this has shifted to South West England this year. There is also a focus on transport hubs with Gatwick, Stansted and Waterloo in the mix. The latter involves a US-style Airstream caravan.
There has also been a drive to build an e-commerce business that started out simply as a “response to Covid”, according to Dunning, who says it is now worth 10% of sales and is growing rapidly. Online sales are split evenly between exclusive online-only order-ahead ranges and personalised doughnuts that are delivered by DPD in three days, and the on-demand orders that are delivered by couriers via the food delivery aggregators.
The pandemic also prompted the launch of an app that supported a rewards-based loyalty programme and has since had e-commerce rolled into it. The rewards programme very much feeds into the narrative of Krispy Kreme being about generosity and gifting, which is why there is a focus across the business of selling boxes of doughnuts – in threes, sixes and dozens. Dunning says it is also much more cost effective for customers to buy this way as a dozen glazed doughnuts is half the cost of buying them singularly.
Tapping into generosity
The generosity theme runs into the ‘Acts of Joy’ initiative that is installed onto all tills in stores and gives the server the opportunity to make someone’s day by gifting them their doughnut purchase. This was undertaken 500,000 times in 2023.
Beyond the complexity of dealing with “living and breathing” fresh dough the business has a relatively straightforward model and a manageable inventory mix that involves a core range of 16 items that are supplemented every four or five weeks with limited time offers of seasonal doughnuts. “These keep the short-term interest. There is a clarity in our doughnuts and many claim there’s are fresh, but they are not,” he suggests.
Adding to the uncomplicated nature of the range and business model is the fact 35% of sales in the UK are for the classic glaze – and this can hit 50% in some overseas markets. With all those shiny, hot glazed doughnuts rolling off the production line at the Oxford Street store we will have to see whether this percentage notches up to match that in international territories.
