Krispy Kreme rebuilt market-by-market after the recession

Krispy Kreme expanded rapidly after going public in 2000, but the Great Recession and the popularity of low-carb diets crushed the chain. Almost all of its Chicago-area stores closed, leaving a single corporate-run shop that mostly served retail clients like Walmart.

In 2015 Krispy Kreme announced it wanted back into Chicago, and in August 2016 the franchisee Chicagoland Restaurants broke ground on a store in Homewood, the first of eight planned shops. Franchisee Carlos Larcada said he would focus on suburban factory stores before moving into the city.

The resume was built on the brand's signature strengths: the hot light, a drive-thru that drove about half of business, and value. A dozen original glazed doughnuts cost around $9 while upscale competitors charged up to $4 per doughnut and over $30 a dozen.

The market had changed, though, with new players like Glazed & Infused, Stan's and Doughnut Vault. Larcada's answer was to compete on value and freshness, noting no one else served them hot.

Krispy Kreme re-entered Chicago with eight planned shops, with drive-thru providing about 50% of business and value pricing against $4-a-doughnut rivals.

The chain had retreated from the market but kept a corporate store in Chicagoland.

The franchisee focused on suburban factory stores before city locations.

Drive-thru accounted for about 50% of business, a key model advantage.

A dozen glazed doughnuts cost around $9 versus $30-plus at upscale rivals.

The signature hot light gave a freshness edge no competitor matched.

A retreating chain can come back by playing its own strength; Krispy Kreme returned on hot, fresh product and value rather than trying to match the fast-casual doughnut boom.

Krispy Kreme's Chicago re-entry was measured and franchise-led, with eight planned shops beginning in 2016. It came back to a market full of fast-casual doughnut shops and chose to compete on value and the hot, fresh product the brand was built on. The comeback ran alongside a turnaround that slimmed the chain and re-emphasised its core factory-store economics.