At the turn of the millennium, Krispy Kreme was the brand on everyone's lips. At the time it went public, driven by word-of-mouth, it gained an almost cult-like following and growth was rapid.
But succumbing to the pitfalls of expansion and the low-carb diet craze, its stock took a hit and it closed outlets. Fast-forward to 2011. Krispy Kreme today enjoys a respectable place in the fast-food landscape as an occasional treat, grounded in love for the brand throughout its 649 stores worldwide.
The past six months have been a more recent period of change for the Winston-Salem, N.C.-based company. Since September it has recruited a new CMO -- its first -- and hired a new agency of record -- the first in several years -- after an agency consolidation. Indeed, just a couple months after his hire, Dwayne Chambers, senior VP-CMO, recruited independent shop Barkley to handle media and marketing duties.
"I have experience with them, so I know how they work," said Mr. Chambers, 45. "We're not flashy. A lot of agencies are flashy, and that's not my experience with Barkley. They're about the same things we are."
But what it lacks in flash, Krispy Kreme makes up for in business complexity, with its many store types, Mr. Chambers said.
To get up to speed on the inner workings of the company, which spent only $1.2 million on measured media in 2010, according to Kantar Media, Mr. Chambers immersed himself in the brand. A veteran of Fuddrucker's, Noodles & Co., Red Robin Gourmet Burgers and Sonic Drive-in, where he'd held senior-marketing roles, he spent time with franchisees, and even took a doughnut-making class the company offers called "Doughnuts Made Easy." He's put many employees, particularly those in marketing, through the class.
5 TIPS1. Connect to individuals' feelings.
2. Why people act is more important than who or how.
3. Keep it simple.
4. Focus on differentiation.
5. Let the "brand" make the decision.
Mr. Chambers has ambitious goals for the brand: "The brand is so much bigger than who we are from a business standpoint. We need to make sure we manage that well, and that we don't try to grow too fast, that we have the right pace," he said.
Ad Age caught up with Mr. Chambers to discuss how the company is leveraging word-of-mouth today; why he plans to spend even less on marketing; the ways social media trumps TV; and how he plans to entice people to eat the calorie-packed treats.
Ad Age: In the early 2000s, the company went public, growth was enormous and the company relied largely on word-of-mouth to market itself. Where does word-of-mouth currently factor in?
Mr. Chambers: What was word-of-mouth in 2000 has really become social media today. If we have 1,000 people who love your brand in 2000, they could tell two people who could tell two people who could tell two people. Today, if you have 1,000 who love your brand, they could immediately tell 100,000 people who could tell 100,000. We're in the fortunate position to be a brand that people love. It will play more of a part now. The ability for us to connect with our team members and guests in the store is important. We're going to continue to spend as much as 50% of time and effort internally turning every team member we have into a brand marketer.
Ad Age: Also in the early 2000s the company started its global expansion. Where are you globally now and are you still expanding?
Mr. Chambers: We're definitely continuing, from a global standpoint, to expand. We have nearly 650 stores in 21 countries. Almost two-thirds of those are international. It's interesting to watch the expansion internationally, because there are some components that are much like what people saw here in that there's this incredible excitement. But it's not just about something being new -- there's definitely some excitement about Americana, and Krispy Kreme has a very Americana image that people grasp onto like they do Coke and Disney. For example, in Thailand we have one store, and the waits are generally at least 30 minutes to an hour. We had to limit people to two dozen doughnuts each.
Ad Age: How will you make calorie-conscious consumers embrace the more-indulgent treats again?
Mr. Chambers: Ultimately our message has continued to be that we don't expect people to be in Krispy Kreme every day. What we've heard from our guests is that when they come to Krispy Kreme, it is a treat for them, and they understand that. But we're also offering up and testing a few things to see if there are other items our guests want to engage in. We just recently in our Philadelphia store started offering some alternative items -- yogurt, oatmeal, Naked juices, soy milk. We haven't seen the final results, but they seem to be accepted by our team and our guests.
Ad Age: Where do you think Krispy Kreme fits into the competitive landscape ?
Mr. Chambers: It probably depends more on the person's occasion than it does our trying to push ourselves into a specific category. It could be an on-the-run breakfast occasion. Could just be "I need a cup of coffee." In the end, a lot of times it's about sharing. We sell the vast majority of our doughnuts by the dozen -- they're sharing those with other people. Internationally, we see it as a time for people to relax, particularly in our Asian markets, where our biggest strength is not at breakfast, but in the afternoon and evening.
Ad Age: What are your expectations from Barkley?
Mr. Chambers: Expectation starts with an immersion in the brand. I have most of the people that are going to be working on our business taking the doughnut class. Then they'll have a series of operational readiness, like working in stores. I have them from an immersion standpoint working with my senior leadership and CEO to understand the vision of the brand. My true expectation is that they are a business partner.
Ad Age: Will there be an increase in ad spending?
Mr. Chambers: There will be a substantial change in that there will be less. Given our size and the breadth of the markets that we're in, there are some media vehicles that don't make good sense. You look at TV as an example, and there are some markets where that does make sense, and we've done some TV historically. But the media that we'll look at will be advantageous to more people, in more markets over a broader scope. I could do something on Facebook and reach our 3 million qualified buyers in a second. The social-media piece crosses over not just boundaries by town and by state but by international boundaries. Since we're in 21 countries, the things that I can do with social media can affect everyone positively in the world.
We'll be changing the things we'll focus our attention on. There will definitely be campaigns, but there's not going to be a new brand campaign. The most noticeable thing will be more continuity in everything that we're doing.
Ad Age: What's your favorite flavor and why?
Mr. Chambers: My favorite flavor before was the glazed doughnut. However, I set about my goal of trying everything we offer, and I have become hooked on blueberry-cake doughnuts.