Krispy Benchmarking

Krispy Kreme Benchmarking

Krispy Kreme is a leading branded retailer and wholesaler of high-quality doughnuts. The Company's principal business, which began in 1937, is owning and franchising Krispy Kreme doughnut stores where over 20 varieties of doughnuts, including the Company's Hot Original GlazedÐ'™, are made, sold and distributed together with complementary products, and where a broad array of coffees and other beverages are offered.

As of July 29, 2007, there were 411 Krispy Kreme stores operated system wide in the United States, Australia, Canada, Hong Kong, Indonesia, Japan, Kuwait, Mexico, the Philippines, South Korea, the United Arab Emirates and the United Kingdom, of which 111 were owned by the Company and 300 were owned by franchisees. Of the 411 total stores, there were 299 factory stores and 112 satellites; 263 stores were located in the United States and 148 were located in other countries.

Factory stores (stores which contain a doughnut-making production line) typically support multiple sales channels to more fully utilize production capacity and reach additional consumer segments. These sales channels are comprised of on-premises sales (principally sales to customers visiting stores) and off-premises sales (sales to convenience stores, grocery stores/mass merchants and other food service and institutional accounts). Satellite stores consist primarily of the hot shop, fresh shop and kiosk formats. Hot shops contain heating technology that allows customers to have a hot doughnut experience throughout the day. Fresh shops and free-standing kiosk locations do not contain doughnut heating technology.

The Company generates revenues from three distinct sources: stores operated by the Company, referred to as Company Stores; franchise fees and royalties from franchise stores, referred to as Franchise; and a vertically integrated supply chain, referred to as KK Supply Chain.