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coffee & donuts = StarKreme?

OK. I have to give it up to myself. This is brilliant--pure genius actually(such moments are very rare for me).

Starbucks is in trouble. First of all, Starbucks overexpanded. Second, the money people used to spend on latte's and cappucino's is now going in the gas tank. So now we have 600 stores being closed and almost 12,000 people out of work.

Krispy Kreme's problems go back a few years. They also overexpanded. It was a bad idea to put their donuts in every grocery and convenience store but Starbucks didn't learn from KK's mistake and now you can find their products everywhere too. Krispy Kreme has also closed a lot of stores(thank goodness the one nearest me in OKC is still open) but their stock is still below $5. In fact a $20 bill will almost buy you a stock of both Starbucks and Krispy Kreme.

So since I don't want either to go out of business--I love hot glazed donuts(and KK's are the best) and good coffee(ah, Caffe Verona) lets just combine the 2 companies. A merger! Isn't that a great idea? The best coffee and donuts in one location--look out Dunkin' Donuts. Just one thing.....since I thought of this and I don't want to spend $5 for a cup of coffee and a donut, I get to be the quality control taste tester.

See, I told you this was brilliant.

Posted by Steve Mangus on 07/03/2008 08:45 AM

Comments (24)

okc, krispy kreme, starbucks

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24 Comments on coffee & donuts = StarKreme?

JUL

2008

Steve - you have succeeded in making my stomach growl . . . I live where there are neither - HELP!

Sorry about that Susan but it's worth a trip to the states for both. Look on the bright side though--your cholesterol will be better and you'll not put on about 20lbs.

Steve:

You are making me feel pretty smart on this July 4th. eve.

I was one of the subscribers to the theory of buying KK low and selling high. I sold my stock at $70/share. Can you believe that? Plus, I never bought into the Starbucks hype. My dislike of coffee probably helped my investment strategy. Hence, I'm in the positive with regards to those two companies.

I'm with you totally on that merger. Let's use our profit share and buy a StarKreme franchise.

Thanks for sharing!

I am sitting getting hungry all because of you! Does make sense but question, is Dunkin Donuts dowsizing?

David, I'm in. Why has no one else thought of this? Makes more sense than Blockbuster and Circuit City! My hat's off to you for being smart enough to sell KK when you did. I did not have any money in either at the time because everything was in my 401K. Lots of people got burned.

Dick, I don't think Dunkin' Donuts is downsizing--I think they are doing well with their coffee if I remember correctly. Personally, I still like KK's donuts better, especially the hot glazed ones.

A one stop trip to go straight to the hips...just what I need! INteresting analogy. When Krispy Kremes came to my area there was a line of traffic that backed up onto the Interstate. In fact they had to hire Sheriff's Deputies to manage it.

You are right, they over expanded and lost their appeal. The "HOT & FRESH" was the appeal, not a donut at every outlet.

Well laid out. You'll think Startbucks would have learned from the mistakes of KK. I guess they thought it was a different era and people are more sophisticated now. I have not been a fan of Starbucks, but, I wish them all the best.

Kristal...same here in Oklahoma City. I hate to admit this but my kids and I camped out all night when KK opened here so we could be one of the very first customers.

You are a true marketer! I think you have thought this out on every level, and I have no recourse to say anything but..."Count me in!"

Jim.....you David and me, that's 3. Who else wants in?

Hi Steve,

I like your idea. But instead of calling it StarKreme, how about KrispyBucks? The reason I suggest that is because it kind of paints a mental picture of getting ‘burned’ with how much 'money' they both charge. (ha-ha)

Okay, okay...that was a pretty bad attempt at humor.

Believe it or not Michael, I had actually considered KrispyBucks.

Steve, Yes, you are brilliant ! Any chance you would consider me as your assistant ? Have a great 4Th !

Steve:

We can name the holding company "KrispyBucks, LLC". That should get Michael on board.

$5 coffee was never appealing to me. I'm not a big donut fan either. They needed to over expand to get their smell under your nose. Once that happens, you're hooked.

Yes David I think that will get Michael on board and Bill, I'm sure we will need a good assistant too. I'm lovin' it!

$5 coffee was never appealing to me either, that's why I get to be the taste tester. Seriously, I only by the bagged caffe Verona, grind it at home and brew it with my french press. That way I get great coffee at a much lower price.

Okay...I'm in too.

: )

Can I be your Canadian connection? Tim Hortons needs competition up here!

Susan, you can definitely be my Canadian connection. Welcome aboard!

JUL

2008

Good idea Steve. Krispy Kream's problem wasnt over just expansion. They got slammed by the Atkins diet fad and the CNBC effect. I was a shareholder that took a huge hit on KKD. They way KKD expanded was thru franchising groups of them to the same owners. These master franchisors has to open or franchise out a quota of stores in thier territory within a set amount of time. I was actually considering a franchise.

However Atkins came along and changed the perception of the country overnight. Krispy Kreme donuts were evil and the root of every American's weight problem according to the news media. CNBC ranted almost daily how much Atkins was affecting companies like KKD, and the CNBC effect took over and the shares plumeted.

Starbucks was a fairy tale story defying the trends and market. Im still heavily invested into SBUX. They seemed recession proof. The were a household name. Products sold in thier stores and supermarkets. However we could see thier cracks showing thru years ago. First the prices of coffee increased along with the price of labor, SBUX finally had to raise thier prices. Remember the hoopla in the news when a Venti coffee was going to cost over $4? With the increased fuel costs, thier products increased accordingly and they had no choice despite a tighter spending consumer. Unfortunately Starbucks coffee is not a necessary commidity like gas, and they are taking a hit.

I know these are consumer items but I classify them as non essential consumer goods, or luxury items. I put them into my stock watch groups with the luxury retailers such as Saks, Tiffany, Neimans, Williams Sonoma, etc. When consumers cut back on spending, these are the companies I expect to get hurt.

Good points Mike. I remember the Atkins thing all too well and the CNBC effect is very real. I don't know about the luxury retailers such as Neimans, Tiffany, etc. -- people that have that much money will still have money. The ones I expect to see get hit are the restaurants--Cheesecake Factory, Ruby Tuesday, Darden to name a few. McDonalds, Yum, Burger King should be ok. What do you think? I hope your SBUX comes back, I'm in the same position with Coldwater Creek. Have a great 4th of July.

Hi Steve... I am going to be the voice of dissent here. First, I will disclose that I prefer Dunkin Donuts for both Donuts and Coffee over KK or Starbucks. Now that you know that, I will offer that I believe the idea of combining two companies with flawed business models or that are financially struggling always sounds good on the surface, but never seems to deliver the financial improvements that those who craft these deals think they will. The recent proposed takeover of Circuit City by Blockbuster was a great example of two companies whose business models did not eveolve well over time and their proposed link up would have done nothing to correct that problem. Thankfully Blockbuster came to realize that BEFORE they moved forward. These sort of business combinations do nothing to fix business models that have failed to adapt to changing market conditions.

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