How Krispy Kreme's unique omnichannel experience set them up for future growth
ANZ CEO Andrew McGuigan talks to QSR Media about the chain’s latest growth iteration and opportunities seen in the dessert space.
Delivering an omnichannel experience has become a buzzword for chains, as consumers’ expectations evolve as a collective and inevitable reaction to COVID-19 restrictions.
For Krispy Kreme, this was already baked into their 84-year old business model, giving them the confidence to leap towards their next phase of growth.
“We are fortunate that this omnichannel business model that we run does not mean we’re overly exposed to one element of the market,” Andrew McGuigan, the chain’s CEO for Australia and New Zealand, told QSR Media in an exclusive interview.
McGuigan is referring to the chain’s “Hub-and-Spoke” distribution model, where Krispy Kreme’s makes doughnuts in its classic "Hot Light Theater Shops" and "Doughnut Factories" that function as centralized production "hubs."
The doughnuts are then delivered to "spokes," or points of access outside the company where customers can buy fresh doughnuts. In ANZ, these points include their brick-and-mortar stores along with commercial partners 7-Eleven, P&C, BP and Woolworths.
This, McGuigan said, also gives them the opportunity to think of omnichannel “in a more advanced way”, such as introducing the e-commerce journey not just into their retail channel, but also to their DFD (delivered fresh daily) channel with partners.
“It's [about] how we make sure the user journey through online, digital, e-commerce...marries up with the retail, the physical brick-and-mortar,” he shared.
Aside from improvements to their e-commerce, Krispy Kreme recently upgraded its website and plans to continue investing in improving its user experience to ensure easier transactions via delivery and click and collect. Manufacturing donuts in about 12 different locations, McGuigan said they are also thinking about evolving their demand planning and how their systems can “talk to each other” better.
McGuigan added the brand is seeing opportunities in “unlocking” regional areas for their next iteration of growth.
“Whether it's regional Victoria, maybe the mid North Coast [or] Far North Queensland, there's nice population hubs out there where our business model considers itself to be accessible because it is interlinked.”
Consistent execution across touch points
As omnichannel is expected to thrive, McGuigan said the reality of ensuring a brand is accessible in a modern way is critical and stressed the importance of consistent execution across touch points.
“We see people shopping across all touchpoints and therefore, it's critical when you execute, the way the brand turns up [and] the way the product turns up needs to be at a high standard. Otherwise, it will erode,” he said. “You need to maintain that core consistency in what truly matters to your brand and your product to do omnichannel well.”
Speaking specifically about their brand, McGuigan said they are mindful of how and the extent of their growth, citing a “access-to-experience” equation.
“You don't want to become available everywhere, to the point that you erode what's truly special about Krispy Kreme,” he said. “It's critical that we're just not within arm's reach like an FMCG brand or a can of Coke.”
The sweet spot for them, he added, is in that balance.
“If you only open DFD cabinets, it gets too far away from what really makes Krispy Kreme amazing. Equally, if you only build retail shelves, you run out of money because there's only so many factories you need in any geography,” he explained.
“It's this idea around scarcity, but you can't be so scarce you can't be found. When we look at omnichannel, we don't need to be in every single grocer or retailer out there.”
The chain currently has over 30 physical stores in Australia, but has over 1,000 points of access through its retail partners. The business’ strategic partnership with 7-Eleven, notably, is approaching a decade.
“The fact that we are not with everyone they [the DFD partners] certainly feel the love, they suddenly understand what's important for the brand and how they execute it is so important.”
On the product development side, McGuigan says they are exploring opportunities to capitalise on sharing and celebration-related occasions whilst remaining “unapologetic indulgence.” Innovation around personalisation is also being considered.
“That could lend itself to different daypart solutions. That could be a bit of permissibility so mindful of the right ingredients,” he said.
Earlier, the chain recently incentivised its some 1,000 staff in Australia and New Zealand to get their COVID-19 vaccines by offering three hours of paid leave. McGuigan expects ensuring both staff and customers are safe will be an evolving space.
Despite lingering challenges, he is positive that the industry will recover.
“It is not going to go back to what it was. But there's a lot of positivity we should be looking ahead of once we get over this phase of the pandemic.”
“It's been around 84 years, you know. We have to be around another 84 more,” he said.