Restructuring / Turnaround Strategies Case Study

Krispy Kreme Doughnuts Inc : Turning the Turnaround Strategies Around?

Abstract:
Since its inception in 1933 as a small doughnuts store in the US, Krispy Kreme has transformed into a large chain of 420 stores worldwide by the early 21 st century. However, the low-carbohydrate craze in the US coupled with the company's overdependence on doughnuts led to its first quarterly loss in May 2004 and its shares declined by 29.2% to $22.51. Further, many of its franchisees went bankrupt and the company was forced to re-acquire them. However, the shareholders alleged that the company had misreported its profits and had also failed to issue a profit warning when it knew that its prediction for the quarter earnings would fall short. This was followed by a Securities and Exchange Commission (SEC) enquiry in July 2004. Under such circumstances, the Chief Executive Officer, Scott Livengood, stepped down in January 2005 and Stephen Cooper, a renowned turnaround specialist, was appointed to turn the company around and refurbish its declining image.

Pedagogical Objectives:

• To highlight the troubled times at Krispy Kreme and the turnaround strategies initiated by Scott Livengood
• To discuss whether Stephen Cooper along with Scott Livengood revive the sagging fortunes of the American doughnut icon.

Keywords : Turnaround strategies; Reasons for business failure; Stephen Cooper; Scott Livengood; Troubled times at Krispy Kreme; Carver Rudolph; Restructuring / Turnaround Strategies Case Study; Low carbohydrate craze in US; Accounting controversies; Securities and Exchange Commission enquiry in Krispy Kreme; Warehouse management; Acquisitions and partnerships; Restaurants and cafes business in US; Restructuring strategies; Cost cutting strategies; Expansion through franchisee