New CEO's Hole Story
In his 23 years in the packaged-food business, Daryl Brewster has helped turn around his share of troubled brands: The 49-year-old marketer was part of the team that revived Campbell's Soup (CPB) in the 1980s and, more recently, the Planters division for Kraft (KFT). But he may now face his biggest challenge yet as the new CEO of Krispy Kreme Doughnuts (KKD), which is still trying to recover from an accounting scandal and ill-fated expansion under prior management.
Krispy Kreme previously announced it would restate earnings back to before the company's public offering in 2000, reducing previously reported profits by $25 million. The company still faces an Apr. 30 deadline to provide financial results for its fiscal year ended Jan. 30, 2005.
But clearly, Wall Street took Brewster's appointment as a sign the company is back on track: Krispy Kreme's shares soared 21%, to $7.71, on Mar. 7, following news of Brewster's appointment (see BW Online, 3/7/06, "Can Krispy Kreme Rise Again?").
BusinessWeek's Atlanta bureau chief, Dean Foust, spoke to Brewster by phone on Mar. 8. Edited excerpts of their conversation follow:
So why did you take the Krispy Kreme job?
What appealed to me was the strength of the brand. This is truly a wonderful brand that brings a smile on everyone's face. The second [appeal] was the people I've met at Krispy Kreme -- the employees and the franchisees.
What was the pitch you made to Krispy Kreme's board as to why you were the best person for the CEO job?
What I thought I could bring were the skills in marketing and [analyzing] consumer insights that I've developed in a quarter-century in the food business. I had experience in revitalizing [some of] the Nabisco brands -- turning around Planters and the specialty nuts -- which was similar to the work I had done with Campbell's Soup in the 1970s. I also had international experience.
So what's your game plan going forward?
[Laughs]. This is Day 2, so I'm still trying to immerse myself in the business. But this is not a Johnny-Come-Lately [business]. When I look at per-capita sales, I see a lot of room for growth. [But] we may need to refine the model or the menu.
Dunkin Donuts has enjoyed a lot of success by emphasizing coffee sales and adding a Togo's [sandwich] counter, so they remain busy at lunch and even dinner. Any plans to emulate that model?
I do think there may be some models out there that we can build on and learn from.
What's your assessment of the company's relationship with the franchisees?
I've already spoken to the franchisees. They were very welcoming. We had a very positive call. We know there are some challenges out there. But there were a number of thoughts and ideas that surfaced. We're getting a lot of good ideas that we hope to execute in the field.
What's the status of the reconciliation of the past accounting?
We've announced as a company we will file our fiscal 2005 10-K by the end of April. All indications are that that's progressing.
Some critics think Krispy Kreme overexpanded and, in the process, lost its cult following. Was that a problem, or do you think Krispy Kreme can be as ubiquitous as, say, Coca-Cola (KO)?
I think this brand has substantial [potential] to be a mass-appeal product. The international appeal of this brand is very high. There are opportunities to build out our per-capitas in the U.S. as well. It's all about making sure we refine the model and are doing a great job of marketing this.