Marketing Best Practices

How Krispy Kreme Doughnuts Found Its Sweet Spot

Simon Martin By Simon Martin March 9, 2017

“It’s like biting into a sugar-coated cloud” … “Purely angelic”. No matter how you spin it, sinking your teeth into a hot Original Glazed Krispy Kreme doughnut—fresh off the production line—is the very definition of a delectable culinary treat.

Sweet dreams are, surely, made of this.

But the Krispy Kreme dream is made of even more.

The company’s in-store viewing windows let customers see the production process first-hand, as they watch fresh hot doughnuts take a ride through the sugary glaze waterfall. They are handed 1950s-inspired Krispy Kreme paper bakers’ hats the moment they walk through the door, the scent of fresh coffee wafting through the air. It’s no surprise that the company has amassed a cult following: it sells more than 7.5 million doughnuts every day.

Krispy Kreme has nailed brand storytelling and experiential retail, in ways that are virtually unrivaled.

Yet while the Krispy Kreme customer experience is certainly among the most iconic and beloved in the quick service restaurant industry, there’s certainly more to tell. It’s the story of Vernon Rudolph—the architect behind it all—and how his Willy Wonka-like dream of launching a doughnut empire still influences and fuels the Krispy Kreme experience as we know it today.

A Simple Indulgence

Doughnuts in America have a disputed history. Many believe their origins can be traced back to the 17th-century, and the early Dutch settlements in Manhattan (then known as New Amsterdam). Enjoyed as a dessert, oliekoeks (oily cakes) were globs of sweetened dough, fried in hog fat, and more likely resembling ‘doughnut holes’ as we know them today.

How the modern doughnut, with its hole in the middle, came about, is quite a different story.

Legend has it that a New England ship captain, Hanson Gregory, claimed to have invented the ring-shaped doughnut. On a voyage aboard a lime-trading ship in 1847, and rather dissatisfied with the uncooked portion in the center of his fried dough cake, he used an empty pepper can to cut out the offending bits. The result was an evenly cooked doughnut-with-a-hole, which he loved. Returning home, he introduced his food innovation to his mother, who subsequently modified the recipe using spices including cinnamon and nutmeg, along with lemon rind, that her son had brought home from his voyage at sea. As a finishing touch, she served it with a heap of chopped hazelnuts in the center and logically called her interpretation of the sweet deep-fried cake a ‘doughnut’.

Doughnuts that line the racks of bakeries today—be they pink frosted with sprinkles or filled with raspberry jelly—can be traced back to Mrs. Gregory’s original recipe.

With the rise of industrialization in the late 19th and 20th centuries, traditional handmade products gave way to machine-manufactured goods—everything from clothing to books… and doughnuts, too. At the 1934 Chicago World’s Fair, the success of the automated doughnut machine led to doughnuts being labeled the “Hit Food of the Century of Progress.”

The doughnut’s popularity subsequently exploded. Budding entrepreneurs opened up shops from New York to Los Angeles and refined their recipes, in an effort to stand out from the crowd. But it was a kid from Kentucky who would come to define the ultimate doughnut experience, as we know it today.

The Doughnut King

Vernon Carver Rudolph was born in Marshall County, Kentucky, in June 1915. He was a well-rounded student with a penchant for both academics and athletics.

In 1933 his uncle, a farmer, had acquired a doughnut shop from a French chef, Joseph LeBeau, complete with equipment and ‘secret’ recipes. Among them, was the ‘Krispy Kreme.’ Shortly after graduating from high school, Vernon went to work for his uncle after years of working at his father’s general store.

But opening a business—any business—during the Great Depression was a hefty risk. Even though the doughnut was a relatively affordable small luxury, the shop failed to prosper in Kentucky, which had suffered a particularly sharp stab from the economic downturn. In the hope of attracting more foot traffic (and building a consistent customer base), Vernon and his uncle packed up shop and headed to Nashville, Tennessee. There they found an increased interest in doughnuts, but it made only a marginal difference—even as Vernon began personally making deliveries to local businesses and stores in his 1936 Pontiac.

Disappointed with their sales numbers, the two moved back to Kentucky to prevent any further losses. But Vernon’s ambition to build his very own doughnut empire persisted. Soon after, he acquired the rights to the secret Krispy Kreme doughnut recipe from his uncle to pursue a new business interest. Weeks later, he took his $200 life savings and hit the road. With two of his closest friends and the back of his Pontiac loaded with doughnut-making equipment, he set off in search of the ideal location to set up shop.

But reality soon hit hard, and Vernon had to face a harsh truth: big city real estate required heaps of cash upfront—something he and his friends just didn’t have. They persevered. They drove from town to town, from state to state, looking for the perfect location that was both affordable and could launch them into national conversations.

According to company historian, Louise Joyner, the trio was down to the last of their cash and pulled over to the side of the road to smoke a cigarette and plan their next move. Flipping the pack of Camel Cigarettes in his hand, Vernon noticed that the cigarettes were manufactured in Winston-Salem, North Carolina. With money and gas running out fast, the group made a bold final move and booked it to Winston-Salem without looking back.

With just $25 left to bootstrap their doughnut enterprise, the trio successfully secured rent on a factory space on Main Street in Old Salem, and immediately set up their doughnut production equipment. But with the remainder of their money having gone to their first month of rent, they found themselves in yet another predicament: there was no money left to purchase the actual doughnut ingredients. Flustered, a local grocer heard about their dilemma and offered to loan them their first order of flour, eggs, yeast, and sugar on credit. By the end of the week, the three were back in the business of mixing, frying, glazing, and selling fresh hot doughnuts.

Since Vernon had witnessed his uncle struggle with operating a retail doughnut storefront, he chose instead to focus all of his efforts on a wholesale enterprise. In the very same 1936 Pontiac that had brought them to Old Salem, he made daily deliveries of fresh doughnuts to local grocery stores and businesses, where hungry customers were already waiting.

But their small production facility was located on busy Main Street, and it was only a matter of time before hordes of curious passers-by were attracted by the sweet aroma, and followed their noses to the warehouse space, in search of hot fresh doughnuts right off the production line.

Hot Now

In the following months, hungry locals lined up along Main Street in hopes of grabbing a hot doughnut within minutes of being made, rather than buying from a store hours later.

To meet the unexpected demand from the surge of eager customers outside the entrance of the warehouse, Vernon made a critical decision. Rather than make the risky move of opening up a separate retail space, he cut a window in the factory wall and handed his customers hot doughnuts just seconds after they came off the line.

What an idea it was!

And it had an unintended result. In creating a clear view into the fascinating doughnut production process, Vernon had, quite literally, opened up a window—not only for the company to interact with customers outside, but also allow for customers to peer inside. Between the intoxicating aroma, the visual spectacle of the ‘doughnut machine’, and of course, the taste of hot glazed doughnuts, Vernon had created an entirely new multi-sensory retail experience.

Through word-of-mouth, news of the factory spread like wildfire, and soon became a must-see destination for tourists passing through the area. As the lines grew longer, Vernon continued to refine this unique take on the retail experience. Realizing that his clean, modern facility was a selling point, he continued to expand the viewable area to further immerse customers into the fascinating doughnut production process. To let passers-by know that hot doughnuts were fresh off the line and ready for purchase, Vernon installed the now-iconic ‘Hot Now!’ sign outside the factory.

Although Krispy Kreme continued to sell fresh doughnuts wholesale to grocery stores and local businesses, the unintended retail business boomed as interest in hot doughnuts and the Krispy Kreme ‘factory store’ experience continued to grow at an unprecedented rate.

Over the next three decades, Vernon expanded upon the original Krispy Kreme experience and built the company into a doughnut empire based on consistency, quality, and brand heritage. In effect, every store he opened during the following years was, in some way, a recreation of the original—the Main Street ‘factory store’ he opened with just $25 to his name, and ingredients borrowed from the local grocer.

During the 1950s in particular, the Krispy Kreme doughnut-making process progressed from a semi-automatic to a fully-automatic operation, with the introduction of a mechanized system for dough extruding, proofing (rising), cooking, and glazing. Although the design of the modern Krispy Kreme production process has been tweaked over the years, it’s still very much the same process on which the company was founded, and still celebrated today by millions around the world.

The original factory-inspired customer experience has become the cornerstone that defines the Krispy Kreme brand story. In fact, the company still refers to their doughnut-making facilities as ‘Krispy Kreme Factory Stores’, and in the 1980s, the layout of Krispy Kreme stores was optimized to make the doughnut production the defining spectacle of the Krispy Kreme experience. Call it guerrilla marketing or strongly reinforced brand storytelling: Krispy Kreme has risen by creating a memorable customer experience that helped define experiential retail before it became a buzzword.

From the moment the perfect dough ‘rings’ are created by the company’s proprietary air-pressurized extruder, and tossed into a river of perfectly-flowing vegetable fry oil, to the moment they pass through the legendary ‘waterfall’ of sugar glaze, Krispy Kreme’s multi-sensory retail experience, grounded firmly in a strong heritage story, is one that few—if any—can replicate. The brand has reached cult status over the years; new locations typically have customers lining up 36 hours in advance to be among the first to sink their teeth into hot doughnuts that melt in the mouth.

And in a world where other restaurants have to spend billions of dollars a year on advertising, Krispy Kreme has managed to do all of this through word-of-mouth and consistently positive customer experiences. The company requires all employees to undergo training at Krispy Kreme University, where they learn not only how to make doughnuts, but also how to be effective brand ambassadors and shining examples of customer service. It’s not uncommon to be handed a hot doughnut free-of-charge, straight off the production line, the minute you walk into a Krispy Kreme store.

Tempted to leave the store with a fresh dozen? Well, yes.

A Doughnut Empire

Vernon passed away in 1973, but his vision for Krispy Kreme—an invitation to step inside and remove all barriers between a customer and a product—is a vision that is still very much alive in the 1,000+ Krispy Kreme stores around the world today. His dream of building a doughnut empire really did come true.

From the wafting aroma of freshly-cooked doughnuts, to the immersive brand experience that puts hungry customers behind the scenes of an active doughnut production facility, Vernon’s story—like that of the rise of In-N-Out Burger—demonstrates that sometimes, to succeed in marketing and in business, the key is to focus on doing one thing only and doing it the best that you can.

When you next have the chance to sink your own teeth into one of those warm sugary clouds, and experience doughnut perfection, remember that you’re not only becoming a part of one of the best brand heritage stories of all time, you’re also confirming that, through hard work and perseverance, sweet dreams really do come true.


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