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Krispy Kreme
Part 1: Introduction /Background Summary:
Michael R Hull, Krispy Kreme;
Bought in 1933 by Vernon Rudolph, he purchased the name, secret recipe and all company assets. Rudolph opened the main shop in Nashville, Tennessee in search of a larger market. Other family member moved to Nashville to help with the business and soon opened stores in Charleston, West Virginia and Atlanta, Georgia. After disappointing efforts in these locations, Rudolph quit the family business and moved to Winston-Salem, North Carolina with the secret recipe and the last $200 he had to his name. Rudolph set out and started an empire that lasted virtually unchanged until his death in 1973. In 1973 his partner became CEO from 1958 to 1974 Krispy Kreme went from 1 million dollars in profit to over 58 million. In 1976, Beatrice Foods bought Krispy Kreme and tried a multitude of things and profits quickly declined as consumers turned on the company. In 1985 Joseph McAleer bought Krispy Kreme for the sum of 22 million dollars in 9 years Krispy had lost over 36 million dollars over 62% decline in value.
Part II: Problem Identification:
Major problem associated with Beatrice foods is that they had strayed from the original recipe of success. Changing the recipe, changing the look customers reacted negatively and sales bottomed out. In 1985, there was a leveraged buy out from the Joseph McAleer group, with double-digit interest rates; it took many years to grow the bottom line. This was accomplished by company owed stores and expansion of off premises sales. Krispy sales rose to $117 in 4 years ...