Krispy Kreme Outlets to Be Sold
The Southern California franchisee for Krispy Kreme Doughnuts Inc. said Friday that it had put the operation up for sale.
Great Circle Family Foods, Krispy Kreme’s largest franchisee, opened its first Southern California store in La Habra in 1999 and now has 22 stores in the region. It has the rights to open 20 more.
The privately held company is selling because current market conditions afford Great Circle’s partners an opportune time to cash out all or part of their investment, Great Circle Chief Executive Richard Reinis said in an interview.
“We have partners who have been extremely patient, and we’ve poured every nickel of earnings back into the development of new stores,” he said. Great Circle has 1,300 employees in all.
He would not comment on the franchise’s selling price but said Great Circle had been in talks with several potential suitors, which he declined to identify.
“Interest in the company’s rights to develop the brand has been intense,” Great Circle said.
One possible buyer is Krispy Kreme itself. The Winston-Salem, N.C.-based company confirmed that it had been in talks with Great Circle about the sale but declined to elaborate or disclose any possible terms.
Southern California “is an important market for Krispy Kreme, both in terms of the business and the high profile of the market,” said Krispy Kreme spokeswoman Brooke Smith.
Krispy Kreme, with nearly 300 stores overall, has enjoyed tremendous growth in recent years.
The chain, known for its “original glazed” doughnuts, has a zealous legion of fans and a knack for generating free publicity to promote its brand.
The chain’s systemwide sales -- at company-owned stores and those of franchisees -- are expected to top $1 billion for the first time this year.
Now is a good time to sell, CEO Reinis said, because potential buyers have access to low-interest financing. Also, Krispy Kreme’s shares are trading near a 52-week high, which makes the stock an attractive currency should Krispy Kreme itself decide to buy the franchise, he said.
Shares closed Friday at $43.85, down $1.15, on the New York Stock Exchange.
Great Circle is being advised by CNL Advisory Services, an Orlando, Fla., investment company that specializes in the restaurant industry. Its president, Michael Shepardson, declined to comment.
Krispy Kreme would have to approve any sale by a franchisee, and the company has bought franchises in the past, the company said.
