Krispy Kreme, The Company and Founding History
With Jim Morgan, Board Chair
By Sheila Cottringer
           
An investment banker and doughnuts may seem like a very unlikely match. But when Krispy Kreme realized they needed someone capable of making the changes needed for a turnaround, they called on the expertise of an experienced turn around expert, Jim Morgan. Known for his turn around success at Interstate/Johnson Lane, Inc. Jim led the troubled investment bank in 1990 to a profitable one that sold at a premium to Wachovia in 1999. Jim's credibility and history of accomplishments made him the right man to bring success back to one of North Carolina's sweetest businesses.
 
Vernon Randolph purchased a secret yeast-raised doughnut recipe from a French chef from New Orleans and wanted to launch his own company. He was searching for the right place to locate as he began thinking about the move. Vernon pulled out a cigarette and stared at the pack where he noticed Camel cigarettes were manufactured in Winston-Salem. If Camel could make it in Winston-Salem, North Carolina then it might be a great place for his business. Vernon rented a building in Old Salem and began selling Krispy Kreme doughnuts on July 13, 1937 to local grocery stores. People began passing by the shop asking if they could buy hot doughnuts so he cut a hole in the wall and began selling the Hot Original Glazed doughnuts to his customers.
 
As most good companies do, Krispy Kreme grew to a chain of stores that were primarily family owned. The doughnuts were made from scratch but were not consistent. The next step was to build their mix plant so they could distribute the donut mix to each store. They eventually built their own doughnut making equipment and continued growing throughout the southeast region.
 
Vernon died in 1973 and the business was sold to Beatrice Food Company in 1976. The company continued to expand and by 1982, some of the early franchisees bought the company back from Beatrice Food Company.
 
Trouble began in 2000 when the company went public at $29 a share. Shares rose to nearly $50 a share in 2003 but unmanaged, rapid growth and a multitude of lawsuits have caused the current share price to plummet to less than $4 per share. These core problems resulted in an erosion of relationships and profits according to Jim.
 
Jim likened the experience to the lyrics of a country song …"It took a heck of a man to steal my woman but it sure didn't take him long." The fall of Krispy Kreme happened swiftly. But the story's not over yet.
 
Interim management was hired to do a tough job. They were not hired to create a warm and fuzzy environment but to move Krispy Kreme forward. There have been lay offs and reorganization. It is not easy but Jim told Charlotte Rotary Club members "Yes, there is a future for Krispy Kreme." Krispy Kreme continues to expand their business and have opened stores internationally.
 
The company still holds the honor of being one of the best brands in the country and the company artifacts have been donated to the Smithsonian Institution's National Museum of American History.
 
Krispy Kreme truly generates memories. Whether it is the childhood memory of a warm Krispy Kreme after school, sharing a dozen at the office or remembering those long lines before a new store opened - most of us have Krispy Kreme memories. How about that dream of a just baked Krispy Kreme when you are trying to lose that last 10 pounds? Both Jim and members of the club shared some of their fondest Krispy Kreme experiences.
 
Jim shared his belief that it is not the material possessions we give our children but the memories we create with them. "That is our legacy," he told us.
 
So what is Krispy Kreme? It is not a name. It is not a building. It is not a doughnut. "It's a company with a heart," Jim conveyed. Although there has been lots of bad press surrounding the plight of Krispy Kreme, it has not been the people who made the poor decisions that have suffered. Jim disclosed that it is the people who have had to make difficult decisions about people they have worked beside for years. Who stays and who goes? It is the employee who has worked for five CFOs in a few short years and it is the great group of people who continue to work for and believe in Krispy Kreme's mission to make memories. Krispy Kreme is a company of people who happen to make doughnuts.
What can we as Rotarians learn from Krispy Kreme's experiences? We can learn to make sure we are not complacent when things are going well. Stay positive but play devil's advocate at the same time. Manage growth. Take care of the people who work for you. And most of all….make some memories.
       
Head Table: Floyd Davis, Dave Adams, Luther Moore, Frank Martin, Herb Harriss, Alan Adler;
Invocation: Jerri Haigler;
Visitors & Guests: John Nicolay; Health & Happiness: Tom Hutchins; Song: Gregg Walker; Piano: Thomas Moore

• Welcome Melissa Swanson, who was introduced to the club by sponsor Tim Newman. Melissa has owned Occasions Catering and Event Planning for nine years and is very active in the community. Contact Melissa at Melissa@occasionscater.com or 704-333-1060.
      
• Leland Park is recovering from last week's back surgery and hopes to be back at Rotary soon; Leroy Mayne has successfully climbed Mt. Kilimanjaro. Leroy will be retiring from the BSA in January and the trip was an early retirement present; Tom Hodges has been elected to the Board of Samaritan's Purse; Suji Kim (last year's exchange student) will be inducted into the National Honor Society at Charlotte Country Day; Ken Harris has resigned from the club due to health issues. Ken's son called this week to say how much Rotary meant to Ken and would like everyone to remember him in a big ole "Health & Happiness Moment."
 
• Tony Zeiss was the keynote speaker at the Latin Chamber meeting; Charlotte City Council At-Large candidates John Lassiter and Edwin Peacock were highlighted in the Observer; Carlos Sanchez defended AT&T's position to stop publishing residential White Pages; Tom Bartholomy contributed to an article on reputable credit counselors; Ronnie Bryant asked the surrounding region for a little economic development cooperation with the dispute between Bruton Smith and the city of Concord.
  
• Sorry to have omitted from the perfect attendance list: Ronnie Pruett and Jerry Walters.
 
• Rotary Foundation Banquet will be November 8 at the Sheraton Airport Hotel. See Sandy to purchase your tickets: $36
 
THINGS TO REMEMBER
 
• Host Dinners:
-DATE October 18 HOST Katie Tyler GUESTS Alan Barnhardt, Mark Norman, Bill Stegelmeyer, Gene Marx, Tom Hutchins, Gail Norman
-DATE October 27 HOST David Anderson GUESTS Meg McElwain, Warren Kean (need 4 more couples)
 
• Trip to Asheboro Zoo: DATE October 20 CONTACT Chris Kemper (704-943-2113) TICKETS are free to first 4 or 5 families
 
• EXCELLENCE IN LEADERSHIP AWARD will be presented November 27, 2007. Guidelines for the nomination process are posted here.  Nominations are to be received by November 5th. Questions may be directed to Phil Van Hoy or Sandy Osborne.
 
• Top-of-the-Week Rotary will have their auction and costume ball Friday, October 26, 6:30 pm at Byron's South End. To purchase tickets ($35) contact Joan Ward, 704-387-7045.

The Classification and Membership Committee recommend and the Directors approve for consideration for all members, the following NEW MEMBERS. Should you question the eligibility of any nominee, please call the Rotary Office by October 22. You will be contacted by a member of the Board. Otherwise, no reply is necessary and election will proceed according to our bylaws.