Krispy Kreme is one of the most popular names in the bakery industry, and if you are looking to invest in this industry, then this company must have popped into your head.
So are you looking to find out how much does a Krispy Kreme franchise owner make, how much is its profit earning potential, franchise failure rate, etc.?
Well, you have landed on the right page!
About Krispy Kreme
Krispy Kreme is an American Doughnut and Coffee shop chain that was founded by Vernon Rudolph in the year 1937 in Winston-Salem, North Carolina.
Vernon Rudolph started selling his doughnuts to local grocery stores, and by the early 40s and 50s, there was a small chain of family-owned stores that were selling Krispy Kreme doughnuts.
They started franchising in the 1950s, and in 2000, they officially went public as Krispy Kreme Doughnuts Inc. Ever since then, the company has expanded to more than 1700 locations across 31 countries in the world.
Krispy Kreme offers franchise opportunities to individuals who have a minimum net worth of $2,000,000 and minimum liquid capital of $350,000.
If you meet these basic financial requirements, then keep on reading to find out how much does a Krispy Kreme franchise owner make and other details.
((https://krispykreme.ca/about-us/history/))
Krispy Kreme Franchise Key Figures
| Franchise fee | $12,500 |
| Royalty fee | 4.5% |
| Marketing fee | 3.5% |
| Investment (mid-point) | $824,000 |
| Average sales | $3,400,000 |
| Minimum net worth | $2,000,000 |
| Minimum liquid capital | $350,000 |
How Much Does A Krispy Kreme Franchise Owner make?
The sales of any Krispy Kreme franchise location may vary based on a many factors, such as the type of franchise model, location, operating expenses, number of staff, etc.
Also, Krispy Kreme does not make any past or future financial representations of the performance of its franchises. However, we estimate that a Krispy Kreme franchise owner makes sales of $3.4 million a year on average.
To find out more accurate sales and revenue figures for Krispy Kreme, you will have to get in touch with the company itself.
How Much Does Krispy Kreme Employee Earn?
The pay for a Krispy Kreme employee may vary depending on their position, department, location, skills, experience level, etc.
However, according to Indeed, the average Krispy Kreme hourly pay ranges from approximately $8.90 per hour for someone working at an entry-level position as a Food Preparation Worker to $23.45 per hour for someone working at a Maintenance Specialist.
In yearly terms, the average Krispy Kreme pay ranges from $23,685 per year for the position of Mixer to $117,261 per year for the position of Human Resources Manager.
Pros & Cons Of Krispy Kreme Franchise
Pros Of Krispy Kreme Franchise
- Proven business model.
- Recognized Brand.
- No need for direct management.
- Opportunity to expand in new markets.
Cons Of Krispy Kreme Franchise
- 65 weeks of approval process.
- No territory protection.
- External competition.
- Does not offer financing.
Krispy Kreme Franchise Average Revenue & Profit
As mentioned earlier, there is no official statement or data shared by Krispy Kreme that confirms the average revenue and profit of the Krispy Kreme franchise.
However, we estimate that a Krispy Kreme franchise makes sales of approximately $3.4 million a year on average in 2020. The number is still less considering that in 2020 Pandemic affected the sales of Krispy Kreme.
In the previous year, it made an average yearly sales of $7.6 million. So this is the kind of revenue that you can expect to make from the Krispy Kreme franchise.
Now there was no information available on the profit figure as well. So we calculated the profit of Krispy Kreme from the information available in the FDD.
According to that, a Krispy Kreme franchise owner makes an average annual profit of $1,110,000 – $2,719,920.
Here’s how we calculated this figure:
| 2020 | 2019 | |
|---|---|---|
| Revenue | 3,400,000 | 7,636,631 |
| COGS | (850,000) | 1,909,158 |
| Rent | (182,000) | 182,000 (as per FDD) |
| Labor | (986,000) | 2,214,623 |
| Royalty + marketing fees | (272,000) | 610,930 (13% as per FDD) |
| Adjusted EBITDA | 1,110,000 | 2,719,920 |
| % margin | 33% | 36% |
Krispy Kreme Franchise Failure Rate
To find out the Krispy Kreme franchise failure rate let us look at the table below:
| Outlet type | Year | Outlets at the Start of the Year | Outlets at the End of the Year | Net Change |
|---|---|---|---|---|
| Franchised | 2018 | 218 | 205 | -13 |
| 2019 | 205 | 187 | -18 | |
| 2020 | 187 | 136 | -51 | |
| Company-Owned | 2018 | 120 | 145 | +25 |
| 2019 | 145 | 173 | +28 | |
| 2020 | 173 | 227 | +54 | |
| Total Outlets | 2018 | 338 | 350 | +12 |
| 2019 | 350 | 360 | +10 | |
| 2020 | 360 | 363 | +3 |
As we can see, over the last three years, Krispy Kreme has been growing but at a slow rate.
The growth comes from company-owned outlets majorly, and the franchise-owned stores have been constantly declining.
In fact, between 2019-2020, Krispy Kreme franchises closed at the rate of 23 units a year.
The reason for this could be that the franchises are not performing well or are not renewing their term. Both reasons seem concerning and indicate a bad sign.
Krispy Kreme Franchise Payback Period
To determine the Krispy Kreme franchise payback period let’s look at this table:
| AVERAGE INVESTMENT | $824,000 |
| AVERAGE REVENUE PER OWNER | $3,400,000 |
| AVERGAGE PROFIT PERCENTAGE | 33% |
| AVERGAGE PROFIT PER YEAR | $1,110,000 |
| AVERAGE PAYBACK PERIOD | 2 years |
PAYBACK PERIOD = TOTAL INVESTMENT / PROFIT PER YEAR
= 824000/1110000 = Approximately 2 Years based on median.
The average investment for a Krispy Kreme Franchise is $824,000.
With an average profit percentage of 33%, the average profit per year is $1,110,000.
This means that the average payback period for a Krispy Kreme Franchise is 2 years, and the total investment of $824,000 would be recouped within this period.
Facts About Krispy Kreme
- Vernon Rudolph borrowed the original glazed recipe from a French chef for his donuts.
- No one knows what makes Krispy Kreme donuts melt in your mouth, as the recipe is a secret and is kept locked in Winston-Salem in a vault.
- Vernon first started supplying donuts to local grocery stores. But the fragrance of freshly-baked donuts lured the passerby in, because of which Vernon had to build a window so that the customer could buy the doughnuts right from the streets.’
- It takes one hour to prepare the original glazed Krispy Kreme doughnut.
- The Krispy Kreme logo has never been changed and is referred to as the “Bowtie.”
- Krispy Kreme once made a doughnut worth $1,388 that took three days to make and went on sale in Selfridges, London.
- Leftover Krispy Kreme doughnuts are sent to feed animals, especially as pig fodder.
- Krispy Kreme has been around the corner for 80 years.
- The company prepares limited-edition treats during special occasions and festivals.
- Until 1963, the Krispy Kreme donuts were prepared by hand.
- The chain gives out free donuts on many occasions throughout the year, such as on draught Day, veteran’s Day, Halloween, etc.
((https://www.wideopeneats.com/krispy-kreme-doughnuts/))
What Is Krispy Kreme Best Known For?
Krispy Kreme is a popular multinational doughnut chain that is known for serving mouth-watering, soft, and delicious donuts, especially their original glazed doughnut.
No one knows what makes Krispy Kreme doughnuts so soft, and the recipe is kept as a top-secret. However, Krispy Kreme prepares its doughnuts fresh each time, and along with it, they are also known for serving coffee.
No one can match the taste of Krispy Kreme doughnuts, and if you haven’t been to Krispy Kreme yet, then here are the most popular doughnuts of Krispy Kreme that you must try:
- Original Glazed
- Glazed Chocolate Cake
- Chocolate Iced Glazed
- Chocolate Iced with Sprinkles
- Glazed Blueberry Cake
- Chocolate Iced with Custard
- Chocolate Iced Raspberry
Is Krispy Kreme Franchise Profitable?
Krispy Kreme is a high-investment franchise and high-investment ventures are usually expected to generate higher returns as well.
If we talk about the Krispy Kreme franchise then, it is definetly a profitable business with franchise owners making as much a million on average.
But is this enough to invest in this franchise? Are you willing to put $100 million upfront to earn $1 million yearly profit?
Also, during the past few years, Krispy Kreme hasn’t been giving consistent results and the company itself has even incurred loss.
Krispy Kreme Franchise Earning Potential
Since Krispy Kreme provides no official data on its sales and profit figure, we cannot say how much a Krispy Kreme franchise can potentially make.
We estimate a Krispy Kreme franchise owner makes between 1,110,000 – 2,719,920 a year on average.
But because of the increase in the closing rate of the Krispy Kreme franchise and external competition, we do not see a very high earning potential for this company.
Wrap Up
As we discussed above, Krispy Kreme is a doughnut and coffee shop chain in the USA, and it offers different types of franchise models for entrepreneurs to invest in.
However, buying a Krispy Kreme franchise is not an easy task. Their approval process is long and rigorous, and it might take upto 65 weeks to open your own Krispy Kreme outlet.
Additionally, you would have to take 15 days of classroom training and 2 months of onsite training, which seems like a lot.
Krispy Kreme is also an expensive franchise and requires you to put in anywhere between $440,500 – $1,207,500.
Although it makes a profit of 1,110,000 – 2,719,920 a year, the amount seems nothing compared to the investment you would have to repay.
Overall, we feel like there are better franchise opportunities in the bakery industry to invest in, such as Crumbl Cookies or Dunkin’ Donuts, etc.
Read: How Much Does A Domino’s Franchise Owner Make?Frequently Asked Questions
a 2-month onsite training as
FAQ
What is the royalty and marketing fees of Krispy Kreme franchise?
Krispy Kreme charges royalty and marketing fees of 4.5% of net sales and 3.5% of net sales, respectively.
What is the initial franchise fees of Krispy Kreme?
The intial franchise fees of Krispy Kreme is $12,500.
How many Krispy Kreme franchises are there?
Krispy Kreme has around 373 outlets in the US over 1,600 locations around the world.
Amit Gupta is the founder of DrFranchises – a digital marketing agency that helps brands rank better on Google Maps through local SEO strategies. Amit has over 11 years of experience in digital marketing, SEO, email marketing, and social media marketing. He’s also the owner of multiple franchises and has helped countless brands achieve success online. When he’s not working, Amit can be found playing with his dog.