It never ceases to amaze one just how tone-deaf big companies can be. Smart managers at Krispy-Kreme would have been all over this: looking to include this guy in ads, touting the way Krispy Kreme is helping one hard working student pay for college, living the American Dream, etc., etc. The good-will alone would have been something you couldn't buy if you tried.
Instead, they totally screwed the pooch and hurt their brand, their customers, and the hard working college kid aspiring for the American Dream. Way to go, Krispy Kreme.
You know normally I would agree with this sentiment, but we're talking about food that's being shipped in unsealed boxes.
I can totally see KK's side of this problem. It's sad to say in the scope of modern society, but how can you trust that this kid is actually selling you legitimate (and, without getting off track, unadulterated) Krispy Kreme donuts when he pulls up in your town?
What damage would this do to the brand if the person turned out to be a bad actor? If you were the CEO of Krispy Kreme, would you err on the side of caution and stop something before it gets out of hand?
A good friend of mine is a restaurant owner and he has a similar gripe about GrubHub and delivery services of this ilk. They bring the food cold, late, and mangled and now the restaurant's reputation is damaged instead of blaming GrubHub for how it was treated in transit.
It would be cool if restaurants could take a picture of the food as it goes out and send it to the consumer. "Hey your food just went out. Look how good it is!" Then when the delivery driver crushes it with something they can take the heat.
What damage would this do to the brand if the person turned out to be a bad actor? If you were the CEO of Krispy Kreme, would you err on the side of caution and stop something before it gets out of hand?
Fair point, but people already trust strangers to deliver their food by using GrubHub, Postmates, Uber Eats, etc.
Anyway, maybe the "right thing to do" for KK was not to just turn a blind eye and ignore the whole thing, but one can't help but suspect that they could have found a better way to deal with this, that would have been more of a "win-win". Worst case, buy the kid off behind the scenes, pay him to appear in an ad or two, and then quietly shut down his service. Surely they could have some up with something that didn't portray this "$BIGCORP uses it's army of lawyers to smash the little guy" pattern...
To me, using the kid in any kind of publicity is basically hanging a banner that says "you too can make money cross-shipping our product!", which is probably not what KK corporate wants. In my view using the big hammer was necessary to stop it before it got out of control.
Sure, it's brand-damaging as well, but we all have short memories these days when it comes to the Global TCP/IP Outrage Generator.
It probably would piss off the franchisees too. They're the ones that paid big money for exclusive sales territories and (contractually) don't want those boundaries crossed by others.
this insoluble argument is between those who see opportunity and those who see risk, we love and admire those who see opportunity and we dislike those who see risk, until that risk becomes active, in which case we punish those who did not guard against it adequately.
Can't have it both ways I guess, although I am probably most often on the side of those who see opportunity that tendency has come back to bite me at times.
Franchisees would be happy to increase sales by having someone help them widen their territory, which seems to be what actually happened here:
> He’d established a friendly relationship with Mary Paredes, the manager of the Krispy Kreme in Clive, Iowa, who admired his entrepreneurial spirit and would have the doughnuts ready when he arrived
Hell yes, a guy who buys 100 boxes off you every time he shows up is a guy you want to work with.
The issue is that this is obviously not controlled by KK, including when it comes to using their trademarks.
As of now, there are no franchised stores in the area. A local store would sell for a non-inflated price and have a better product (Krispy Kreme donuts are generally terrible, but if you get them fresh off the line, they're kind of okay).
Why would you get a glazed ring when you have so many better options at ye olde neighborhood donut shoppe. Old fashioned, twisted, jelly filled, bear claw, etc etc. Yum.
I'm from Dayton, OH.. in Dayton there's Stan's donut a hole in the wall and Bill's donut a not-so-hole-but-locally-owned-24-hour-shop that have the best donuts ever.
I can't stand KK's, Tim Horton's, or Grocery store donuts. They're all horrible. I'm in utah now, and around 2200/state street in Salt lake has an amazing donut shop as well...
All hole in the walls, mom/pop shops. Corporations make horrible donuts. period.
don't fight, poor dwellers of US :) The donuts here, be it KK, Dunkin or whatever, is just a poor version of Eastern European "ponchik/pyshka" https://en.wikipedia.org/wiki/P%C4%85czki
"pączki are made from especially rich dough containing eggs, fats, sugar, yeast and sometimes milk.
...
The traditional reason for making pączki was to use up all the lard, sugar, eggs and fruit in the house, because their consumption was forbidden by Christian fasting practices during the season of Lent. "
Krispy Kreme doughnuts are great and you can actually see the process. I’m not even sure if Dunkin Doughnuts makes their own stuff. KK sells half a billion dollars worth of doughnuts a year.
The stores left the area after 6 years. Sounds like they should’ve downsized instead of left the area completely.
I would be comfortable with making a statement saying "we don't condone this, we can't guarantee the quality or sanitation levels of the food."
Done.
How in the hell would Krispy Kreme be responsible for this guy reselling doughnuts? He's literally filling a niche market that the company chose not to fill.
How in the hell would Krispy Kreme be responsible for this guy reselling doughnuts?
Their agent, the franchisee, has actual knowledge of his intent for the 100 boxes of donuts he routinely buys. Now that they know that, they can't un-know that.
There's a real risk that, in the event of a controversy, serious people will not describe this as "a niche Krispy Kreme chose not to full" but "the mechanism by which Krispy Kreme chose to fill the niche." Which is not totally unfair; their agent is taking active steps to facilitate this.
A lot of food is shipped in unsealed boxes. Bread, meat, fruits and vegetables. Have you ever seen the horror of grains growing on OPEN field and then transported on OPEN truck and then processed UNWASHED?
If I buy some waffles from the (definitely not sanctioned by any corp) random waffle stand next to the local bar who do I blame with the syrup is bad? Not Aunt Jemima, I blame the guy running the waffle stand.
Same if I go to Walmart and buy bananas that turn out to be rotten. I don't blame whoever grew the bananas, I blame the local Walmart.
If you don't trust that the kid is selling legit donuts then don't buy from him, its pretty simple. I don't think KK should have any say in the matter, hes just buying donuts. What he does with them after that is none of their business as far as I am concerned. You can buy and resell anything you want if the market for it exists.
I get what you're saying... but it doesn't make sense in this case. Back in the early days of Krispy Kreme, this kind of thing was defacto standard way to get Krispy Kreme donuts as everyone in rural communities made runs to metropolitan areas to get boxes of donuts to sell on corners and in WalMart parking lots for fund raisers for every type of youth organization possible.
I've noticed I see less of that now, as the number of stores has gone way up and novelty of importing the cool rare donut has worn off. But I still see it a little. If food safety were ever an issue, this company would have died a long time ago.
How can you be sure that the non profits who distribute Krispy Kreme Donuts in the same unsealed boxes that sell them as fundraisers with Krispy Kreme’s blessings aren’t selling unadulterated products?
I think Krispy Kreme will be okay no matter what donut man does. It's worth hundreds of millions, it has 4300 employees, operates in multiple countries, it has been around for nearly a century.
In a "rogue donut man" scenario, I think Krispy Kreme would do fine because it already has employees or contractors who talk to the press and argue with the public on corporate social media.
As for your friend's opinions about grubhub, if his restaurant is a similar size to Krispy Kreme - i.e. international franchise, over $500 million revenue - then I could have an easier time imagining that his fears align perfectly with the fears of c-level execs at Krispy Kreme; right now I just don't know if your friend really reflects the conciousness of Krispy Kreme's high-muck-a-mucks because I don't know if the two companies are equally vulnerable to internet slander.
a disgruntled pizza delivery person could put rat poison in your pizza if you're not a good tipper. There's plenty of opportunity to do so. I'm sure some bad pizzas have been delivered and have been tampered by bad employees one way or another. You can't control everything. Would've probably been better for them to create some sort of on-the-books business association, make him sign a contract or something and follow some protocols on food handling to deliver as good a product as possible.
It should simply not be the company’s responsibility? You have no obligation after sale. Anyone can walk into any store, buy a box of donuts, the turn around and resell them on the street.
> Anyone can walk into any store, buy a box of donuts, the turn around and resell them on the street
And when something goes wrong, anyone could blame the donut shop. It doesn't matter if those people are right or wrong -- the donut shop could lose business either way.
I don't see how they could possibly stop him, under the First Sale Doctrine. About the only avenue of attack would be to rat him out to the state as an unlicensed food vendor, or something like that.
And no, they shouldn't be able to use trademark law against him, any more than Microsoft should be able to stop me from selling legitimate new-in-box copies of Windows or Office on eBay.
There used to be, most of the locations went out of business around 10-15 years ago. Corporate was screwing over their own franchisees and making bad business decisions that saturated the market. On top of that corporate was cooking the books. The result was the company lost 80% of it's value and most franchises couldn't stay open.
>Krispy Kreme also had supermarkets and gas stations carry their donuts, which soon contributed up to half of the chain's sales, creating further market saturation as well as increasing competition to its franchisees. All this expansion devalued Krispy Kreme brand's novelty, by making the once-specialty donuts ubiquitous, particularly as the newer sales outlets required pre-made donuts as opposed to the ones made fresh in factory stores, which alienated brand devotees.
>Besides royalty payments from new stores, the parent company also enjoyed significant profits by requiring franchisees to purchase mix and doughnut-making equipment from the parent's Krispy Kreme Manufacturing and Distribution (KKM&D) division. KKM&D earned $152.7 million in 2003, which made up 31 percent of sales, with a reported operating margin of 20 percent or higher, but these mark-ups were largely at the expense of its franchisees.
>Krispy Kreme has been accused of channel stuffing by franchisees, whose stores reportedly "received twice their regular shipments in the final weeks of a quarter so that headquarters could make its numbers".[9] The company was also dogged by questionable transactions and self-dealing accusations over the buybacks of franchisees, including those operated by company insiders.
I think even the boxes you bought in the grocery store had a note about microwaving them for 8 secs to mimic the hot and fresh donuts available at the franchise locations.
Imagine if 50 mules popped up... increasing KK doughnut sales by 1500 per week at 50 different locations nationwide... hard to imagine they'd dislike making more money.... how is that negative?
If it were me, I'd jump on the bandwagon and create some mule services to help grow mules to markets where Krispy's aren't delivered.
Smart managers would run it by equally smart lawyers and regulatory partners, who would patiently and in no uncertain terms explain that compliant operation of this business has a playbook, that "college kid with an unrefrigerated uncontrolled uncleaned car" is not part of that playbook, and that the last time a fast food chain needed to announce a food safety issue it wiped off billions of dollars in market cap. (The tippity top of the iceberg here is that the courier can't produce a document attesting to the last time his car was cleaned signed and dated by the person who visually inspected it. Note that this is a different requirement from "You must clean the interior of any vehicle which transports food over state lines.")
It is very plausible that the playbook is excessively limited and excessively costly because of regulatory capture by competitors, because of excessive loss aversion, or because society weights preventing risk-adjusted botulism outbreaks incorrectly against the societal good of an expectant mother being able to eat a donut, but none of those arguments against the playbook are responsive to the brute fact that the playbook exists and that you must follow it or be sanctioned.
Additionally, and Dangerous Professionals will love to remind managers of this: after you have been told the playbook exists, your risk of sanction if you ignore it _increases markedly_, particularly if you do something like cite any of the above rationales as a reason to _ignore_ the playbook.
I'm sorry, but you're suggesting that botulism would take hold inside a 4-6 hour window on fried, glazed, doughnuts?
The risk of foodborne illness on an unopened box of fresh, less than half-day old deep fried sugar crusted doughnuts has got to be stupendously low.
Krispy Kreme literally sells older doughnuts on the shelves of gas stations and grocery stores.
And furthermore, managers at a Krispy Kreme franchise aren't running an abstract game theoretical calculation based off of input from pastry lawyers, they're saying: "cool, $1200 in sales every Saturday!"
When I was in scouts we'd do the same thing: load up the back of the SUV or pickup with boxes, drive street to street, walking door to door selling them to fund summer camp.
I think that there is relatively little weighting to food science here and relatively high weighting towards technocratic administration, which predicts (correctly) that neither Krispy Kreme franchisees nor donut couriers have done a risk assessment and therefore is extremely prescriptive about the paper trail you need to have to exempt you from broadly applicable practices.
Grocery stores are an example. They're professionalized infrastructure! The regulator knows their safety record individually, as a class, and feels regulatory-warm-fuzzies over knowing that there is a named individual at the store responsible for food safety and who files a report weekly saying "Story this week same as the last week; we checked everything you want checked and there were no anomalies, because we made it so."
It's not just food safety, it's also food quality. KK wants to maintain the quality of the food and a donut sitting in a hot car for a few hours before a customer gets it will degrade the quality. They don't want potential customers (they could open a store in that area) to associate their product with a warm, soggy donut.
The playbook applies to what people do after they bought a product? I would think the first-sale doctrine (or sale rights exhaustion) applies; once Krispy Kreme has sold the product to the college kid, they exhaust all rights over him to determine what he does to the donuts.
He's not their employee after all and the playbook does not apply. If there is a food safety issue, it will be on that kid, not the donut shop.
And the donut shop can do absolutely 0 to stop that. They exhausted their first sale doctrine, they can't stop someone from selling a rotten donut (the law can, not the donut shop).
Nope, they actually can't stop him from selling the donuts with their branding on it (or using the boxes with their branding on it to hold the donuts while selling them). They can stop him advertising using their branding, like on a facebook group, but that's largely the extend of it.
The first sale doctrine extends to trademark protections as well, if I buy a thing with a trademark on it, the trademark owner cannot stop me from selling it with that trademark on it.
They can force him to stop using their branding, so definitely more than 0.
I don't really know how clearer it can be, that's exactly what they did, and it's totally enforceable because he's calling himself "Krispy Kreme Run Minnesota". Not "2nd Hand Donut Run" or "Donuts R Us".
He's passing himself off as associated with the company. Whether he realises, or intended to, or not. I don't believe he did, but you can't call yourself a name with a branded trademark and be surprised when they shut you down.
Imagine if a bookstore opened calling itself "Amazon Bookstore" with a facebook page plastered with Amazon packaging, just like this guy has done? Think that'd stay open long?
They can stop usage of the branding in advertising but they cannot stop the sale of their donuts. End of story, they can do 0 about that, I don't know why you bring the facebook page into this.
the competent manager would then offer the kid training and to loan a refrigerated van branded in company color as an one off goodwill token off from the marketing budget, while having lawyers writing a strongly worded letter to the effect that other following up would have to do with following safety and regulations or be barred from the premises.
I'm pretty sure that the more active of a hand that the company might take in supporting and promoting the activities of this lad, the less good it becomes for the company if/when something "goes wrong" (for absurdly loose definitions of "wrong", being, the low bar of a filing a civil suit on contingency).
How is any part of what you described their problem though? He's buying 100x boxes of doughnuts from them and then that's where their responsibility ends. Just like I don't know, a butchery isn't responsible if the store that sells their product doesn't keep it in a refrigerated display - it's not their problem, they don't send an inspection party to make sure that what left their warehouse is definitely being transported/sold in an approved way.
I think you are right with the boundary enforcement. Someone probably owns the rights to sell KK in that area, they just haven't built the stores yet. That person is probably in the ear of their KK rep saying "Don't let this kid ruin my territory."
He's probably bolstering their territory, not ruining it. Without The Donut Kid here, those potential KK customers might switch to Dunkin Donuts, or some regional chain, and get addicted to those instead. Now, they're primed and ready for a KK franchise to open up near enough to visit in person!
What you say may be true, but lawyers don't (generally speaking) run companies. The Smart Managers would certainly consult the lawyers, understand and respect their opinion and evaluation of risks, but remember that lawyers tend to be inherently over-risk-averse, and then still make the right decision.
And just to reiterate: I'm not necessarily saying that "turn a blind eye" would have been the right response from KK. I'm just suggesting that it would have been possible to construct a scenario that would have been more favorable to everybody.
it seems like maybe they're using the streisand effect to their benefit here - i wouldn't have heard about the original story if not for the controversy. they get the "people want our product so bad they're breaking rules to get it" headlines while also shielding themselves from any potential legal or food-safety issues by being loudly on-record as saying not to do this.
as soon as he buys them he can do whatever he wants, he just cant imply that he works for krispy kreme or is part of the distribution network. if KK doesnt want to sell in an area that wants KKs thats thier problem. people are allowed to grocery shop by proxy and operate delivery services of many types. it would probably help his case if he was taking delivery orders for other things such as bottled water, or energy drinks, and jack links as well.
They will probably enforce it by preventing the franchise owner selling to him. Otherwise, you're right, they can't do anything about it - not that that's always enough to stop them from strong arming a person with their lawyers.
The financial stamina comment you made below seems to be in line with what happened to https://en.m.wikipedia.org/wiki/Pirate_Joe's wrt Trader Joe’s. Even though he had the much stronger legal case.
I don't see how this is actually any different than any of the many doughnut (KK specifically) fundraisers around the country where groups (sports, music, etc) either pre-order or buy large quantities to resell. Its exactly the same model, other than that this guy was doing it repeatedly and KK wasn't getting to set the terms.
If I had to guess, this is a trademark issue. First sale doctrine only gives him the right to sell legitimately-marked products, but not to use the Krispy Kreme marks in advertising. His FB page was called “Krispy Kreme Run Minnesota”, which implies an endorsement that doesn’t exist.
This is the most sensible possibility I’ve seen. This whole time I was scrolling I was wondering how this is different from the stupid crap Postmates and DoorDash do, or how it squares with the First Sale Doctrine.
I don't see how it's different from any of the food delivery services I can use to get Krispy Kremes brought to my house. Not sure KK has a legal leg to stand on here.
Also, local laws may apply. Most towns have a health department which periodically inspect restaurants and food trucks. He is probably legally required to apply for a permit before he sells food.
I guess the local health officials will choose to look the other way, as they do when a kid sets up a lemonade stand, at least until someone files a complaint.
I wonder what was contained in that cease and desist? How could he have been doing anything that could warrant a civil suit from the company? Sure, he doesn't have a license to be a food seller, but that's a legal issue with the local municipality. I wonder what they claimed their "damage" to be?
The practice that this student engaged in is called “arbitrage” - taking a thing that is undervalued and finding its true value.
Kristy Kreme undervalued their product, which made it ripe for arbitrage. If not this student, it would have been Uber Eats or some other delivery service.
Is it arbitrage? The value he's adding is convenience, which is what people are paying extra for. I don't think the donuts sitting behind the counter at Krispy Kreme are undervalued. They have a huge inconvenience cost built into their location.
My comment was a bit wrong, I should have said that he found value in another market; krispy kreme was serving one market, where the donuts were valued at X. But this guy found the student market, where donuts were valued at x+n.
Delivery services basically gave restaurants a never-ending source of business that requires no seating, wait staff, or overhead of any kind, and their response has been almost universally negative. I don't get it.
Based on his Facebook page[1], it seems he's going to be an authorized reseller soon.
> Hi everyone, here is the next important update! I am pumped to announce that I will be able to continue the business soon, and have the support of Krispy Kreme. They want to ensure I become an independent operator and make sure the brand is represented well. On both ends, there are things that are being worked on right now to achieve that as this is being made as a special exception. But nonetheless, we can get started up again soon once certain things are in place.
> This being said, I am definitely going to need a bigger vehicle with how much this has grown over the past few days. I know a couple of you have asked about a GoFundMe. I decided to create one because I won't be able to cover the costs on my own I realize. Any donation would mean the world to me, no matter how small. Maybe I can decal it with some donut stickers! I am happy that things turned out positive, and this can continue to strive and grow over the next couple of years. I've said it before, and I will say it again. Thank you from the bottom of my heart to everyone that has supported me on this journey.
It's a novelty product. Once the novelty wears off, there's nothing special about them to make them any more desirable than any other doughnut. The Twin Cities has plenty of other doughnut outlets, many of them locally owned and run bakeries.
Before Pollo Campero opened in San Francisco, there were people (1) driving vans of take-out from Los Angeles, and (2) flying it over on an airplane from Guatemala.
There was a planet money story about a guy in canada who would buy up huge quantities of trader joes stuff and sell it at a significant markup. he had to evade trader joes' managers who were told the guy was a persona-non-grata and did a lot to keep him out. eventually he had to close up shop (and he did have a real physical location) as it became too difficult to stay open.
He had to close because even though the legal rulings were for him. Trader Joe’s kept appealing and he couldn’t keep up with the finances for defending what had become bullying.
https://en.m.wikipedia.org/wiki/Pirate_Joe's
This reminds me of domestic flights in Thailand from Bangkok to Chiang Mai where it is common to see Krispy Kreme mules.
There are no Krispy Kreme stores in Chiang Mai but the people in Chiang Mai seems to prefer it over other Doughnut shops in the city. So, when locals fly up from Bangkok to Chiang Mai it is fairly common for them to take up a few boxes of Krispy Kreme for their friends and family.
Someone at Krispy Kreme should be fired. Better business all around would have been to come up with some happy way to bring this guy in somehow. Publicity alone would have been ridiculously profitable: ie Free. Offer him a delivery franchise or whatever. Krispy Kreme actually said No to a delivery model that only needed tuning and some simple improvements. He essentially did a territory feasibility assessment for them. For free.
As a non-customer I now just think of Krispy Kreme as jerks. And the kind of business people who hate making money.
They would have to add some sort of management structure, make sure he was up to hygiene codes, incorporate the new model in their finance and admin, produce risk assessments, have meetings, do a ton of work I can't even think of.
It would cost them $100,000s, for a few $1,000 revenue.
That they've been forced to adopt him because of an online backlash is an indictment of the irrationality of the internet, not a bad mark against the totally reasonable, and rational, decision an employee made.
You're writing as if food delivery was a new thing and therefore completely unknown. If my local bakery can get UberEats worked out, I'll boldly state that a company like Krispy Kreme can probably afford a lawyer or two to read a contract without evaporating 1.5 million dollars or whatever.
Fire someone, reduce bonuses, perhaps a stern look at the next regional meeting. Figure it out people. Good grief. Companies complain about slow revenue growth while leaving obvious money on the table. This example was a business refusing a $1000 or similar per month. That might not be much to you, but I'm fairly sure a franchisee would notice that. $12k/year is measurable for most small businesses even if you wouldn't even notice that amount.
"Hi everyone, here is the next important update! I am pumped to announce that I will be able to continue the business soon, and have the support of Krispy Kreme. They want to ensure I become an independent operator and make sure the brand is represented well. On both ends, there are things that are being worked on right now to achieve that as this is being made as a special exception. But nonetheless, we can get started up again soon once certain things are in place."
Seems like confirmation that this was most likely about trademarks and representation.
It will be interesting if Krispy Kreme also makes an effort to be flexible with their operation with him. It obviously didn't work to have store franchises previously, the total sales likely didn't cover all the fees and costs, hence the closure.
Besides the geo-arbitrage, it seems obvious that a huge part of this guy's success was going to 8 different Target parking lots, and splitting the (pretty small) total across them.
Simple envelope math: 100 boxes across 8 lots, that's 12 boxes per lot. Pretty horrible if you're a franchisee, but nice and comfortable if you're a college kid looking to earn extra bucks.
If KK can be flexible with him ("here's a regulated supply, you guarantee and agree to certain food safety/brand provisions, now you can drive around like an ice-cream man and sell this"), it's likely he can continue, but if he's diving headfirst into a typical franchisee arrangement, he should run for the hills.
I respect what he's doing, but I'm not totally clear on why he expects people to donate for him to buy a van? I get it when people ask for help with medical bills (well, I'm in the UK but I sympathise with them), but he just wants a bigger vehicle? Save up your donut money and buy it dude!
If you can ask for free money, and people actually will give it to you, why not ask? I don't think he expects it per se, but since it's in the offering? Get it.
It is business. He has traction now, he is known now, there is a chance people will be willing to help him. Because they know his story and like him.
Crowdfunding is about making people know you and being personal, he got that now. It is not like he would be getting filthy rich never have to work again from that. It is his sudden chance to get a bit better business, so he is trying.
I didn't say it was impossible; I said that there was regulatory risk in doing it the way he was doing it. Reading his comment here does not decrease my confidence that I was correct. Is your model that no paperwork (reps & warranties, transfer of liability, etc) is getting signed between him and Krispy Kreme as a result of this turn of events? If so, I bet your model is wrong.
If you read his commments regularly, he comes across as really corporate-minded and risk averse.
There was one post where he talked about how much money he was spending on one of his businesses and for a pretty simple web app it was astounding. Like the exact kind of stuff you see big businesses blowing money on but it’s just one guy.
as someone from south Europe, I am amazed for the love of donuts they have in the U.S.A, how can you be craving so much to pay twice for donuts? they are mostly pure sugars sweets isnt it ?
how can you be craving so much to pay twice for donuts?
It’s a cultural thing. For example if you are an American cop then being seen with a donut in your hand is part of the image, just as much as the badge and the gun. People will gladly pay a premium in many ways to portray a particular image, the entire fashion industry relies on it.
Come on now being in southern Europe you should be well aware of cafes and corner bakeries and the culture around it. It's pretty much the same concept as the US (or Canadian) doughnut shop except not as nice.
I worked with a guy from Poland who worked for a company in Austria which was based in Monaco. He just got back from Spain after being in France for a while. When he came here to Canada he was shocked at the lack of corner bakeries. It's so common to pop into a corner bakery for a croissant or sandwich made fresh that morning or afternoon.
In Canada the Tim Horton's coffee and doughnut shop is a giant. It has four times as many store per capita than Starbucks in the US.
This story strikes very close to home. My first capitalist adventure involved running donuts to my middle, and later, high schools. I used to periodically stop on the way to school to grab a donut and noticed that buying 6 donuts at once cost the same as buying 5 individually. So, I purchased 6 every morning and sold the other 5 at the individual price. By the time I got to high school, I was moving 4-6 dozen donuts a day, and had "employees" who handled deliveries and collections and were paid in donuts.
I commented on the previous post that broke this story, pointing out just how many youth fund raising activities had been doing exactly this for ever. And I really admired the guy and his repeated efforts to make some money for school. This is the classical lemonade stand incarnate. He warmed my heart; big business KK pissed me off.
Day two rolls around. Things are proceeding. An agreement has been struck, and he's soliciting the equivalent of seed money to meet the new anticipated demand. Whereas yesterday I could have seen some additional students using their small cars to also deliver donuts if a) they're willing to put in the effort and b) there's enough demand, today that seems less likely. The sophomore across campus now has to compete against the capital gifted to this guy as well as his "special arrangement" with KK. So, some form of "big business" wins again.
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[ 3.1 ms ] story [ 101 ms ] threadInstead, they totally screwed the pooch and hurt their brand, their customers, and the hard working college kid aspiring for the American Dream. Way to go, Krispy Kreme.
I can totally see KK's side of this problem. It's sad to say in the scope of modern society, but how can you trust that this kid is actually selling you legitimate (and, without getting off track, unadulterated) Krispy Kreme donuts when he pulls up in your town?
What damage would this do to the brand if the person turned out to be a bad actor? If you were the CEO of Krispy Kreme, would you err on the side of caution and stop something before it gets out of hand?
A good friend of mine is a restaurant owner and he has a similar gripe about GrubHub and delivery services of this ilk. They bring the food cold, late, and mangled and now the restaurant's reputation is damaged instead of blaming GrubHub for how it was treated in transit.
Fair point, but people already trust strangers to deliver their food by using GrubHub, Postmates, Uber Eats, etc.
Anyway, maybe the "right thing to do" for KK was not to just turn a blind eye and ignore the whole thing, but one can't help but suspect that they could have found a better way to deal with this, that would have been more of a "win-win". Worst case, buy the kid off behind the scenes, pay him to appear in an ad or two, and then quietly shut down his service. Surely they could have some up with something that didn't portray this "$BIGCORP uses it's army of lawyers to smash the little guy" pattern...
Sure, it's brand-damaging as well, but we all have short memories these days when it comes to the Global TCP/IP Outrage Generator.
It probably would piss off the franchisees too. They're the ones that paid big money for exclusive sales territories and (contractually) don't want those boundaries crossed by others.
Can't have it both ways I guess, although I am probably most often on the side of those who see opportunity that tendency has come back to bite me at times.
> He’d established a friendly relationship with Mary Paredes, the manager of the Krispy Kreme in Clive, Iowa, who admired his entrepreneurial spirit and would have the doughnuts ready when he arrived
Hell yes, a guy who buys 100 boxes off you every time he shows up is a guy you want to work with.
The issue is that this is obviously not controlled by KK, including when it comes to using their trademarks.
IMO, their classic glazed rings are the best glazed rings you can get anywhere.
All their other options are garbage. The creme they use in their cream filled donuts is disgusting.
I can't stand KK's, Tim Horton's, or Grocery store donuts. They're all horrible. I'm in utah now, and around 2200/state street in Salt lake has an amazing donut shop as well...
All hole in the walls, mom/pop shops. Corporations make horrible donuts. period.
"pączki are made from especially rich dough containing eggs, fats, sugar, yeast and sometimes milk.
...
The traditional reason for making pączki was to use up all the lard, sugar, eggs and fruit in the house, because their consumption was forbidden by Christian fasting practices during the season of Lent. "
The stores left the area after 6 years. Sounds like they should’ve downsized instead of left the area completely.
Done.
How in the hell would Krispy Kreme be responsible for this guy reselling doughnuts? He's literally filling a niche market that the company chose not to fill.
Their agent, the franchisee, has actual knowledge of his intent for the 100 boxes of donuts he routinely buys. Now that they know that, they can't un-know that.
There's a real risk that, in the event of a controversy, serious people will not describe this as "a niche Krispy Kreme chose not to full" but "the mechanism by which Krispy Kreme chose to fill the niche." Which is not totally unfair; their agent is taking active steps to facilitate this.
If I buy some waffles from the (definitely not sanctioned by any corp) random waffle stand next to the local bar who do I blame with the syrup is bad? Not Aunt Jemima, I blame the guy running the waffle stand.
Same if I go to Walmart and buy bananas that turn out to be rotten. I don't blame whoever grew the bananas, I blame the local Walmart.
If you don't trust that the kid is selling legit donuts then don't buy from him, its pretty simple. I don't think KK should have any say in the matter, hes just buying donuts. What he does with them after that is none of their business as far as I am concerned. You can buy and resell anything you want if the market for it exists.
I've noticed I see less of that now, as the number of stores has gone way up and novelty of importing the cool rare donut has worn off. But I still see it a little. If food safety were ever an issue, this company would have died a long time ago.
https://s3.amazonaws.com/Fundraising_KKD/2015KKCIFUNDRAISING...
I wouldn't even be worried about intentional poisoning - just pathogens introduced by improper food handling.
In a "rogue donut man" scenario, I think Krispy Kreme would do fine because it already has employees or contractors who talk to the press and argue with the public on corporate social media.
As for your friend's opinions about grubhub, if his restaurant is a similar size to Krispy Kreme - i.e. international franchise, over $500 million revenue - then I could have an easier time imagining that his fears align perfectly with the fears of c-level execs at Krispy Kreme; right now I just don't know if your friend really reflects the conciousness of Krispy Kreme's high-muck-a-mucks because I don't know if the two companies are equally vulnerable to internet slander.
And when something goes wrong, anyone could blame the donut shop. It doesn't matter if those people are right or wrong -- the donut shop could lose business either way.
What do you mean by this?
I assume you’re not into drugs - I’m not either - but no one is sneaking free cocaine into donuts, I guarantee it
Liability
They are so obsessed that something could go wrong it takes a team of lawyers.
I hope they can’t stop him. That would be really nice.
And no, they shouldn't be able to use trademark law against him, any more than Microsoft should be able to stop me from selling legitimate new-in-box copies of Windows or Office on eBay.
https://www.marketwatch.com/story/rise-and-fall-of-biggest-k...
https://en.wikipedia.org/wiki/Krispy_Kreme
>Krispy Kreme also had supermarkets and gas stations carry their donuts, which soon contributed up to half of the chain's sales, creating further market saturation as well as increasing competition to its franchisees. All this expansion devalued Krispy Kreme brand's novelty, by making the once-specialty donuts ubiquitous, particularly as the newer sales outlets required pre-made donuts as opposed to the ones made fresh in factory stores, which alienated brand devotees.
>Besides royalty payments from new stores, the parent company also enjoyed significant profits by requiring franchisees to purchase mix and doughnut-making equipment from the parent's Krispy Kreme Manufacturing and Distribution (KKM&D) division. KKM&D earned $152.7 million in 2003, which made up 31 percent of sales, with a reported operating margin of 20 percent or higher, but these mark-ups were largely at the expense of its franchisees.
>Krispy Kreme has been accused of channel stuffing by franchisees, whose stores reportedly "received twice their regular shipments in the final weeks of a quarter so that headquarters could make its numbers".[9] The company was also dogged by questionable transactions and self-dealing accusations over the buybacks of franchisees, including those operated by company insiders.
If it were me, I'd jump on the bandwagon and create some mule services to help grow mules to markets where Krispy's aren't delivered.
It is very plausible that the playbook is excessively limited and excessively costly because of regulatory capture by competitors, because of excessive loss aversion, or because society weights preventing risk-adjusted botulism outbreaks incorrectly against the societal good of an expectant mother being able to eat a donut, but none of those arguments against the playbook are responsive to the brute fact that the playbook exists and that you must follow it or be sanctioned.
Additionally, and Dangerous Professionals will love to remind managers of this: after you have been told the playbook exists, your risk of sanction if you ignore it _increases markedly_, particularly if you do something like cite any of the above rationales as a reason to _ignore_ the playbook.
The risk of foodborne illness on an unopened box of fresh, less than half-day old deep fried sugar crusted doughnuts has got to be stupendously low.
Krispy Kreme literally sells older doughnuts on the shelves of gas stations and grocery stores.
And furthermore, managers at a Krispy Kreme franchise aren't running an abstract game theoretical calculation based off of input from pastry lawyers, they're saying: "cool, $1200 in sales every Saturday!"
When I was in scouts we'd do the same thing: load up the back of the SUV or pickup with boxes, drive street to street, walking door to door selling them to fund summer camp.
Grocery stores are an example. They're professionalized infrastructure! The regulator knows their safety record individually, as a class, and feels regulatory-warm-fuzzies over knowing that there is a named individual at the store responsible for food safety and who files a report weekly saying "Story this week same as the last week; we checked everything you want checked and there were no anomalies, because we made it so."
He's not their employee after all and the playbook does not apply. If there is a food safety issue, it will be on that kid, not the donut shop.
Some people would still blame the donut shop.
The first sale doctrine extends to trademark protections as well, if I buy a thing with a trademark on it, the trademark owner cannot stop me from selling it with that trademark on it.
I don't really know how clearer it can be, that's exactly what they did, and it's totally enforceable because he's calling himself "Krispy Kreme Run Minnesota". Not "2nd Hand Donut Run" or "Donuts R Us".
He's passing himself off as associated with the company. Whether he realises, or intended to, or not. I don't believe he did, but you can't call yourself a name with a branded trademark and be surprised when they shut you down.
Imagine if a bookstore opened calling itself "Amazon Bookstore" with a facebook page plastered with Amazon packaging, just like this guy has done? Think that'd stay open long?
You can say "Nope" again, but you're still wrong.
win win and all that.
My hunch is this has much more to do with franchise laws and boundary enforcement.
And just to reiterate: I'm not necessarily saying that "turn a blind eye" would have been the right response from KK. I'm just suggesting that it would have been possible to construct a scenario that would have been more favorable to everybody.
it seems like maybe they're using the streisand effect to their benefit here - i wouldn't have heard about the original story if not for the controversy. they get the "people want our product so bad they're breaking rules to get it" headlines while also shielding themselves from any potential legal or food-safety issues by being loudly on-record as saying not to do this.
https://www.wfsb.com/krispy-kreme-strikes-deal-with-college-...
https://www.npr.org/sections/thetwo-way/2016/08/29/491824957... [2016]
KK can also just be real dicks and tell the cops about him, and bribe them with, ha, donuts.
I guess the local health officials will choose to look the other way, as they do when a kid sets up a lemonade stand, at least until someone files a complaint.
I think maybe he was just using the Krispy Kreme branding or trademarks.
Kristy Kreme undervalued their product, which made it ripe for arbitrage. If not this student, it would have been Uber Eats or some other delivery service.
Retail: the sale of commodities or goods in small quantities to ultimate consumers
Back in 2015 a little burger shop sues a little known company for ferrying burgers across the Stanford campus.
https://www.mercurynews.com/2015/11/12/in-n-out-burger-sues-...
The suit settlement did shut down Doordash from gray-marketing In n Out.
> Hi everyone, here is the next important update! I am pumped to announce that I will be able to continue the business soon, and have the support of Krispy Kreme. They want to ensure I become an independent operator and make sure the brand is represented well. On both ends, there are things that are being worked on right now to achieve that as this is being made as a special exception. But nonetheless, we can get started up again soon once certain things are in place.
> This being said, I am definitely going to need a bigger vehicle with how much this has grown over the past few days. I know a couple of you have asked about a GoFundMe. I decided to create one because I won't be able to cover the costs on my own I realize. Any donation would mean the world to me, no matter how small. Maybe I can decal it with some donut stickers! I am happy that things turned out positive, and this can continue to strive and grow over the next couple of years. I've said it before, and I will say it again. Thank you from the bottom of my heart to everyone that has supported me on this journey.
[1]: https://www.facebook.com/pg/KrispyKremeRunMinnesota/posts/
I hope everything works out for donut man.
I run a very small scale resell operation and I do my taxes myself.
https://web.archive.org/web/20110603025320/http://blogs.sfwe...
https://archives.sfweekly.com/thesnitch/2011/02/14/mission-i...
There are no Krispy Kreme stores in Chiang Mai but the people in Chiang Mai seems to prefer it over other Doughnut shops in the city. So, when locals fly up from Bangkok to Chiang Mai it is fairly common for them to take up a few boxes of Krispy Kreme for their friends and family.
As a non-customer I now just think of Krispy Kreme as jerks. And the kind of business people who hate making money.
They would have to add some sort of management structure, make sure he was up to hygiene codes, incorporate the new model in their finance and admin, produce risk assessments, have meetings, do a ton of work I can't even think of.
It would cost them $100,000s, for a few $1,000 revenue.
That they've been forced to adopt him because of an online backlash is an indictment of the irrationality of the internet, not a bad mark against the totally reasonable, and rational, decision an employee made.
And now you're calling for him to be fired. Sad.
Fire someone, reduce bonuses, perhaps a stern look at the next regional meeting. Figure it out people. Good grief. Companies complain about slow revenue growth while leaving obvious money on the table. This example was a business refusing a $1000 or similar per month. That might not be much to you, but I'm fairly sure a franchisee would notice that. $12k/year is measurable for most small businesses even if you wouldn't even notice that amount.
"Hi everyone, here is the next important update! I am pumped to announce that I will be able to continue the business soon, and have the support of Krispy Kreme. They want to ensure I become an independent operator and make sure the brand is represented well. On both ends, there are things that are being worked on right now to achieve that as this is being made as a special exception. But nonetheless, we can get started up again soon once certain things are in place."
Seems like confirmation that this was most likely about trademarks and representation.
Besides the geo-arbitrage, it seems obvious that a huge part of this guy's success was going to 8 different Target parking lots, and splitting the (pretty small) total across them.
Simple envelope math: 100 boxes across 8 lots, that's 12 boxes per lot. Pretty horrible if you're a franchisee, but nice and comfortable if you're a college kid looking to earn extra bucks.
If KK can be flexible with him ("here's a regulated supply, you guarantee and agree to certain food safety/brand provisions, now you can drive around like an ice-cream man and sell this"), it's likely he can continue, but if he's diving headfirst into a typical franchisee arrangement, he should run for the hills.
https://www.gofundme.com/f/krispy-kreme-vehicle-upgrade
Crowdfunding is about making people know you and being personal, he got that now. It is not like he would be getting filthy rich never have to work again from that. It is his sudden chance to get a bit better business, so he is trying.
There's a playbook.
There was one post where he talked about how much money he was spending on one of his businesses and for a pretty simple web app it was astounding. Like the exact kind of stuff you see big businesses blowing money on but it’s just one guy.
It’s a cultural thing. For example if you are an American cop then being seen with a donut in your hand is part of the image, just as much as the badge and the gun. People will gladly pay a premium in many ways to portray a particular image, the entire fashion industry relies on it.
I worked with a guy from Poland who worked for a company in Austria which was based in Monaco. He just got back from Spain after being in France for a while. When he came here to Canada he was shocked at the lack of corner bakeries. It's so common to pop into a corner bakery for a croissant or sandwich made fresh that morning or afternoon.
In Canada the Tim Horton's coffee and doughnut shop is a giant. It has four times as many store per capita than Starbucks in the US.
I commented on the previous post that broke this story, pointing out just how many youth fund raising activities had been doing exactly this for ever. And I really admired the guy and his repeated efforts to make some money for school. This is the classical lemonade stand incarnate. He warmed my heart; big business KK pissed me off.
Day two rolls around. Things are proceeding. An agreement has been struck, and he's soliciting the equivalent of seed money to meet the new anticipated demand. Whereas yesterday I could have seen some additional students using their small cars to also deliver donuts if a) they're willing to put in the effort and b) there's enough demand, today that seems less likely. The sophomore across campus now has to compete against the capital gifted to this guy as well as his "special arrangement" with KK. So, some form of "big business" wins again.