6/24/2004 09:56:18 PM|||Scott Lewis|||So much for the death of doughnuts.
Despite reports that the nation's low-carb diet craze is hurting sales of the sugar-drenched delicacies, New England's Dunkin' Donuts is charging into Charlotte with big expansion plans -- even as rival and home-state favorite Krispy Kreme makes a minor retreat.
Allied Domecq Quick Service Restaurants of Randolph, Mass., wants to have up to 45 stores operating in the Charlotte region by the end of 2007, compared with five today, said Tom Wyczawski, who is spearheading the expansion of Dunkin' Donuts, Baskin-Robbins and Togo's restaurants nationwide. While Dunkin' Donuts franchises have operated in Charlotte for years, Wyczawski said his company -- a unit of the $5.2 billion-a-year British spirits giant Allied Domecq PLC -- will bring more resources to bear.
"This is a much more focused approach than before," he said. "We are going to put enough resources and energy into each market, and we are going to win."
Wyczawski will oversee similar expansions in Cleveland and Tampa, Fla., from his new home in Charlotte. He insisted that Americans' love affair with low-carb diets has not affected Dunkin' Donuts sales, in large part because the restaurants earn 50 percent to 60 percent of their sales from coffee. Moreover, Allied Domecq's strategy of co-locating Dunkin' Donuts and Baskin-Robbins in the same store gives its franchisees a broader menu that lures customers all day long.
Allied Domecq's designs on Charlotte come at a tough time for Winston-Salem's Krispy Kreme, which has gone from a hot growth stock to a big question mark since early May. The company's stock plummeted nearly 30 percent May 7 after CEO Scott Livengood lowered the company's fiscal 2005 earnings expectations 10 percent. Livengood said the growing popularity of low-carb diets was eating into Krispy Kreme's business. He said the company would close six stores, including one at the corner of Providence and Queens roads in Myers Park.
The company has since been hit with 10 shareholder lawsuits, some of which allege Livengood and other executives used the publicity over low-carb diets to obscure fundamental problems with the company's business. Livengood has denied the allegations.
Argus Research analyst Joseph Bonner said Friday the expansion of Dunkin' Donuts in Charlotte would only add to investor concerns about the stock.
"If they are putting a vice president down there and making a big push in the Southeast, that is definite concern," said Bonner. "It's their (Krispy Kreme's) home turf."
Krispy Kreme officials could not be reached for comment late Friday afternoon.
Bonner had raised his rating of Krispy Kreme stock from "sell" to "hold" Wednesday after concluding the company still has the potential to grow 20 percent annually. The company's stock closed Friday at $20.10, down 27 cents.
About the same time, just a mile or so from where Krispy Kreme closed its Myers Park store in May, Ashley Parker and Danielle Lucier were preparing to open Dunkin' Donuts sixth store in Charlotte, off South Kings Drive.
The former New Englanders acquired rights to open three Dunkin' Donuts/Baskin-Robbins stores in the city after arriving in Charlotte a few years ago. They already are building their second near Sunset and Beatties Ford roads.
"We are going to make a lot of people who are transplants very happy," said Parker, who said she has never tasted a Krispy Kreme doughnut.
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