Friday, August 18, 2006

Doughnut Hole

I still remember the night in early 1999 that a bunch of us piled in the car and drove down to La Habra.

Where? We'd never heard of the city, let alone ever considered making a trip there. But hidden down there was the first-ever Krispy Kreme outlet in Southern California. We had to make the trip.

We arrived late on a Saturday night, and the line snaked out the door. After a 20 minute wait, we picked up a dozen glazed and headed back to the car -- where we immediately snacked on the goodies. Each of us probably had four. A tad woozy from the sugar high, we still proclaimed them the food of the gods.

We made one or two more treks to La Habra, but soon after, Krispy Kremes started popping up all over Southern California -- and in locations much closer than La Habra. Sadly, as Krispy Kreme over-expanded in Southern California, the original La Habra location suffered.

Now, the region's very first Krispy Kreme -- which sold 20 million doughnuts and made $9 million in sales in the first year -- has shut down, reports the L.A. Times:

Southern California franchisee Great Circle Family Foods blamed the closing on carb-conscious customers and changing tastes. It also cited turmoil at Krispy Kreme Doughnuts Inc.'s North Carolina corporate headquarters, where former executives were accused of cooking the books to inflate profit and boost the sagging stock price.

Whatever the reasons, James Glass, an analyst with CIBC World Markets in Boston, put it bluntly: "People just won't line up for doughnuts forever and ever."

The store that started the local craze gradually became unprofitable, with sales falling to about a third of their original level, one employee said.

Krispy Kreme was in some sense a victim of its own success. The quick proliferation of stores — seemingly opening by the dozen — made it harder for individual locations to get by. The La Habra store closed as part of a retrenchment in the last year that has left Great Circle with 17 Krispy Kremes, down from a peak of 31.

Thankfully, the location closest to us -- in Burbank's Empire Center -- remains open. Whew!

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