Tuesday, June 20, 2006
Horde of the rings
Is it the sugar, the fat or the secret ingredient? Chris Johnston investigates what makes Krispy Kreme doughnuts so popular.
THE hordes queue up to eat Krispy Kreme doughnuts - but the hordes also queue up for the honour of working for them.
At a football club in the outermost of Melbourne's outer suburbs, 1000 people - school leavers, students, mums, dads, grandmums, granddads and new Australians - lined up to work for the American superbrand.
The footy club was the Casey Scorpions. It provided the venue for the fast-food chain's imminent arrival in Melbourne, hosting a vast recruitment drive for a day last month. There were 110 jobs going at Krispy Kreme's first Melbourne store, at Fountain Gate, and at its factory in Dandenong South.
The hopefuls waited for their turn to shine in a footy function room, all dressed up before a panel of doughnut managers, in a scene not a million miles from an Australian Idol audition. Some hopefuls waited five hours, during which they were indoctrinated into the corporate thinking behind the food cult that is Krispy Kreme.
The company's human resources manager, Michelle Filo, ran the show, co-ordinating group exercises such as the "human knot" to detect "leadership qualities" and "the ability to have fun". Applicants also addressed the group as a way of assessing their confidence.
Then she introduced the product - the fabled doughnuts. A buzz of anticipation filled the room. "Stand up if you have never tasted a Krispy Kreme," she said, at which point company staffers at the back of the room - in uniform - scurried forth with boxes, holding them aloft in one hand like silver-service waiters carrying Michelin-rated exotica. People whooped and hollered. Doughnuts were inhaled. "What do you think?" asked Filo. "Yum, huh?"
She then asked the mob to recite where the first Melbourne store will be, when it will open and what time - 6.30am - which, amazingly, they all know. She gave a spiel about the company and how great it is: "Who would have ever thought a doughnut shop would have a 24-hour drive-through!" She outlined the bubbly attitude necessary to work there. "It's all about helping people," she said. "Helping your workmates and the customers. Helping someone to their car with 20-dozen Original Glazed, helping the barista to make milkshakes if he is snowed under, cheering up a customer if they come in with a bad attitude."
Applicants then waited for one-on-one interviews, in which they were asked questions about expectations, frustrations, accomplishments, personality type and conflict resolution. Later, Filo says the detailed hype-laden process is to find "people aligned to our culture, people with bounce, energy and passion". She says the company subscribes to the famed Fish! Philosophy, from the "cold and smelly" Pike Place fishmarket in Seattle where all the workers are constantly happy and productive.
"It's about keeping the energy levels alive," she says. "We hire primarily for attitude, then train for skill.
"Krispy Kreme is about giving a customer a magic moment."
Krispy Kreme is a cult brand. It is a fast-food item that sells virtually of its own accord; the company has a policy of hardly advertising at all, instead relying on rabid word-of-mouth and public expectation.
Forbes magazine recently defined a cult brand as something that "seizes the imagination of a small group who spread the word, make converts, help turn a fringe product into a mainstream name". This is how Krispy Kreme works - in Melbourne, long before a store even showed signs of opening, expectation was built by people coming back from Sydney, where the company has operated since 2002, with boxes of the doughnuts, to be lapped up by those who were deprived of the opportunity.
The product was recognisable from popular culture: David Letterman gives them away on TV, Jay Leno had a woman high-jumper leap over a pole ringed with them, Sex and the City's Miranda was a big fan, as are Homer Simpson and Tony Soprano. Madonna and Nicole Kidman have been photographed eating them.
There's a mythology surrounding these doughnuts; that they are good, the best, aspirational, a must-have item. In the US they sell 3 million a day. In Sydney they have proved so popular that two more stores are opening next month. That one of the best-performing stores is at Sydney airport is significant; airports these days are shopping malls with planes. They theme themselves as both suburban and romantic, as does Krispy Kreme.
Somehow this doughnut - described by a food blogger as "little rings of lard wrapped in a thick glaze of liquid sugar" - has an X-factor that makes it more desirable than perhaps it should be.
In terms of taste, they are good, if you like that sort of thing. There are 15 basic varieties - plus the occasional seasonal special - sold in Australian stores. The flagship doughnut, the Original Glazed, is sweet but not cloyingly so, and light, very light, almost fluffy, in the middle. The outside is fried crisp and the yeast-raised inside is contrastingly buttery, which is appealing.
There are filled doughnuts, cake-like doughnuts and iced doughnuts, plus coffee, milkshakes, ice-cream and juices called "chillers". In Australia the company is developing pineapple, caramel and choc-mint doughnuts. The standard recipe hasn't changed in 70 years, and there is a secret ingredient. It has been suggested this is as simple as vanilla in the flour (which is imported), but no one's telling. "The recipe is locked in a vault in America," says Melbourne operations manager Brett Hannah. "Only two people in the world know it, and those two people never fly on the same plane."
A known key factor, though, is heat. At selected factory stores, the doughnuts are made in full view of the customers and when they're ready, and hot, a neon light flashes on saying "Hot Doughnuts Now". The company calls this process "doughnut theatre". The neon signs themselves are retro looking, with 1950s styling. And a hot Krispy Kreme doughnut melts in the mouth.
Ingredients are listed in small print, tucked away in the depths of the American company website. They include "enriched" flour, dextrose, dried egg yolk, wheat gluten, yeast, skim milk, calcium peroxide, diammonium phosphate, amylase, pentosanase, locust bean gum and, of course, sugar. An Original Glazed is 23 per cent fat (more than half of it saturated or trans fat) and 19 per cent sugar.
Customers are regularly given free samples in the stores. "It's the best feeling," says Adrian Romei, who has trained for nearly three months in Sydney to be Melbourne's first store manager. "People don't expect something for nothing. Their eyes light up when you say, 'Here you go mate, have a hot one on me.'"
Krispy Kreme is as American as apple pie. Although there are now stores in Australia (Sydney was the first outside the US), Britain, Mexico, Canada and Korea, it is steeped in a history strictly tied to its small-town American roots.
In 1937, a man named Vernon Rudolph, in North Carolina, bought the recipe from a New Orleans chef. Doughnuts by this time were already an American staple, having been brought to Manhattan - then called New Amsterdam - by the Dutch in the 1800s. Rudolph was soon was selling direct to customers through a hole cut in his factory wall.
The 1960s saw the growing number of stores standardised, all with folksy green roofs and "heritage" road signs. Production of the doughnut mix was centralised. Beatrice Foods bought the company but then, during the 1980s, the company was bought back by a group of franchisees. In 2000 it was publicly listed, but in 2004 trouble brewed in the US when it was investigated for corporate tax infringements. Profits took a dive but have recovered. Last year a new chief executive officer was appointed and the company restructured.
Some American stores are run by franchisees and some by the company itself. Here in Australia, it is entirely company run. The owner, trading as Krispy Kreme Australia, is the Sydney-based Food and Beverage Company, which is majority owned by Hunter Bay Partners (in partnership with Soul Pattinson Equity Limited), an investment firm helmed by Australians John McGuigan, John Atkinson and Neil Whittaker. The Food and Beverage Company also owns Jester's Pies and Little Creatures beer. McGuigan and Atkinson are both former international lawyers with the world's biggest firm, Baker & McKenzie, in Asia and the US. McGuigan ran the firm out of Chicago. Whittaker is a former CSR and Woolworths executive.
McGuigan admits the investment was initially a gamble. "Doughnuts are not the highest item on the Australian food totem pole. A lot of people were sceptical and wondered if we could get Australians excited about eating a doughnut. Bringing anything new into a sophisticated market has risks. And if we're honest with ourselves, it didn't elicit an immediately positive reaction."
But now Krispy Kreme Australia is firing. There are 15 stores in Sydney and another is opening before the end of next month. A Canberra store will open this month and Melbourne's Fountain Gate store in Narre Warren, on Thursday. In a rapid expansion schedule, the company hopes for up to five Melbourne outlets before the end of the year.
A big part of its strategy is grassroots "consumer" marketing. This means it eschews big-budget advertisements or billboards in favour of word-of-mouth and goodwill through involvement with communities around the stores.
Already Krispy Kreme has spread its tentacles deep into local organisations near the Fountain Gate store; for example, helping to raise $14,000 in charity money for a new sports scoreboard at the Hallam Reserve.
It has also become involved with AFL clubs, particularly Hawthorn, VFL clubs such as the Casey Scorpions, south-eastern suburbs' schools, the Starlight Foundation and the Good Friday Appeal. At the end of July, it will sell a special blue-sprinkled doughnut to help raise funds for Jeans for Genes. It has given away a lot of doughnuts.
McGuigan says that in the lead-up to the Fountain Gate opening he can detect a lot of "pent-up enthusiasm". Company marketing director Chris Edwards says it's an old-fashioned marketing tool.
"Just get out to the community and to the people who we hope we will be our customers and see how we can help them, and get them to try the product before we open the store," she says. "I call it a non-traditional and old fashioned - let the people be the judge of the brand without telling them what it is and why they should come and see us."
So there it is. They want to be your friend. They want to light up your life with a magic moment or two. They want to make communities better, the world a better place. And it's not food, as such, it's a "brand". Albeit a brand made of sugar and fat.
"We've never said anything but that we are a treat," says Edwards. "Wouldn't the world be horrible if all treats were ruled out? We're just like good-quality ice-cream and chocolate. As part of a balanced diet everyone should be able to treat themselves indulgently from time to time. We're not trying to be anything that we are not. We don't have low-fat doughnuts. It is what it is."