FORTUNE Cover Story: How Krispy Kreme Became the Hottest Brand in America; Story Uncovers the Company's Colorful Origins--and the Turbulent Saga of Its IPO

NEW YORK--()--June 23, 2003--With so many companies today desperate for customers, what business has shrieking fanatics lining up around the block in the middle of the night to buy its products? The answer, reports FORTUNE editor-at-large Andy Serwer, is Krispy Kreme, whose 291 stores did $491 million in sales last year--and whose net income per share has compounded at more than 43 percent since 1998. In "The Hole Story," Serwer goes behind the scenes to report on Krispy Kreme's little known past and talks to CEO Scott Livengood about how he plans to keep the company growing. The cover story appears in the July 7 issue of FORTUNE, available on newsstands June 30 and at www.fortune.com.

Serwer details the colorful history of Krispy Kreme, from its origins in the mid-30s when founder Vernon Rudolph founded the company in Kentucky, to Winston-Salem, NC where it is located today. Serwer reports that stories still abound about its heavy-drinking founder--and explains why, for much of the company's 66-year history, "smart" and "Krispy Kreme" rarely appeared in the same sentence. Serwer also details the intense game of chicken--Livengood was essentially pitted against a lone shareholder--that nearly prevented the company's IPO.

Key to Krispy Kreme's success is the power of its brand. The company spends nothing on advertising--yet its "retro red, white and green logo is rapidly becoming part of American culture," says Serwer. It's also hard to think of a brand that's been in more movies and TV shows--including How to Lose a Guy in Ten Days, Bruce Almighty, The Sopranos, and Will & Grace--this past decade, reports Serwer. "This is a marketing company," says company director Erskine Bowles. "Scott Livengood once told me if a finance guy ever gets a hold of Krispy Kreme, sell every share."

Ultimately, says Serwer, there are two related questions to ask about Krispy Kreme: Is the stock too high? And where does the company go from here? "Unless the fat police run riot across this land, Krispy Kreme is here to stay," concludes Serwer. "It isn't some fly-by-night dot-com. There's 66 years of history here. It's a product that people not only love but understand." In other words, don't bet against it.

Contacts

FORTUNE, New York
Jenny Parker, 212/522-7149
jenny_parker@timeinc.com
or
Caroline Plauche, 212/522-2134
caroline_plauche@timeinc.com

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Contacts

FORTUNE, New York
Jenny Parker, 212/522-7149
jenny_parker@timeinc.com
or
Caroline Plauche, 212/522-2134
caroline_plauche@timeinc.com