31 January 2005

It's only a mug. The Krispy Kreme experience.


I've recently returned from New York and while there ducked into Krispy Kreme and espied one of their great vintage diner mugs, which sell for around $5.95 in their US stores and franchises.

The great thing about diner mugs is that reek of American coffee and donut culture, something Krispy Kreme trades on heavily and is part of their brand essence. The "Coffee and Donuts since 1937" surely says it all. As does this statement from Krispy Kreme themselves:

"There's nothing quite like drinking coffee or tea from diner mugs. They're solid, simple, functional, and unpretentious."

This surely is a brand statement about Krispy Kreme, if I ever heard one, and also attractive at the same time.

Now Krispy Kreme is a franchise business and the business of selling coffee and donuts hasn't been going well lately. From highs of $40 last year to under $9.00 on the US sharemarket, falling sales as well as investigations into misreporting from the buy back of underperforming franchises, it's not been a great start to 2005 for Krispy Kreme.

When I arrived back in Sydney, I remembered the diner mug (I have few of those vintage Victory mugs, kind of a Holy Grail for American diner mug collectors) and visited my local store to buy one. So what do I find? A plain ordinary garden variety $0.99 type mug emblazoned with the bow tie logo, sitting behind plexiglass and selling for A$8.95.

Why should I be concerned about this if I as Krispy Kreme's management am worried about the performance of the Australian franchise?

Yes, it's been hugely successful in this country, but is the allure wearing off? What's in a coffee cup?

Firstly, this business is about donuts and coffee. Australians may not know much about American diner mugs but they would recognise one. They want an American experience, they like the retro aspects of this brand and they are happy to buy into it. Secondly, the functionalism and robust design of the mug itself says as much about the Krispy Kreme brand and the bow-tie logo and the in-house production line. It's absence and replacement with an eratsz version, in branding terms, might be an oversight but it also might be a critical branding issue.

Global brands can have local nuances, but when something speaks so specifically of a brand's values and essence that it is replaced by something so much less so, those values and essence and the brand building associated with it are diminished. The experience is less.

When I looked for a comment card, I was interested to find that it asked me to rank the Krispy Kreme experience. So I am sending mine in. You'll know what I'll be talking about.

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