Should You Invest in Krispy Kreme?

PHOTO CREDIT: Krispy Kreme

OVERVIEW

Krispy Kreme is a company based in the United States. The company operates a chain of restaurants around the world where the company sells a variety of donuts, coffee, and other food. At the moment, the company operates over 1400 locations across 32 countries around the world. It was founded in 1937.

Why You Should?

  1. Krispy Kreme is a great reopening play in an investor’s portfolio. The company had to shut down and limit operations at all of its locations around the world as the pandemic spread. However, after this pandemic is over, the company will see strong growth at all of its locations, something that will also benefit investors.
  2. Krispy Kreme has an extremely strong brand recognition across all of the markets that it operates. It is one of the most popular American restaurant brands around the world (just like McDonald’s and Starbucks). Strong brand recognition will benefit the company as it will be able to grow across all of its markets and retain customers. This will also benefit investors in the company.
  3. Krispy Kreme is a great story of a strong turnaround. From accepting accounting wrongdoing and falling sales at its locations, the company is now starting to grow once again and decided to go public again a couple of months ago. This strong resurgence and growth in the restaurant industry benefited the company and will also benefit investors in the company.
  4. One of the main reasons why Krispy Kreme is seeing exponential growth is its unique product portfolio. From the classic sugar-glazed donuts to the new cinnamon roll and fall-themed donuts, the company continues to innovate and expand its product portfolio to the amusement of customers and investors. This strong product portfolio will benefit the company.
  5. Krispy Kreme also saw strong growth during the pandemic as consumers stayed at home. Many people consumed comfort foods like donuts and coffee when they were at home. Many utilized Krispy Kreme store drive-throughs in residential areas and mobile app ordering system to purchase their coffee and donuts. This benefited the company and its investors.

Why You Should Not?

  1. The company faces tough competition in the restaurant industry. Some of these competitors include McDonald’s, Starbucks, Restaurant Brands International, and many others. This competition might hurt the company and its investors in the future.
  2. Labor shortages as well as several other supply chain issues have hurt the company. The company has had to pay their workers more while seeing the costs for many other transportation services and raw materials rise. This has hurt the company’s margins in the short to mid-term and will continue to negatively impact the company until prices normalize.

MY OPINION

I think that Krispy Kreme is a good long-term investment due to its position as a good reopening play, strong brand recognition, a strong turn-around story, continued product innovation, as well as some positive impacts from the pandemic. However, tough competition and labor shortages might hurt the company and its investors in the company.

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Aaditya Patel is a writer who publishes analysis on companies publicly traded on the NYSE. Follow him @the_investing787 on Instagram for summary posts.

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Aaditya Patel

Aaditya Patel

Aaditya Patel is a writer who publishes analysis on companies publicly traded on the NYSE. Follow him @the_investing787 on Instagram for summary posts.

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