Never Underestimate your Competition!

In 2003 Krispy Kreme, the maker of the Original Glazed doughnut, was the darling of Wall Street and with what appeared to be unlimited potential, it entered the New England market-the home base of Dunkin’ Donuts. Krispy Kreme was riding a wave of success with national media coverage, stocks and revenues at all-time highs.

Now they were boldly moving in on the home turf of the world’s leading baked goods and coffee chain, Dunkin’ Donuts. As we say in New England, don’t poke the bear!

The first store opened in Medford, Massachusetts, just outside of Boston, to a news media frenzy, with “people waiting in line for up to three hours,” according to Mayor Michael McGlynn in the Boston Globe.

Dunkin’ Donuts, anticipating the Krispy Kreme move into the marketplace, launched an all-out media campaign with the slogan “Bring Yourself Back.” They beefed up their customer service and continued to promote their widely recognized Dunkin’ Donuts brand of coffee. (Since 2006 their slogan has been “America Runs on Dunkin'” with a cup of coffee as part of their logo.)

By 2006, just three years later, the eight Krispy Kreme stores that had opened were either closed or close to it. As of this writing, there is only one store left in New England, in Connecticut.


Krispy Kreme, founded in 1937, was a successful business producing hot doughnuts in the Winston-Salem, North Carolina area. Slowly, over a period of years, it began to expand throughout the Southeast. They sold through grocery stores and built a small chain of mostly family owned stores. It wasn’t until the late 90’s that they began to expand outside their region and then in 2000 went public. That changed everything. Expectations from investors increased and the drive to expand accelerated.

Why did they fail in New England? As Sir John Lubbock once said, “What we see depends mainly on what we look for.” They looked at the size and scope of the opportunity and with dollar signs in their eyes and underestimated the competition. Here are things that they missed or misjudged:

* Location is King: Dunkin’ Donuts has 50 stores in the greater Boston area alone.
* Dunkin’ has grown their market since 1950 and accelerated expansion once threatened.
* The cost of a Dunkin’ franchise was $500,000 vs. Krispy Kreme’s at $2 million.
* Krispy Kreme offered one product line: Original Glazed doughnuts, with variations.
* Dunkin’ Donuts offered a wide range of donuts, baked goods, sandwiches and…
* Dunkin’ Donuts’ coffee is an icon in the marketplace. Krispy Kreme’s was just coffee.
* They underestimated brand loyalty and the willingness for Dunkin’ to push back.

Don’t make the same mistake Krispy Kreme did!


It’s a matter of clearly understanding your competitor and tracking their progress. Just because you may think you know your competitor, even over a period of years, things do change. Remember your customers have options and if you’re not locked into their wants, needs and desires, they will move on. You will be left thinking: How did that happen?

Here are some questions to ponder: Are the same key players still in charge? How do they position the business on their website? Has their product or service mix changed? Are they partnering with others? Here are some tools you can use to answer these questions and keep up with your competition and the marketplace:

1) Google Alerts: These email updates give you the latest Google search results, based on your queries, so you can monitor your competitors’ websites, news announcements, and activities of key people.

2) Monitor Websites: Quarterly monitor the websites of your competitors. Has it been upgraded? Do they have special offerings like free downloads, specials on products or services? Look to see if there is new management, logos or things that Google Alerts doesn’t pick up.

3) Attend Functions: Attend functions, trade shows or events they may participate in or sponsor. Learn how they present their products and services. What is the message and image they portray?

You will learn what works, what doesn’t, and gain a competitive edge.