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DONUTS: Krispy Kreme and American Capitalism

Dollars to donuts is the subject of this story.  I realize that The Waterglass 3.0 is less donut-focused (unless Obama is eating a donut, in which case I guess someone will post about how his donut eating habits says something about how the man governs), but this story is too darn donutly interesting to ignore:

Krispy Kreme had been a popular DONUT chain in the South since 1937, but remained unknown to the rest of us until about 1996. That’s when the first Krispy Kreme popped up in New York City, on West 23rd Street.  Believe it or not, the town went nuts. 

DONUTS are a major food group in New York, where people eat many of their meals while walking. These fabulous new DONUTS were favorably reviewed by local newspapers. Lines formed when the “Hot DONUTS” sign was lit. The two young men who owned the franchise were extolled as modern entrepreneurs.

Krispy Kreme went public in 2000.  Krispy Kreme stock hit a high of about $49 in 2003. Then it started on a long downward spiral, losing about 90% of its value.  It over-expanded and took on crushing debt. There were allegations of management misconduct. Some franchises went bankrupt. Competition was fierce in the cheap eats category. More people started consuming healthy foods.

Now the company is under new management and seems to be on a bit of a roll.  Since February, when its share price hovered around $1, it has climbed steadily, topping $4 a share before settling at $3.49 as of October 8, 2009. It has fewer and smaller stores, but is parking them in strategic locations around the world.

The company even got some good press recently, if you want to call it that. A new junk-food craze involves a bacon cheeseburger sandwiched between two Krispy Kremes (Original Glazed). It weighs in at 1,500 calories, give or take a few.

A HOT CHEESEBURGER INJECTION INTO YOUR HEART, LOVE, KRISPY KREME

If this Krispy Kreme story is not proof that capitalism is still the best way to organize an economy, I don’t know what is.

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