Losing Dough From Low-Carb Diet, Krispy Kreme Franchise Files For Bankruptcy And Closing Stores

Livin' la vida low-carb is STILL haunting Krispy Kreme doughnuts

One of the most difficult guessing games that happens behind the scenes of the American economy is figuring out how to create a product that people will want often enough to turn a consistent profit. It is this decision-making process that will either make or break a company.

You hate to gloat when a company has to file for bankruptcy (although the media certainly didn't mind doing it when Atkins Nutritionals did in 2005 but then they completely ignored it when they emerged from bankruptcy stronger in January 2006). But when that company is Krispy Kreme doughnuts and they continue to struggle to remain viable promoting high-sugar, high-carb products as their mainstay, it's hard to feel sorry for them.

I first blogged about Krispy Kreme closings in June 2005 and then again in July 2006 when it placed the onus on "the low-carb Atkins diet fad for its troubles." Hmm, it seems that darn low-carb "fad" is still haunting them in September 2007 according to this Chicago Tribune story.

The Illinois franchise called Sweet Traditions LLC of St. Louis who owns the Krispy Kreme doughnut stores in the Chicago, Illinois area is in such dire straits financially that they have been forced to close half of the stores in that area and file for Chapter 11. Not surprisingly, the owner blames high rent and a declining customer base for the closings and economic losses, but does that REALLY explain it?

I'm willing to give them the benefit of the doubt regarding the idiocy of the corporate headquarters requiring gargantuan stores costing $3 million a piece, but what explains the loss of people coming into the Krispy Kreme stores? This is a trend that's happening nationwide as this once-mighty company is crumbling.

Again I must ask--WHY?! It's not difficult to figure out.

As I shared in this recent podcast, doughnuts are about the worst possible food you could eat if you are trying to lose weight and get healthy. With half of Americans on a controlled-carbohydrate nutritional approach, the frequency of doughnut consumption has become less and less.

Although Vegas Krispy Kreme franchisee Lincoln Spoor arrogantly declared last Fall that "everybody cheats" and his doughnuts are the best food to eat on a cheat (I'm not kidding, he REALLY said that!), the fact of the matter is livin' la vida low-carb is putting a serious hurtin' on this chain of stores whose stock dropped nearly 40 percent on Friday after poor second quarter sales reports. Krispy Kreme is expected to close SEVERAL more stores in the rest of this fiscal year. YIKES!

They've tried gimmicks like making "healthy" (translated LOW-FAT!) doughnuts and they announced late last month they were removing trans fats from their menu. While that's a nice PR move and all, it just further proves they don't get it. The business dynamic has RADICALLY changed over the past three years and Krispy Kreme hasn't adjusted to it.

If they want to survive and thrive again, then they will need to seriously consider trying to reach the low-carb market rather than shunning it and thumbing their nose at us. I'm not saying I would necessarily eat there because even a sugar-free, low-carb doughnut would likely be made with inferior sweeteners like the sugar alcohol maltitol, it would at the very least be a "if you can't beat 'em, join 'em" strategy for survival. Maybe.

It may be their only hope.

9-8-07 UPDATE: You get all kinds of people writing to you when you start talking about business failures like Krispy Kreme. Here's what one egocentric gentleman penned in an e-mail responding to my post:

Are you kidding me? You’re still spouting that low-carb crap. What are you, a shill for Krispy Kreme?

Take a look at Dunkin Donuts and Tim Horton’s. Why wasn’t their business adversely affected by the low carb craze?

Krispy Kreme went down because of bad management, not because of carb counting.

FYI The low carb craze has been dead for some time. Perhaps Krispy Kreme should look for a way to blame the weather for their poor performance.

Um, yes, that "low-carb crap" has helped me lose 200 pounds and keep it off for the past four years. I have no dog in this hunt with Krispy Kreme, but I'm simply calling it as I see it. Sure, they've made some management blunders, but they are the #1 doughnut company in the United States.

It shouldn't be lost on anyone that low-carb has made an impact on their business and they've even said as much as I noted in my column. Face it, people are eating healthier nowadays and Krispy Kreme has failed to change with the times. That's it, pure and simple.

As for the "low-carb craze" being "dead for some time," perhaps you should come visit my blog more often. Since April 2005 when I created this blog and when low-carb was supposed to be dead then, I have a blog that's about to hit 2 million pageviews since then, a successful podcast show, an independent book release, a fantastic new discussion forum, engaging and fun videos on YouTube, and even my own low-carb, sugar-free chocolate bar coming out later this month.

Does this sound like low-carb is dead? Me thinks not, my friend. Nice try, though.

Krispy Kreme Franchisee Says 'Everybody Cheats' On Their Diet, Doughnuts 'Best' Cheat Food

Spoor believes doughnuts are the "best" way to cheat on your diet

We all know how much companies like Krispy Kreme doughnuts are hurting because of the low-carb lifestyle. The corporate bigwigs at that company have said many times over the past couple of years that the Atkins diet has caused them to lose profits and has even been responsible for several stores that have been forced to close their doors for good.

But none of this fazes Krispy Kreme franchisee and CEO of the Westward Dough Operating Company Lincoln Spoor who owns the famous doughnut units located in the Las Vegas area. This In Business Las Vegas interview with Spoor, whose father incidentally was the CEO of Pillsbury when he was growing up, shows that he is unconcerned about the financial impact on his business of low-carb plans such as Atkins, Mediterranean, and South Beach which all encourage people following them to "stay away from sugar or stay away from the carbs."

"There was a time when our corporate franchisor had said the Atkins diet is hurting us," Spoor recalled. "I don't subscribe to that view. I think what's happening is people are very smart about what they eat these days. They ration their calories. You do, I do."

"Ration their calories?" What in the world does that mean, Mr. Spoor? Who in their right mind thinks eating ANY doughnuts, the worst possible food you could eat on a low-carb diet by the way, is a part of a healthy lifestyle? Is Spoor actually making the same kind of statements about Krispy Kreme doughnuts that this Coke representative recently made about Coca-Cola? Absurd!

But Spoor didn't stop there with his belief that Krispy Kreme doughnuts are permitted even when you are attempting to watch your calories and manage your weight. You are not gonna believe what he said next.

"We are saying, 'You know what, I'm rationing my calories or I'm on a diet but you know what, I really want something great. I really want something best of class, so if I cheat, and everybody cheats, then I'm going to cheat with the best.' That's what we do. People cheat with our doughnuts. They cheat with Häagen-Dazs ice cream, they cheat with Mrs. Fields cookies, they cheat with In-N-Out burgers."

"The best" food to cheat with is doughnuts? Are you kidding me?! EWWW! I think I'm gonna hurl. Furthermore, don't insult my intelligence by automatically ASSUMING that "everyone cheats" who goes on a diet. Sure, those who are not serious about their weight loss plan will slip up and eat those foods you mentioned, but they are in my opinion technically off their diet when that happens. Especially if those "just one time" cheats become daily ones like my friend Kent Altena noted in his latest Atkins educational video.

How often would people need to "cheat with the best" to keep a company like Krispy Kreme in business, Mr. Spoor? Daily? Weekly? Monthly? Pretty soon, that would begin to catch up to your business and send you crashing and burning like some of your fellow franchisees have. The fact remains that you NEED customers to come to your stores DAILY and ordering lots and lots of doughnuts to keep your business profitable. Otherwise, the decline in sales will continue.

What keeps you in business are the people who DON'T care about their weight and health who buy dozens of your products at a time to take to their office. While some can eat just one doughnut and be satisfied with that, there are many people who are like I used to be when I weighed 410 pounds who cannot stop feeding the sugar monster once it gets started. I could have easily down 6-8 doughnuts at one time and not even think about it back before I started livin' la vida low-carb. Not anymore.

Today, even the thought of one BITE of a doughnut just makes me literally sick to my stomach. Do they still look good? Sure. Do they even smell good? Of course they do. But I KNOW they cannot be a part of my healthy lifestyle change...EVER AGAIN! Once I go down that path, there's no turning back. Spoor disagrees.

"If you've gone off your diet if you've cheated a little bit and you've done that, it's worth it. You're like, 'You know what? I've cheated, I loved it, and I'm glad.'"

How arrogant is it for someone like Spoor to pretend to speak for people who have cheated on their diet?! How does he know that people who cheated "loved it" and are "glad" they did it? I for one would feel so guilty from an emotional standpoint as well as physically sick from consuming all those empty carbohydrates that it could lead me to a binge eating attack that would balloon me right back up to 400+ pounds again. NO THANK YOU!

Mr. Spoor looks like he's a normal-weight man in that picture at the top of this post and I have no idea if he has ever suffered with being overweight in his life. But as one man who has struggled with being addicted to sugar, I realized a long time ago that sugar cannot be a part of my healthy lifestyle. No matter what you say and believe about sugary doughnuts, Mr. Spoor, they simply cannot be a part of my life anymore.

By the grace of God and through this unique visualization method I used back during my weight loss in 2004, I was able to take back control of my weight and health and am going on nearly three years without allowing the large quantities of sugar that I used to consume daily to even cross my lips. There are just too many damaging effects that sugar can cause that it's better to completely do without it and I encourage others who go on low-carb to do the same. YOU DON'T NEED IT!

Being the businessman that he is, Spoor said he is tinkering with some products to try to appeal to people who are on a diet.

"We're working on a 100 calorie doughnut and a reduced sugar doughnut. And the key, of course, is to make it taste as close to our signature product as you can get. You do that two ways: One is by using the new sweeteners that are out there today, and the second is by reducing the portion. You go into any of the stores today, in the candy rack, all those candy bars are a lot smaller today than they used to be and the calories are lower and the sugars are a lower and the fat calories are lower and that's one way of doing it."

Oh boy, that's just what I want--a 100-calorie doughnut. Don't they call that a doughnut hole? HA! Jumping on the 100-calorie gimmick bandwagon isn't helping anyone with a smaller portion size, Mr. Spoor. What will happen is people will buy a whole bag of these "diet" doughnuts and rationalize in their mind that they can have more of them because they're supposedly better for them. Even a reduced sugar doughnut will still be jam-packed with white flour carbs that turn to sugar in the body. NOT GOOD!

Spoor said these new "diet" doughnuts are expected to be out in 2007 along with a whole wheat doughnut attempting to take advantage of the whole grain craze that's all the rage right now. Sorry to burst your bubble, Mr. Spoor, but none of these products are acceptable for those of us who are livin' la vida low-carb. You should be ashamed for promoting your products to people on a diet as a great way to cheat. What far-fetched, warped mind would even think of pushing doughnuts to people desiring weight loss? Only a cold, heartless CEO seeking to fatten his wallet at the expense of the weight and health of his consumers.

With half of Americans currently eating lower-carb, it's only a matter of time before even more Krispy Kreme stores feel the impact on their bottom line and are forced out of business. Pretending that your company offers products that are for every once in a while to try to drum up support among consumers is a sign of desperation and the clock is ticking to your final days. And Sporr knows it!