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Krispy Kreme to Close

Posted on: Friday, 3 March 2006, 06:00 CST

By Cahalan, Steve

ONALASKA, Wis. - The "Hot Doughnuts Now" illuminated sign at Krispy Kreme Doughnuts in Onalaska is about to go dark permanently.

The store, which opened with great fanfare in January 2004, will close within two weeks, Krispy Kreme spokesmen said Friday.

Krispy Kreme Doughnuts Inc., based in Winston-Salem, N.C., said franchisee Glazed Investments LLC of Oak Brook, Ill., filed Friday for protection under Chapter 11 of the U.S. Bankruptcy Code. Glazed Investments is the Krispy Kreme franchisee for Wisconsin, Minnesota and Colorado, and operate, the Onalaska store. Krispy Kreme has a 97 percent ownership interest in Glazed Investments.

Krispy Kreme said Las Vegasbased franchisee Westward Dough has reached an agreement to purchase 12 Krispy Kreme stores, as well as the franchise development rights for the three states, for about $10 million. Glazed Investments agreed to conduct the sale under a Chapter 11 section that will facilitate it, Krispy Kreme said.

The Onalaska location isn't among the stores to be purchased by Westward Dough.

Glazed Investments recently was operating 20 Krispy Kreme stores, a few of which have closed, Krispy Kreme spokeswoman Laura Smith said. The eight stores that aren't being sold to Westward Dough either. have closed or will close, she said.

"While we don't comment on the specifics of individual store closings, Glazed Investments has been carefully evaluating the performance of its locations and determine that closing this store was a prudent business decision," Krispy Kreme spokesman James Golden said of the Onalaska store.

Glazed investments leases the Onalaska store, Golden said. He did not know how many employees the store has, but said Krispy Kreme locations typically have 15 to 25 employees.

"The company anticipates being able to continue to service a significant majority of existing wholesale accounts" for the three- state area, Golden said.

But that might not include the LaCrosse area.

Woodman's Food Market Manager Tom Wysocki said Krispy Kreme notified him in a letter this week that the Onalaska bakery will close. The letter said that with the closing, "We will also be discontinuing our wholesale operations in your area," and that Feb. 11 will be the last delivery date.

Wysocki said he wasnt surprised to learn the local Krispy Kreme will no longer be one of his suppliers.

"They came out of the gate hotter than hot," he said. "Their sales steadily declined. I don't know why.

"I feel bad for them," Wysocki added.

Dave Skogen, owner of Festival Foods in Onalaska and Holmen, said Friday that those two stores quit carrying Krispy Kreme doughnuts a week ago.

"We discontinued their product line because they notified us they were going to go out of business," Skogen said.

"They said they could supply us from another store," but the two local Festival Foods declined.

"We'd seen Our sales of their product drop off," Skogen said, "I don't know why. It's kind of been troubling to me. I think it's an excellent product. Was it just something people got tired of? I don't know."

Copyright La Crosse Tribune Feb 04, 2006

Source: La Crosse Tribune

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