Regional Krispy Kreme Franchise Halts Expansion Plans

PORTLAND, OR-Krispy Kreme’s Northwest franchisee has walked away from its planned store along Interstate 5 at Jantzen Beach and halted all other expansion efforts in its territory while new store concepts are tested. Gerard Centioli, chief executive of Icon, the Chicago-based restaurant company that owns the regional franchise, Kreme Works LLC, tells GlobeSt.com that Krispy Kreme is testing smaller store concepts that could be placed in smaller markets and supported by existing full-size stores that have been the standard.”The thought is that the smaller versions would provide an alternative to developing only full-size stores in larger markets or as a way of further penetrating markets,” says Centioli. “Right now [under our franchise agreement] we would only build nine stores in Oregon, but there would be a lot of geography between those; a smaller store concept would allow smaller communities to be developed, putting us closer to the [customer].”Kreme Works territory includes Oregon, Washington, British Columbia, Hawaii and Alaska. It can open 30 stores in those markets combined under its existing franchise agreement. It has to date opened two in the Portland area, eight in Washington, one in Hawaii and one in British Columbia. The smaller store concept would supplant the current practice of delivering product for resale at off-premise locations, such as grocery stores, says Cenioli. Even though it had yet to open a store there, Kreme Works had been paying $10,000 a month in rent since May for its would-have-been Jantzen beach location, the one-time Waddle’s Restaurant at 11900 N. Hayden Dr. The property is owned by Dkoop Properties, which acquired the restaurant in 1999 for $850,000. What Kreme Works had to pay, if anything, to get out from under its lease commitment for the Waddle’s site or any others was not immediately available. Centioli declined comment on the details of its arrangements and Dkoop’s Dirk Koopman did not return phone calls seeking comment. Koopman has said that he has a restaurant tenant in back-up position that would lease the space, but has not named the potential user.