Charity hot at Krispy Kreme

By Todd Cohen

WINSTON-SALEM, N.C. – The sweet success of selling doughnuts in more than 220 stories in the U.S. and Canada has Krispy Kreme Doughnut Co. making plans to endow its own philanthropic foundation.

In addition to continuing to earmark a percentage of pre-tax income for charitable giving, Krispy Kreme plans to endow a charitable foundation that eventually could have $10 million to $20 million in assets.

“We obviously would like this to become a major foundation that would have an impact on a national level,” says Paul Breitbach, retired executive vice president and chief financial officer who is forming the foundation and initially will run it. “We’re not interested in having a small foundation.”

Conceding its charitable giving was “fragmented” after trying different approaches, Breitbach says the company’s philanthropic focus would be youth and community.

Krispy Kreme has not decided how much pre-tax income it will contribute to charity once it creates a foundation. In past years, it has contributed roughly 2 percent a year, including donated doughnuts.

In the fiscal year ended Jan. 31, for example, pre-tax income totaled $42 million, and charitable contributions totaled about $840,000, with roughly one-fifth of it in donated doughnuts.

Breitbach hopes within six months to develop a mission statement for the foundation, which would focus on helping youngsters learn to read and encouraging parents to read to their children.

The company then would endow the foundation, possibly with shareholder contributions.

Details and timetables are flexible, Breitbach says, because the company wants to “do it right.”

In addition to its corporate philanthropy, Krispy Kreme since at least the early 1950s has offered schools, charities and religious congregations a fundraising program that lets them buy boxes of one-dozen glazed doughnuts – or coupons for boxes — for half-price, and then sell them at the regular price.

Sales from that fundraising program have surged in new franchise territories in the wake of Krispy Kreme’s initial public offering of stock in  April 2000.

In the fiscal year through Jan. 31, that program generated more than $27.2 million for Krispy Kreme in the 34 states in which it does business, says Sam Fowler, community partners director.

That included more than $7.6 million from new franchises, or nearly 10 times the total from new franchises two years earlier, he says.

Fowler, a school principal in Alamance and Guilford counties for 24 years, joined Krispy Kreme six years ago after students at Western Alamance High School raised $14,000 in three months selling doughnuts – enough to cover costs for about 40 extracurricular organizations.

“The growth opportunities are tremendous,” says Breitbach, who estimates that fundraising sales represent about 4 percent of system-wide sales – and could grow to 5 percent to 10 percent when new franchise markets mature in 10 to 20 years.

“It is a wonderful opportunity for the company,” he says, “and a wonderful opportunity for the communities we serve.”

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