Dubai: US doughnut and coffee chain Krispy Kreme will open its first UAE outlet in the Deira City Centre shopping mall tomorrow, the first of seven stores planned for the country this year.
The North-Carolina-based food company, which is listed on the New York Stock Exchange, aims to roll out 100 stores throughout the Middle East in the next five years.
The move follows a regionwide partnership agreement with Kuwait-based Americana Group, which owns franchise rights to fast food chains KFC, Pizza Hut, Hardee's and TGI Friday's.
Krispy Kreme has been operational in Kuwait since fourth quarter 2006, where sales hit approximately Dh31,700 in the first three months - a benchmark for the Dubai store, according to Americana Group officials.
However, retail analysts say the chain might struggle to take UAE market share from competitors Dunkin' Donuts and Starbucks unless it perfects its business model.
"I think the market will absorb the brand and there is undoubtedly available capacity with all the retail space coming up, but they didn't really penetrate the sophisticated UK retail market, which is a concern," said an industry analyst.
Well known for its traditional glazed doughnuts, Krispy Kreme enjoyed wild success in the US following its IPO in 2000.
However, analysts say the company expanded its store count too quickly, leading to several bank-ruptcies among its franchise partners and numerous store closures. It was also hit by an inquiry into its accounting practices.
Domestic issues did not seem to hamper the company's international expansion. By the end of 2007, overseas outlets will represent almost 50 per cent of its 400 store global presence, the company said.
Ayman Wagdi, chief marketing officer at Americana Group, said the company will take Krispy Kreme into the UAE, Saudi Arabia, Qatar and Bahrain this year, with a view to expanding into other Middle East countries in 2008.
Jim Rogers, director for international marketing at Krispy Kreme, said the company has high hopes of its latest Middle East venture.
"We think this is going to be one of the best openings we've had around the world. We would certainly liked to have been in the UAE sooner," he said.
FACT FILE
7.5m doughnuts a day
- The first Krispy Kreme outlet opened in 1937 after founder Vernon Carver Rudolph secured a doughnut recipe from a French chef- Krispy Kreme produces 7.5 million doughnuts daily throughout the world. - 14 million doughnuts will have been produced in the UAE's seven planned stores by the end of the year.- In 2001 the company opened its first store outside the United States near Toronto, Canada.
