Doughnut company Krispy Kreme has officially filed for an IPO on Nasdaq. The North Carolina-based brand will be traded under the ticker DNUT.
Krispy Kreme has had a varied history with the stock market. In 2000, the company first went public on the Nasdaq, then switched to the New York Stock Exchange the following year. Within about five years, a snowball of suffering sales numbers, regulator investigations, and shareholders lawsuits led the brand to file for bankruptcy.
In 2016, Krispy Kreme was acquired by JAB Holding and became privately held. At the time, the doughnut maker was valued at $1.35 billion dollars. Comparatively, in 2020, the franchise reported $1.12 billion net revenue with a net loss of $60.9 million. Krispy Kreme’s current S-1 paperwork states that it hopes to raise $100 million, though they did not cite how many shares they would offer or what the initial stock price would be.
Along with the decision to go public, Krispy Kreme is planning major upgrades to attract more customers. Many shops are being redesigned, and a super-sugary new menu has been released, featuring new customizable toppings and glazes. The franchise also opened a 24-hour shop in New York City’s Time Square with a glaze waterfall and a “doughnut-making theater” where guests can watch the conveyor belt production of their doughnuts. By the end of 2022, the franchise hopes to open 450 new shops worldwide.
Krispy Kreme’s business strategy moves in the opposite direction of their competitor Dunkin’ who recently became private after being acquired by Inspire Brands in October 2020. Dunkin’s recent menu changes have less of a sweet-tooth appeal, such as their savory breakfast bowls and other items targeting a more health-conscious crowd.
Given Krispy Kreme’s past stock market struggles, some analysts are unsure if different leadership will lead to different results this time around. Krispy Kreme’s owner, JAB Holding, is the same conglomerate that owns Panera Bread, Au Bon Pain, Peet’s Coffee, Caribou Coffee, and Pret A Manger. Could the success of JAB’s other national brands foretell a brighter future for the doughnut franchise?
As the history of Krispy Kreme shows, even with significant brand name recognition the rise and fall of stocks can be hard to predict. Investors must weigh whether to pursue shares in major brands or smaller businesses with potential for growth. One reliable benefit of acquiring qualified small business stock (QSBS) is the sizable tax savings. Current tax law allows up to 100% of capital gains from QSBS to be excluded. Early investors and employees at Krispy Kreme may be eligible for capital gains tax savings if the QSBS requirements were met. Learn more about QSBS exemption guidelines at QSBSExpert.com.
This article does not constitute legal or tax advice. Please consult with your legal or tax advisor with respect to your particular circumstance.
