Hot and fresh, but not in Philly

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A hot original glazed from Krispy Kreme is a wonderful thing. It melts in your mouth with a sugary gush, disappearing in less time than it takes to even think about the calories. Any aftertaste is easily washed away with the second hot donut, and the next after that, until the box has been entirely demolished, leaving you in a coma that’s as sweet as they get.

This is the Krispy Kreme ritual. But you can’t do it in Philadelphia.

The North Carolina-based company has more than 1,000 locations in 37 states and 25 countries around the world, but in Philly there are exactly zero.

“I do have four stores in the Greater Philadelphia Market!” says local franchise owner Keith Morgan when asked about the dearth, with only a hint of indignation. Those locations — Bensalem, Havertown, Collingswood, N.J. and New Castle, Del.— serve more than 43,000 customers each month with an average purchase of a dozen donuts, he says, “so people in our market are eating over 500,000 Krispy Kremes a month.”

Ok, fine. So our suburban friends could hook us up, and if we were really hurting, we could reserve a Zipcar or pull our own car out of its prime parking spot or wait for SEPTA or PATCO. But within the city limits: Nothing.

It’s not for lack of trying.

A trio of attempts

The brand, which has been around since 1937 but didn’t start expanding in earnest until some ownership changes in the ‘90s, opened its first shop in the area in 2002. The Northeast Philly store survived only three years, at which point it went down with franchise owner Rocco Fiorentino’s bankruptcy.

After that it was glaze-free times in the city for the next half-decade, until Morgan and his then-business partner (and cousin) Brian Zaslow snapped up the regional rights to the brand. They too picked the Northeast for their first outlet, set at 7855 Oxford Ave. in Fox Chase. In 2010, the store opened to lines out the door.

In spring 2011, Morgan ’s company — officially called Dough Nuts for Doughnuts LLC — branched into Center City, launching a shop on 16th Street just north of Chestnut. At that point, the stores in Bensalem and Collingswood were also open, and Morgan even hired a marketing and fundraising manager to help with promotion. (Side note: Who was it? Shawn Darragh, now co-owner of Cheu Noodle Bar and Bing Bing Dim Sum.)

But in December 2012, less than two years later, the Center City shop closed, even though the lease wasn’t up. Steve’s Prince of Steaks, which is in the location now, is actually Morgan’s subtenant.

And then the final blow came in 2013, when the Fox Chase Krispy Kreme also shut its doors.

Traffic vs density

Morgan’s not entirely averse to giving Philly another go. But if he was to return, he would be more careful about exactly where he set up shop.

A 55-year-old Lower Merion native and Penn grad, he doesn’t hesitate to admit he made some mistakes. His previous business experience was helping grow the AAMCO transmission company founded by his father into a national franchise. He had little experience on the franchisee side of the transaction, and even less with food service.

“Both those locations were bad locations,” Morgan says. “It’s not specific to the general market or to the brand itself.”

He went with the Fox Chase location because of population density. There were 300k people within three miles and 600k within five, generally good numbers. However, what Morgan didn’t take into account — and later learned — was that the Krispy Kreme business model is mostly based on drive-through sales. And the vehicular traffic at the Oxford and Hasbrook Ave. intersection wasn’t all that hot: Just 17k cars passing by daily (compared to 40k at the Havertown location, he says).

Moreover, the streets in the neighborhood are relatively congested and do not offer a lot of parking. So it turned out people just weren’t likely to drive over to satisfy a donut craving.

No dozens, no weekends

In Center City, it was a different story. Morgan had never counted on drive-by purchases there. He picked the location because 16th and Chestnut was sold to him as the No. 1 busiest pedestrian intersection in all of Philly, with 25k people a day traipsing through.

But there was something else he hadn’t yet realized about the Krispy Kreme model: It’s heavily based on selling donuts by the dozen.

That’s in contrast with Dunkin Donuts, which seems to flourish on every other corner. The difference: More than half of Dunkin sales come from coffee and other drinks. It actually wants to be known as a beverage company — that’s where the “America runs on Dunkin” slogan comes from. Not so at Krispy Kreme.

It’s not that people zipping by the 16th Street shop didn’t come in. Morgan estimates the store served around 4,000 customers a week. It’s just that they often left with only one or two donuts in their hand.

“Picking up a dozen or two and walking around the city is inconvenient,” he says. “Also, if the weather’s bad, even office workers who’d normally bring a dozen back to their colleagues aren’t going to want to do it.”

In consequence, the check average was less than half of the Krispy Kreme national. Plus, that part of Center City is relatively empty on weekends, which are the best days for Morgan’s other locations.

Combined with high rent, it just wasn’t worth continuing to operate. But Morgan, whose cousin left the franchise this year, is not ready to write off Philly entirely.

“Philadelphia is a very big donut town,” he says with emphasis, pointing out the proliferation of Dunkins and Wawas and even the cult adoration of Federal Donuts. “I do think there’s opportunity for Krispy Kreme to grow here.”

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Danya Henninger

Danya Henninger is director of Billy Penn at WHYY, where she oversees the team, all editorial decisions, and all revenue generation — including the...