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Fighting Back

Veteran doughnut franchise chain Winchell's is working hard to show it's still got it.

On special mornings, we'd get doughnuts for breakfast. Get in the car a few minutes early and head to the doughnut shop, sit in the swivel chairs and marvel at the great '70s-style brown-tone decor. For kids and businesspeople in Southern California, Winchell's was a great, pre-Starbucks breakfast destination. Coffee, milk, doughnuts, bear claws, whatever you wanted, quick and easy.

But the company lost steam, stores started closing and Winchell's, which at one time had 1,000 stores stretching from California to Ohio, became more of a regional favorite, maintaining most of its locations on the West Coast. When Krispy Kreme headed west with its glazed doughnuts, it suddenly seemed possible that Winchell's would become another of those "remember when" brands.

Somehow, though, the Santa Ana, California-based Winchell's saw the arrival of Krispy Kreme as an opportunity rather than a bad omen. Today the company has more than 200 locations in 10 Western states and intends to open 12 to 15 franchised locations and three company stores this year.

Franchise Zone spoke with Ron Roberts, director of marketing for Winchell's, about Winchell's comeback.

Franchise Zone: How has the company responded to Krispy Kreme coming into the market?

Ron Roberts: We do what we do best: focus on our core values. For example, we don't just bake once overnight, we have a baker scheduled all throughout the morning. We still create the hand-cut, hand-rolled product; they're made with care versus something else that's made by a machine. We're not a big factory--we're a neighborhood bakery, and we treat our guests in that fashion, and people enjoy that. They feel warm, welcome, comfortable...like friends. We're in a position to give them that one-on-one care and service.

Has the arrival of Krispy Kreme on the West Coast benefited Winchell's at all?

They've made doughnuts cool again, which is great. When you bring that type of awareness and excitement around doughnuts again, certainly it's going to help everybody, including us. We even have a location in Riverside where Krispy Kreme opened right across the street from us, and that store has increased in sales over the prior year.

When Krispy Kreme first headed west, what did Winchell's do to reassure franchisees about the new competition?

Winchell's has, and continues to, focus on its core competencies when it comes to competition from Krispy Kreme or any other doughnut shop. Our handmade products speak for themselves in terms of quality, size and variety. And Winchell's history in the marketplace sets it apart from the competition.

What is Winchell's doing now to assure potential franchisees that the company can compete with Krispy Kreme?

The results speak for themselves. Our same-store-sales have been up year over year for the two years since Krispy Kreme made its entrance into Southern California. We share this and other positive news with our franchisees via a new franchise operation manager and through a new franchisee section in our internal newsletter.

Why is Southern California so important to the company?

In Southern California, we have brand awareness of over 97 percent. That level of recognition is incredible for any company in the industry. We want to capitalize on that awareness and continue to build stores. We consider this our home and the market considers this our home, so through development we want to try to put as much of our product out there as possible.

What about markets outside Southern California where you don't have a 97 percent recognition rate?

Even in the outer markets, our awareness is still considerably high. We're developing outer market opportunities as well--we just signed on a multiunit franchisee in Nebraska. Southern California is a priority for us, but there are other opportunities out there that are equally important.

What has the company done to get its name out to people outside of Southern California and the West Coast?

We initiated a print advertising strategy both inside and outside of California, including a recent free-standing-insert in newspapers to promote our Frozen Mocha Cappuccino drink.

Why do you think Winchell's has such high brand awareness?

First and foremost, doughnuts are fun, and people remember things that are fun. There are so many people, me being one of them, growing up with the Winchell's brand. Families have enjoyed the product for over 50 years, and those memories remain alive and well.

You haven't changed the menu, but have you updated the look of the stores?

We've remodeled two stores, and both are very successful. We're looking to expand on that same design package in some of our other stores as well.

How is this look different?

It has more earth tones and warm colors, with natural wood tables and chairs, and is designed to create a warm feeling, to invite people to sit down, relax and enjoy their doughnut and coffee and just relax.

Besides the updated look and marketing campaign, what is Winchell's doing to let people know the brand is still vital?

Open new stores both inside and outside of California, and introduce new products and promotions.

With everything your company is doing, are you trying to go after new customers or welcome back older customers?

Both. Clearly we have an opportunity to reach new users, but we also realize some lapsed users haven't experienced the brand in a while, and we certainly want to attract them back to our stores.

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