Until he joined Krispy Kreme Doughnuts five years ago, Rob Hunt’s career demonstrated textbook moves through blue chip organisations. A graduate of the Unilever management training programme, he held senior roles at the consumer goods giant and at drugs company Pfizer. However, something was missing. Rob became increasingly frustrated with the lack of autonomy and headroom endemic in large organisations. “When you’re part of this juggernaut, it’s very difficult to make an impact,” he says. “And I realised that I wanted to be able to make a difference to what was going on.”
Rob found he was something of an entrepreneur-in-waiting and began searching for a more dynamic working environment. He found his new role at doughnut company Krispy Kreme the old-fashioned way, via an ad in the Financial Times. The company is a $350 million turnover franchise operation in the US and opened in the UK in 2003.
New opportunities with Krispy Kreme
Rob joined Krispy Kreme in 2007 as Finance Director and is now Joint Managing Director. He found the real-life experiences he had been missing were here available in spades. Joining just one year ahead of the credit crunch, he found things that he had previously taken for granted, namely IT support and office facilities, to be his frontline responsibilities.
The company was growing fast, but it wasn’t long before the worsening economic conditions began to bite. Rob signed off his first set of accounts that put turnover at £18.6 million. The company had drawn up plans to open stores at a rate of ten a year and the first decision they took on the back of the crisis was to halve their expansion programme. Rob recalls tense conversations with landlords, costly commitments the company had no choice but to honour, combined with stringent cost control. But in retrospect the company never got to the point where the directors’ concerns became overwhelming. “We traded quite well throughout,” he says. “It was a case of reviewing the fundamentals rather than real fire-fighting.”
"It's better to do one thing that's great than two things that are OK." Rob Hunt, Krispy Kreme Doughnuts
Rob believes that a sound business with the right product, carefully managed, can weather even severe storms. “Perversely, it doesn’t matter what the conditions are,” he says. “What matters is how you trade. With Krispy Kreme, we have a positive product, a treat. If you have a positive and relatively cheap product and you’re offering a good experience, people will buy into that.” Twelve months into the financial crisis and the company saw signs of improvement. “Like-for-like sales were holding up pretty well and footfall was good. Those indicators gave us the confidence to start trying to expand the business.”
The company refinanced with Santander on the back of a new five-year plan, and – with his newfound ability to sign longer-term deals – Rob says the company is now well placed for growth, with plans for 10 more stores over the next 12 months. “We are rolling out our brand across the UK and our plan is to double in size.” Rob expects to see turnover of £40 million for the current financial year and aim to reach £80 million over the next five years.
One significant lesson, Rob says, is the difficulty of identifying the point at which you are no longer a small business able to concentrate all your efforts into top-line growth. It’s the point at which back office systems become more mission-critical, when marketing and business plans need refining, when directors need to concentrate on the business more widely. “Virtually all of our investment went into store openings and not into our back office,” says Rob. “We probably got that transition around 12 to 18 months too late and consequently our infrastructure was underdeveloped.”
With hindsight, Rob says he would have looked into the store portfolio more critically. But at the time the company’s momentum was such that the desire to build revenue by opening another store outweighed everything else. He also advises to be wary of false economies. Rob believes that if you have a strong and distinctive brand then it is crucial to uphold that and to continue working to the gold standard. “When you’re starting out, cash is by far your most valuable resource and using it wisely is very important,” he says. “That’s easy to say and harder to do, but it’s better to do one thing that’s great than two things that are OK.”
Value your employees
Rob also goes to great lengths to ensure they look after their employees. They take board meetings around the country, visit the UK’s 44 stores as often as possible, and are as likely to hold a marketing meeting in the Leeds store as in the London HQ. “We have an absolute drive to keep head office as small as we can,” he says.
Rob understands the value of knowing where your cash stands in both good times and bad. “Nothing will kill your business more quickly than running out of cash,” he says. “We got close a couple of times when the economy was worsening.” He also believes in the importance of making sure you know what your customer wants. “It’s a cold world out there and if they have a bad experience they don't come back,” says Rob. “So make sure you’re giving them the product and the experience they want. A strong brand and good customer experience creates something more interesting for the consumer.”
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