Krispy Kreme returning to Philadelphia region

Glazed heavenlies!

Krispy Kreme Doughnut Corp., a hole in the local doughnut market, says it will reenter the Philadelphia area with 21 new stores in the next seven years. The stores could employ 300 people.

"Our dream is to have 40 to 50 stores," Keith Morgan, the new exclusive franchise-rights holder for the Philadelphia market, said Tuesday. "The brand is a survivor, and this is a good fit."

The last Krispy Kreme store in the Philadelphia area switched off the doughnut machine several years ago when the Winston-Salem, N.C. company was involved in a federal accounting probe and other financial trouble.

It's been a long road back to sweetness for Krispy Kreme. The company was a Wall Street darling when it went public in April 2000 at $5.25 and shot to more than $49 a share. But the doughnut company crashed back to earth in 2003 and 2004, as it restated past earnings and restructured its business. Krispy Kreme stock closed Tuesday at $4.88 a share, down 20 cents.

The first new Philadelphia-area Krispy Kreme is expected to open this year somewhere in the city. Morgan won't say where, but negotiations for a site are under way.

There will be a combination of larger stores that produce the doughnuts and neighborhood stores in a hub-and-spoke system, Morgan said.

Morgan, 48, is the former chief executive officer of AAMCO Transmissions, the auto transmission repair-shop franchiser with headquarters in Bala Cynwyd. AAMCO was cofounded by his father, Robert, in 1963.

Keith Morgan sold the company in 2006 and was looking for a new venture.

"To tell you the truth, I don't think I ever ate one of their doughnuts or stepped in one of their stores until I went to the Winston-Salem headquarters," Morgan said. "But I know of so many people that just know their brand."

His partner in the doughnut business is Brian Zaslow, a cousin and a former vice president of marketing for Aramark Corp., the Philadelphia food-service company.

While glazed doughnuts may seem to be very different from greasy transmissions, Morgan doesn't think so. "Retailing businesses are very similar," he said - and the most important part of each is the customer experience.

Morgan will have his hands full. The competition includes local bakeries, Wawa, Starbucks, and Dunkin' Donuts, which has added 200 stores in the Philadelphia area in the last six years, for a total of 500 in the region.

But, vows Morgan, "We will be making doughnuts seven days a week, 24 hours a day."