US doughnut chain Krispy Kreme and Canadian counterpart Timothy Hortons are moving into each other's territory.

According to a report in the Wall Street Journal, North Carolina-based Krispy Kreme plans to open 39 outlets in Canada over the next six years, with the first due to open doors in Toronto early next year. The group's sales have more than doubled since 1996, last year reporting turnover up 40% to US$448.1m. Although still small with just 192 stores, the group is well represented nationwide, with a presence in 32 States. Alongside its Canadian campaign, Krispy Kreme plans to increase its US store count to 360.

Krispy Kreme's fresh-out-of-the-oven doughnuts have won a cult following - brides have even been known to serve them in place of wedding cake.

North of the border, meanwhile, Tim Hortons has gained even greater status. Founded by a well-known ice hockey player, the group is now owned by US burger giant Wendy's International, but most Canadians are ignorant of this and the group claims "We never forget where we came from." There are already 1,932 stores in Canada, serving a population of just 31 million. Together with rival providers such as world leader Dunkin' Donuts, this gives Canada more doughnut shops per capita than any other country.

Tim Hortons employs 42,000 staff and has already moved into the US, opening 30 stores in the Buffalo area alone. It is also targeting other US cities near the Canadian border, such as Detroit. Its US operations are expected to break even by the end of 2002, and possibly even turn a modest profit. The group plans to open 28 more stores in the US this year, as well a further 180 at home in Canada. It has announced a brave foray into Krispy Kreme's core southern US territory, where it will operate stores in West Virginia and Kentucky.

Both groups are bullish about their chances for success in each other's home territory. Tim Hortons says its product diversity will give it an advantage over Krispy Kreme. The Canadian group sells soups and sandwiches and is planning to include baguettes and sourdough, whereas Krispy Kreme focuses exclusively on doughnuts. This single-mindedness, on the other hand, is what gives the US group its confidence. "All we have are our doughnuts," says the company's spokesman Mr Parker.


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