Rising Commodity Prices are Biggest Challenge: Krispy Kreme CEO

The rise in commodities prices are the biggest “external challenge” to donut company Krispy Kreme, James Morgan, the company’s CEO told CNBC Thursday, but he has a plan to offset those increases.

“We’re very comfortable through pricing and some economics in our stores, we’ll be able to offset that fully,” said Morgan, who noted that even with a price increase a dozen donuts at Krispy Kreme costs about $6 to $7.

He said the company will also reduce the size of its stores—from a high of 6,000 square feet to a range of 900 to 2,400 square feet. Morgan said a larger size didn’t suit the economics of the business.

Krispy Kreme operates in 20 countries, including Indonesia. Morgan said for some of the countries, the store operators offer different flavors in line with local tastes.

The company has also introduced bagels and ice cream to its menu, added Morgan, but it hasn’t rolled those items out fully until sales of them pick up.