The one time high-flying, hot-selling doughnut company, Krispy Kreme, might have to tighten their belt as a result of the low-carb diet craze. Since the company became public in 2000, for the first time, Krispy Kreme has predicted lower profits for the next fiscal year.

The profits were estimated to be around 10 percent below prior forecasts.

Experts stated that increased consumer awareness in low-carbohydrate diets has negatively impacted the flour-based food industry including products such as bread, cereal and pasta. Since the beginning of the year, the reduced carbohydrate consumption has grown significantly and has continued to skyrocket in the last two to three months.

The company stated they would be opening 100 new stores this year, which is around 17 percent less than previously planned.

Krispy Kreme’s revenues have dropped, particularly the sales of pre-packaged doughnuts at local grocery chains, 0.4 percent over the 12-week period, which ended April 18, 2004.

Signs of slowing Krispy Kreme revenues could be seen in the closing of its Montana Mills stores. One expert stated the new low-carb industry has posed a threat to the estimated profits for the remainder of the year. Executives at Krispy Kreme have planned to take an aggressive and logical approach, which included creating many operational initiatives, which would focus on increasing the productivity and profitability of the stores.

Yahoo News! May 7, 2004

USA Today May 25, 2004