Does America’s Sweet Tooth Make Krispy Kreme Doughnuts (KKD) a Winner?

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However, a partnership is likely nowhere in Krispy Kreme Doughnuts (NYSE:KKD)’s future. The company’s CEO made it clear: Krispy Kreme is not interested in competing with Dunkin’ Donuts, Starbucks, McDonald’s, or any other popular coffee venue. The company makes doughnuts and it makes them well, CEO Jim Morgan insists. As Dunkin’ Donuts and Starbucks expand their menus, Morgan believes it’s important to note that those companies emphasize coffee and other items while, for Krispy Kreme, it’s all about the doughnuts. Apparently, it’s a bet that’s paying off, since the company is expected to experience a 7% increase in earnings overall this year.

Starbucks still the winner

While it’s easy to say that Krispy Kreme’s differentiating factor is a focus on one product, Starbucks Corporation (NASDAQ:SBUX) also has a similar overarching priority: coffee. Just as coffee is an afterthought to Krispy Kreme, food is a secondary item at every Starbucks location. Most customers come in for the coffee.

Despite Krispy Kreme Doughnuts (NYSE:KKD)’s considerable gains, it can’t come close to competing with Starbucks $3.56 billion in earnings for the same quarter. Compared to Krispy Kreme’s $8 million, even Dunkin’ Donuts is a higher-earner, with $23.8 million. While Krispy Kreme may satisfy your early-morning sugar cravings, it looks like coffee is still the champion when it comes to America’s breakfast addictions. As an investor, you may want to ignore your sweet tooth and put your money into coffee.

The article Does America’s Sweet Tooth Make Krispy Kreme a Winner? originally appeared on Fool.com and is written by Stephanie Faris.

Stephanie Faris has no position in any stocks mentioned. The Motley Fool recommends Starbucks. The Motley Fool owns shares of Starbucks. Stephanie is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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