John Ivankoe: And of the DFD Doors that do particularly well versus the ones that might be significantly lagging, I mean what are the real differences that you’re kind of seeing? Are there any patterns that you’re now seeing in terms of what determines a good door versus a slower door as we really think about this footprint going forward?
Josh Charlesworth: Well, from a door point of view, it’s naturally the traffic of customers that are coming to that real estate. And we have worked with the customers to make sure that we are going to ones that that commands that the number of footfall that, that would make all this make sense. And they’ve got used to that. We’re not in every one of our customers is stores and have periodically moved around the units both between stores, but even more significantly within stores. There are certain parts of the store that are better, obviously the higher traffic elements of the store. You want to be as near as either the book to the entrance or the checkout as you can, but that doesn’t mean that it can’t work in the Bakery Aisle or the milk section either.
And we really work with our customers to optimize this. We’ve seen it work in big layout stores like a Walmart or I mentioned at the call a super target. We see it working not just in the big box stores, though, different grocery stores, convenience stores, now increasing drug stores. We’ve been rolling out with Duane Reade Walgreens. So yes, we are seeing different execution have a place and C-stores and even gas stations, we’ve been able to add. One of the things that really makes it work for us is to make sure the route profitability is right. So we focus on the number of stocks per route, the location of the stores on a route, make sure we’re optimizing that and these are all the areas that we are getting better at over time to make sure we don’t just get the top line, but we get the bottom line flow through and efficiencies that the model commands.
John Ivankoe: Thank you.
Operator: And we will take our next question from Brian Harbour with Morgan Stanley. Your line is open.
Brian Harbour: Yes. Thanks. Good morning, guys. Maybe just first, is there anything more you could say about kind of your pricing plans, especially given that you’ll €“ you’re kind of seeing more inflation in the first half. Do you intend to take any more pricing in the current quarter, for example, or how are you thinking about that?
Josh Charlesworth: Hi, Brian. Yes, and I’m assuming your questions around the U.S. but a lot of this holds for around the world in the pricing we have learned is successful as long, of course, as we offer a great product. And we’ve been very focused on that. In the U.S., we took pricing actions a little late last year. We mentioned that before in July and October on retail and then November on DFD. And we caught that up, it was lagging a little bit. And we’ve learned from that for 2023. We’ve definitely been very disciplined about identifying inflation as Jeremiah mentioned, we’ve got a good line of sight to inflation for 2023, even better than we had in 2022. And as a result, we already took another small price increase mix in January on retail low single digit.
And we actually enter the year at low double digits effective pricing. And we will adapt to the inflation numbers and a price €“ have a price strategy going forward that adapts to them in both retail and DFD. And as Jeremiah said, we’ve got a reasonable pretty good view that the inflation will be higher at the beginning of the year €“ the end of the year. And so it’ll be natural that our pricing strategy will follow that.
Brian Harbour: Okay. Thanks. And then just in the international segment, could you help us think maybe a little bit about kind of the pace of growth there? Is it fairly, even through the year is when will we see kind of some of the new market openings take effect? And then also, I know that in 2023, the points of access growth was more weighted to the first half relative to the second half. Is that what you expect in 2023 as well?
Mike Tattersfield: So from a country perspective, Brian, this is Mike. I’m €“ we anticipate opening up anywhere between five of the seven countries, right? Those will be paced throughout the year fairly evenly. What I’m pretty pleased about that is that you’ll see, last year we were getting into the Middle East and even in the African continent, and now this year we’ll be opening up in the South America, Central America, the Caribbean as well, right? And then including Europe as well as they’re probably on the back end of the year. So we see that type of pacing. From a point of access, it ends up being fairly consistent, where you see the points of access being driven quarter by quarter with the back end of the year. I’m not fairly similar, right? It’s grocers or the doors tend to kind of look at their rationalization around holiday times. I don’t see any of that being anything different.
Brian Harbour: Thank you.
Operator: And we will take our next question from Bill Chappell with Truist Securities. Your line is open.
Stephen Lengel: Hey, good morning. This is Stephen Lengel on for Bill Chappell. Thank you for taking our question. Can you provide us
Mike Tattersfield: Hey, Stephen, how you are doing?
Stephen Lengel: Hey guys, how’s it going? Can you provide us more color on how much of the solid growth in 4Q was driven by the seasonal demand? And kind of how we started to see some normalization in January and February to date as consumers kind of cut back on indulgences post holiday or has momentum kind of carried over into these months? Thank you.
Mike Tattersfield: So again, €“ I’m €“ yes, so I’ll answer the first one, just the consumer. I’m €“ as we think about it, right? So our business model again is dozens gifting sharing, it’s not a high frequency model. And we even talked about people continue to buy our brand and a dozen to give to someone else. The affordable indulgent piece is a clear driver, which is really helps all of our consumers base about being resilient. And then Josh even talked a little bit about the premiumization that happens as we start to get into the Halloween or the holiday. And even, for example, when people say January or this, well, we actually introduced a very high premium, very indulging product in first part of the year and extremely successful.
And we just finished with our probably one of our highest days of the year from a concept of what we do across the world in Valentine’s Day. So again, from that gifting model very successful Valentine’s Day. So again, this is a gifting kind of business that follows along. And that’s where the models really change in the difference. So that’s points of access allows the biggest opportunity that we have from the customers to get it to where they are. That is their number one challenge that they have for us is they can’t get the doughnuts, right. So here’s what it is from a €“ I believe your second part of the question just related to anything volume based.
Josh Charlesworth: Well, I think that look €“ just as you think about 2023, I mean, we’re not assuming any sort of backdrop of economic growth or changes like that. We are focused on is the point of access expansion that reflects the number one reason again and again why a consumer may not choose to buy a Krispy Kremers they just can’t get it. So that’s the number one driver of growth, getting those points of access out to people, making them more convenient through this delivered fresh daily channel. From an activation point of view, we’re also as you mentioned leveraging not just seasonal, but other specialty doughnut opportunities to take that further, to increase frequency, to make sure that we’re driving the premium growth.
So it’s definitely not just about the seasonal celebration events there. And in fact, as Mike said, we can find a season in January, February, March, April every month of the year when somebody’s looking for an indulgent sweet treat. And so I think when you think about Q1, we expect top line momentum to continue. And certainly, the evidence so far would say that there’s no sort of change in our consumer’s behavior.
Stephen Lengel: Great. Thank you so much guys.
Operator: There are no further questions at this time. I will now turn the call back to Mr. Mike Tattersfield for additional and closing remarks.
Mike Tattersfield: Thank you everybody for being on the call. Again, I’d like to thank all the Krispy Kremers. I really €“ I’m a really showed up every day in 2022 and made our brand really live its purpose on every single day. And I look forward to catching you up as we move along the year. Thank you very much.
Josh Charlesworth: Thank you.
Operator: And ladies and gentlemen, this concludes today’s conference call and we thank you for your participation. You may now disconnect.
