Snatching Victory from the Jaws of Defeat

A Krispy Kreme Story

In 1996, after 26 years of practicing law and developing real estate, I decided it was time to think about finding a business for my five kids. They ranged in age from 29 to 13, and the law was not going to be a chosen profession. In those early years, I sold too many hours to clients, and my own children were determined not to suffer the same fate.

Perhaps this idea of finding a business for my children came to me as the result of vacancies in a new shopping mall in Riverside that I'd developed with some associates. Bringing a business to University Village, adjacent to UC Riverside, would solve both a real estate and estate planning problem.

At the time, my daughter Wendy and her husband Roger were living in NYC, where he was director of real estate for Sony engaged in development of multiplex theatres around the country. I mentioned to Roger what I had in mind and encouraged him to let me know if he found a concept that would work at University Village and might be something that would appeal to him and Wendy or Wendy's sibs. (Subtext: I had an ulterior motive: how might I entice Roger to give up a job in NYC and bring his family back to California?)

A few months went by and Roger called me from South Carolina, where some desperate real estate owner, stooping to appeal to Roger's basest instinct, had taken him to his first Krispy Kreme to impress upon him how Sony Theatres would prosper if located on his nearby property. Roger is 6'6", 300 pounds (looks more like a football player than I do), so the idea that food might be persuasive showed some ingenuity.

After consuming a dozen fresh original glazed (the equivalent of one doughnut for mere mortals), Roger became convinced that this product was best in class. The developer told him that the company had just completed repaying bank debt incurred in an LBO by a group of franchisees, who purchased Krispy Kreme from Beatrice Foods, a Midwestern conglomerate. The plan, he was advised, was to expand for the first time out of the Southeast by franchising.

We both agreed that such a concept met both of my principal goals to (1) fill the vacancy in Riverside, and (2) buy a business the family would own. Roger made it clear that if we were lucky enough to get the rights from Krispy Kreme, he and Wendy would be interested in running the business.

Two years later, we were awarded the largest franchise agreement in the history of Krispy Kreme, and our lives were forever changed. Over the next six years, the Reinis family enjoyed a "Field of Dreams" experience opening 31 franchised Krispy Kreme Doughnut Shops, bringing the joy of the best doughnut on the planet to millions of Californians. At our peak, we employed 1400, enjoyed greater retail sales than any other Krispy Kreme franchisee, became the nation's #1 retailer of single servings of milk (a health food!) and the nation's leading wholesaler of fresh yeast raised doughnuts through 800 grocery stores. In 2000, I left the practice of law to become CEO and GC, attempting to harness the administration of this burgeoning enterprise, while Roger served as President and Wendy as VP of Operations.  During this same time, we created 1 billion media impressions and propelled a Krispy Kreme (franchisor) NYSE IPO to enormous success.

Then disaster struck, and we went through a terrifying period of six or seven years trying to salvage our business and even our lifetime savings. Personal guarantees brought me face to face with work-out groups from banks and an energetic franchisor, all of whom convened a dismemberment party with me as the centerpiece.

The difficulties started before the Great Meltdown in 2008, but for somewhat similar reasons. As I retell the story in case study presentations around the globe, I do not dwell on the causes, but simply describe the predicament and its effect on me and the family. At the time, it was devastating. As the years have passed, fortunes have changed considerably, and I no longer shudder in fear thinking about our proximity to cataclysm.

Our survival depended largely on operations execution, not only in the doughnut shops, but in courtrooms and boardrooms.  Perseverance and luck played some role in the remarkable outcome. How we turned all this around isn't unique, but it is instructive, and I've devoted more than ten years to the telling of the tale as a means of giving back.  I returned to the full-time practice of law and Roger and Wendy and one other run a prospering, growing Krispy Kreme doughnut business.

I've been asked for my definition of success, the answer to which is impacted temporally. In the early years, it might have been measured in money. After all we experienced, the answer is different: freedom from anxiety.

How we snatched a great victory from the jaws of defeat seems to be of interest to folks, as I'm invited to speak to executives all over the country. In 2019, I've so-far booked Dallas, San Antonio, Cincinnati, Minneapolis, San Diego, Los Angeles, and Kauai. I'm turning down more requests than I accept, but don't be deceived by this.  My honorarium is dirt cheap.

Besides the paltry money earned in these speaking engagements, I get a chance to see the country and my friends from Princeton, Class of '66. Bruce Smith, Jim Stoops, John Fischer, and Dick Rogers, so far. Looking for more.