Low-Carb Craze Pummels Krispy
Kreme In Second Quarter
UNH Rosenberg Center Franchise 50 Index™
Slips 2.2 Percent
Contact: Lori Wright
UNH Media Relations
July 20, 2004
DURHAM, N.H. – The University of New Hampshire Rosenberg Center
Franchise 50 Index™ dropped 2.2 percent in the second quarter
of 2004 due to large losses by Krispy Kreme, McDonald’s and
In comparison, the S&P 500 grew 1.3 percent over the same period.
Following last quarter’s 54.9 percent jump in its stock price,
CKE Restaurants (CKR) is again the best performer of the index this
quarter with a 34.6 percent increase. CKR is the owner, operator,
and /or franchisor of Hardee’s, Carl’s Jr. and La Salsa
Fresh Mexican Grill restaurant chains.
CKR soared almost 20 percent June 23 after reporting much better
than expected financial results, driven by strong same-store sales
increases at its two major brands, Carl’s Jr. and Hardees.
Carl’s Jr. launched The 1 lb. Double Six Dollar Burger ™
and the Low Carb Charbroiled Chicken Club ™. Hardee’s
strong sales are fueled by the popularity of its Angus beef Thickburger
Krispy Kreme (KKD) is the worst performer of the index in Q2 2004.
“A victim of the current popularity of low carbohydrate diets,
such as the Atkins and South Beach diets, Krispy Kreme plunged 44.4
percent this quarter,” said Udo Schlentrich, director of The
William Rosenberg International Center of Franchising at the UNH
Whittemore School of Business and Economics.
Krispy Kreme is responding to weaker doughnut sales by expanding
its packaged doughnut business to new retail customers, introducing
new doughnut products (sugar-free doughnuts, doughnut holes, mini-doughnut
rings), and launching a new line of frozen drinks and its own brand
of coffee beans.
McDonald’s (MCD), the largest component of the RCF 50 Index™
with more than 19 percent of the market capitalization of the index,
dropped 9 percent this quarter mainly due to concerns over future
sales growth and the health of its top executives.
“ Though this quarter’s financial results are strong,
investors are now more focused on the future prospects of the company.
The current anti-obesity backlash (as illustrated by the recently
released documentary “Super Size Me”), tough year-over-year
growth comparisons, and macroeconomic factors that may negatively
impact discretionary spending on fast food (higher interest rates
and fuel prices) are expected to lead to lower sales growth in the
near future,” Schlentrich said.
From January 2000 to June 2004, the RCF 50 Index™ is up 34.0
percent, while the S&P 500 Index is down 18.2 percent.
The Rosenberg Center Franchise 50 Index™, developed by UNH’s
William Rosenberg International Center for Franchising, is an index
that tracks the market performance of the top 50 public U.S. franchisors.
These 50 franchisors represent more than 98 percent of the market
capitalization of all public U.S. companies engaged in business
The complete Franchise 50 Index™ Second Quarter 2004 Report
is available at http://www.unh.edu/news/docs/F50Q204.pdf.
For more information on the William Rosenberg International Center
of Franchising or the Rosenberg Center Franchise 50 Index™,
Editors: Udo Schlentrich, director of The William Rosenberg International
Center of Franchising at the University of New Hampshire, is available
to discuss the Franchise 50 Index™ Q2 report. Please contact
Lori Wright at 603-862-0574 or firstname.lastname@example.org
to make arrangements.