Scandals Krispy Kreme Can Never Live Down
Krispy Kreme is more than a company with two misspelled words in its name. In fact, for many, it's nothing short of a donut juggernaut. According to Insider, the folks at Krispy Kreme make over 20 million of these fried-up desserts every year. This place is pretty popular, too, with over 7.7 million likes on Facebook and big-name fans like actress Reese Witherspoon, who shouted out this organization on National Donut Day over Twitter.
However, while a lot of people might like Krispy Kreme's delicious donuts or are in awe of its Guinness Book of World Records entry for the biggest-ever box of doughnuts, the company has also made plenty of embarrassing public blunders over the years. That's right, Krispy Kreme isn't perfect after all. Allegedly, it hasn't always looked after its employees, has occasionally hurt its customers, and has made numerous other mistakes. In fact, the company has been in serious trouble enough times that we're about to take a deep dive into some of their most notable scandals.
So, hold onto your seats, everyone, because we're about to plunge into the seedy underside of Krispy Kreme that it probably doesn't want you to know about. But, be warned: you may like this company a tad less by the end of this potentially shocking exploration of the scandals that Krispy Kreme may never really live down.
Krispy Kreme executives inflated the company's earnings
The year was 2005, and Krispy Kreme publicly admitted that it had messed up, as The New York Times reported. That year, Krispy Kreme released an internal report that stated some of their accounting had been completely inaccurate. Krispy Kreme admitted that it had actually discovered some $25.6 million worth of money lost through incorrect accounting. Nevertheless, the report didn't state that Krispy Kreme committed fraud, claiming that the issues were part of poor accounting practices and errors, but not a deliberate attempt to manipulate funds. Furthermore, company employees claimed that they didn't distort the numbers on purpose.
Moreover, this internal report hasn't been the only investigation that has probed into Krispy Kreme's earnings and come up with some funny numbers. In 2009, The Wall Street Journal wrote about how the Securities and Exchange Commission was interested in this organization's accounts and so began a probe into the donut company's earnings beginning in 2004. By the end of the investigation in 2009, the Securities and Exchange Commission concluded that Krispy Kreme had in fact inflated its profits on purpose. The SEC charged three former executives $632,919 for the company's ill-gotten gains, plus interest and another $150,000 worth of fines. The company itself, however, was off the hook, at least financially. But what did Krispy Kreme think about this situation? Well, naturally, it denied cooking its books.
Krispy Kreme got sued for causing sewer damage
Sewers are great. Seriously, who doesn't want water whisking away their waste and debris to a distant treatment plant in a safe and responsible manner? However, it's not always that simple when Krispy Kreme gets involved. In 2009, the Richmond Times-Dispatch reported that Krispy Kreme was blamed for harming just such a waste treatment plant in Fairfax County, Virginia by putting grease and yeast into the pipes and therefore clogging up the works. The company was additionally accused of breaking its lease at its property. In 2012, Krispy Kreme was sued by Colchester Security II LLC for these violations. Colchester Security was the landlord of the property which Krispy Kreme had hired out, and it wanted a pretty hefty $2.7 million for its troubles.
In 2013, this issue was settled when the Fairfax County Circuit Court ruled that Krispy Kreme had lost its case against Colchester Security. Krispy Kreme was additionally barred from entering a counterclaim for $3 million and was forced to settle the dispute with Colchester Security for an undisclosed amount of money.
Krispy Kreme accidentally referenced a hate group in an ad
Surely, the vast majority of people will agree that the Ku Klux Klan is a vile and abhorrent hate group that needs to be scrubbed from the face of the Earth. It's therefore probably not the best idea to reference them in a donut ad. However, as reported by The Guardian, a Krispy Kreme branch in the UK did exactly this back in 2015, though their reference appears to have been inadvertent. It all started when Krispy Kreme held a promotional event called "Krispy Kreme Klub Wednesdays," otherwise known as "KKK Wednesdays." Perhaps the cutesy misspelling theme could have been reviewed more stringently.
After this particular Krispy Kreme branch advertised this day on its Facebook page, it received some comments that noted that the abbreviation it used was actually a common reference to the aforementioned hate group. The offending post was quickly removed. A spokesperson who worked for Krispy Kreme told The Guardian, "Krispy Kreme apologises unreservedly for the inappropriate name of a customer promotion at one of our stores." They also noted that "This promotion was never intended to cause offence. All material has been withdrawn and an internal investigation is currently underway."
Krispy Kreme additionally talked to the Hull Daily Mail about this incident and said the branch was naturally going to retitle their promotional day. A spokesperson said, "We don't have a new name for the event yet but it is still going ahead this week."
Krispy Kreme failed to keep an employee safe
It's surely an employer's responsibility to keep their workers safe while they're engaged in their duties, right? This is why it's such a shame when companies fail to fulfill this duty and an employee's safety begins to look less than certain when they're only trying to do their job. And according to EHS Today, there was a seriously unfortunate time when the Canadian branch of Krispy Kreme didn't do all that it could to protect a member of their staff.
In 2005, the donut company in question was fined for violating Ontario's Occupational Health and Safety Act. This is because, in the previous year, a worker of theirs was driving a lift truck for the first time. Critically, the driver hadn't received any official training whatsoever and subsequently crashed while operating the vehicle. Moreover, this Krispy Kreme employee broke their leg as a result of the incident. During the court proceedings, Krispy Kreme pled guilty.
So, how much was the Canadian branch fined? Well, this organization got ordered to hand over $90,000. The court also made Krispy Kreme pay an extra $22,500 surcharge. This additional money went to a special provincial government fund that supports victims of crime.
Krispy Kreme stopped a student from selling donuts
In 2007, SW News Media reported that every Krispy Kreme in Minnesota, barring one, had closed. "They grew too fast, and they became like the Cabbage Patch Doll," stated Len Simich, a local man. "When you couldn't get your hands on it, everybody wanted it. Once they were mass producing them, nobody wanted them anymore." Since then, according to Foursquare, the last location mentioned by SW News Media has been closed.
Now cut to 2019, when CBS News outlined that a Minnesota college student named Jayson Gonzalez had begun selling Krispy Kreme donuts in this state. He did this by driving to Iowa each weekend and then purchasing the elusive donuts. He then sold them back in Minnesota for an estimated $17.00 to $19.00 per box. However, Krispy Kreme didn't approve of this situation and told Gonzalez to stop. Gonzalez subsequently wrote that he'd been forced to stop on Facebook, after which the college student received heaps of online support.
Moreover, once members of the general public became critical of the chain's move, Krispy Kreme talked to CNN, saying that it had changed its decision. A spokesperson said that Gonzalez would now be allowed to keep selling their donuts. They said, "We reached out to Jayson to express our appreciation for his love of Krispy Kreme and admiration for his entrepreneurial spirit."
Krispy Kreme didn't stay true to a sustainability rule in the UK
According to environmental organization Clarity, businesses in the United Kingdom must financially support recycled packaging efforts and the recovery of packaging waste efforts equal to the amount of packaging that they have put onto the market. Businesses can support these operations by buying Packaging Recovery Notes, which results in another group doing this work for them, or they can undertake their own recycling initiatives.
However, in 2011 PackagingNews reported that Krispy Kreme was fined more than £12,000 at the Woking Magistrates Court for not buying its required Packaging Recovery Notes. What's more, this donut company pled guilty to not recovering and recycling the correct amount of packaging waste between the years 2006 and 2009. Krispy Kreme instead joined a program in 2010.
Matt Higginson, an investigating officer at the Environment Agency, responded to the company's failures by stated that, "Although these regulations have been in place for over a decade, many businesses still remain unaware of their responsibilities. The money that Krispy Kreme UK has saved by not purchasing Packaging Recovery Notes would have directly supported the recycling industry." He also stated that this wasn't an issue that should be easily dismissed or forgotten. "All businesses must take their impact on the environment seriously and Krispy Kreme has failed to do this by not complying with these regulations."
Krispy Kreme was part of discrimination at one event
In 2018, Stuff reported Krispy Kreme opened its first-ever store in New Zealand. However, this grand opening can't be deemed a success because, during the proceedings, a security guard refused entry to a Filipina woman, as only New Zealand residents could win any of the free donuts that the store was providing. "I'm not a citizen here, I didn't have the right to fight," the woman later noted.
The Philippine ambassador in New Zealand, Jesus Domingo, was critical. "Why were they suspicious with a Filipina? Why did they suspect she was not a Kiwi? I would have no complaints if everyone's passports were being checked but this sounds like this is a simple case of racial discrimination," he said, going on to suggest that people ditch Krispy Kreme in favor of Filipino-owned and operated bakeries. Of course, he noted that people could always go to Dunkin' Donuts, too.
Krispy Kreme later apologized for what had happened, stating, "We are disappointed to have caused any upset with our New Zealand Grand Opening competition." And Andrew McGuigan, the company's chief executive of Australia and New Zealand, said that "When running a competition, we typically apply standard terms and conditions, which stipulate entry is open only to residents of the specific country where the competition is running [...] We understand New Zealand has a wonderful and diverse population. In hindsight, it was a lapse in judgment to apply our standard [terms and conditions]."
Krispy Kreme allegedly lost employee money
The folks at Krispy Kreme have financially settled on more than one occasion, it seems. In 2006, the Los Angeles Times reported that Krispy Kreme had agreed to give some of their workers $4.7 million after a financial dispute where employees alleged that Krispy Kreme had concealed the fact that their sales profits were going down. These losses reportedly resulted in some of its staff members losing heaps of retirement saving funds. The employees involved in this proceeding believed that their executives didn't tell them that the stocks which they bought for their 401(k) accounts or given as bonuses were actually pretty precarious investments, all due to the difficulties Krispy Kreme was experiencing at the time.
Krispy Kreme claimed that it did nothing wrong in regards to how it paid its workers or presented its finances. Nevertheless, this settlement was for a serious amount of cash. And hopefully, Krispy Kreme's staff members don't feel like they have to make these types of accusations again in the future.
An Australian Krispy Kreme giveaway caused controversy
Amidst a 2020 coronavirus lockdown in Melbourne, Australia, and while Sydney was on the edge of a larger COVID-19 outbreak, Mumbrella reported that Krispy Kreme decided to hold an ill-considered promotional campaign. Local stores offered free donuts to people whose birthdays fell between March 13 and July 13, an event that resulted in some people ignoring social distancing guidelines. The New South Wales Police stated that riot squad, traffic control, and general duties officer were called to more than one of the donut companies stores. Moreover, a Melbourne establishment had to close early.
The NSW Police was extremely critical of this free donut campaign. "This is nonsensical and defies logic," claimed acting assistant commissioner Tony Cooke. Meanwhile, the NSW minister for police and emergency services, David Elliott stated that "The recent images we have seen of mass gatherings and social distancing rules being blatantly ignored are disturbing."
Krispy Kreme ended up defending its decision to run the event despite the subsequent uproar. As a spokesperson for the company told Mumbrella, "When announcing the one-day-only birthday offer on social media, Krispy Kreme clearly outlined to customers the following message around social distancing: 'All government guidelines must be followed and customers will be required to comply with social distancing rules at all times.' " However, despite this being the case, Krispy Kreme still decided to suspend their campaign in the face of the ensuing backlash.