Krispy Kreme Offers “Doughnut Deflation,” Making Wednesdays Sweeter

With the goal of providing relief to customers facing the brunt of rising fuel costs, Krispy Kreme (DNUT) has introduced a new pricing scheme for its Original Glazed doughnuts.

Calling it “doughnut deflation,” the company said that for the next four Wednesdays, it will reduce the price per dozen of these doughnuts to the national average price of a gallon of regular gas as of the previous Monday.

Orders can be made through the app, website, or at the drive-thru. Each person can order up to two dozen doughnuts at this price.

The price for April 13 has been fixed at $4.11, which is considerably lower than the original cost of $15.99 for a dozen donuts.

“While Americans deal with the rising PPG – price per gallon – of gasoline, we’re lowering our PPOG – price per Original Glaze. Inflation and high gasoline prices are serious and forcing families to make tough tradeoffs.

“A dozen Original Glazed Doughnuts for the price of a gallon of gas will help our fans make midweek a little sweeter for their friends and family,” said Dave Skena, Krispy Kreme’s chief marketing officer.

Wall Street’s Take

Recently, Citigroup analyst Sergio Matsumoto downgraded Krispy Kreme’s rating to Hold from Buy with a price target of $16 (19.5% upside potential from current levels).

Consensus among analysts is a Moderate Buy based on three Buys and two Holds. The average Krispy Kreme price target stands at $18 and implies upside potential of 34.4% from current levels.

Hedge Fund Trading Activity

TipRanks’ Hedge Fund Trading Activity tool shows that hedge fund confidence in Krispy Kreme is currently Very Positive, as the three hedge funds that were active in the last quarter collectively increased their holdings by 666,300 shares.

Takeaway

The company’s small promotional activities seem impressive and help attract investors’ attention. Further, hedge funds and insiders are depicting an encouraging picture for the stock.

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