Yahoo Finance’s Brian Sozzi and Brooke DiPalma speak with Krispy Kreme CEO Mike Tattersfield about the company’s public debut, trends in the dessert industry, outlook, and much more.

Video Transcript

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BRIAN SOZZI: Welcome back to "Yahoo Finance Live." Krispy Kreme hopes to make a delicious return to public markets today. The company will debut on the NASDAQ under the ticker symbol that only it can pull off, DNUT. Recall, Krispy Kreme was acquired by consumer goods investment firm JAB Holdings in 2016 for $1.35 billion. Using its IPO pricing, Krispy Kreme was valued at $2.7 billion.

Joining us now is Krispy Kreme CEO Mike Tattersfield. Yahoo Finance food reporter Brooke DiPalma is here as well. Mike, good to see you again here. Congrats on the deal. Look, let's just start with the pricing here. It's $17, that was below the $21 to $24 range. I'm surprised to see it, just given how far you've grown since you've been a private company. Is there a concern you're going to have to address amongst investors just based on where it did price?

MIKE TATTERSFIELD: Listen, today's a great day in the 84 years that Krispy Kreme is about to turn in two weeks. And we've been a public company once before. And we're now again. And we're able to do that again because we've transformed the business. We've focused on a brand, focused on our culture, and really changed our business model.

So that focus on the business model as we really drove an omnichannel to make donuts, fresh donuts, following where the customers are, we were able to double the revenue and double the EBITDA. So when we shared that story-- and you talked about that we acquired the business a little over a billion dollars and where we are today, it's 2 and 1/2 times the value that's been generated.

So when we chatted with investors and they saw the growth that we've had, it's really the tremendous journey that we still have in front of us, both in the United States, as well as the globe. This is a global brand, which is really interesting because you have this shared occasion's which what we do with dozens, accessible price points. And people love celebrating, right?

So that focus on that brand transformation has been incredible, as we've seen Krispy Kreme continue to go. So it's a great day. I'm really pleased.

BRIAN SOZZI: Yeah. And a great day for me too. Your team sent me about a hundred of these donuts this morning ahead of the IPO. So thank you to the Krispy Kreme team. Mike also too, you have an interesting approach to your business model. So you've been buying franchisees, taking ownership of them. That's a little bit of a different model, I would say, than others in the restaurant industry. Why have you taken that approach?

MIKE TATTERSFIELD: So that brand transformation I talked about, right, so it's a focus on the brand. In the globe, we only have 400 hot light shops-- a little less than 400 hot light shops across the globe. We love those shops. They're special. They produce the donuts. But instead of actually focusing on doing more donut shops, we actually tried to figure out, how do we actually build an omnichannel model to get to where the customers are.

The reality is those donut shops are where the donuts are produced. So in the US, to be able to really drive the brand, a lot of the system in the past, the franchisor/franchisee, today we're a branded donut company. And so we bought back the majority of the US system. So we have 85% control. And that really then allowed us to really expand the brand and get donuts to where the customers are, open up opportunities in fresh shops, for example, New York, where we deliver donuts there daily, sometimes twice a day fresh from our donut shops, as well as e-commerce and delivery, and actually, also deliver donuts fresh, from those donut shops again, to the wholesale, select grocers, or select convenience shops.

So it's a very different model. We run a branded donut company. And we've done that also in other countries around the world. So it's a very unique model of how you bring the same donut experience that you're getting at that Krispy Kreme donut shop and then making sure, wherever the customer is, you get it exactly fresh, just like you would at the shop.

BROOKE DIPALMA: --main tactics, the day of the dozens, graduation dozen, and the COVID-19 vaccination incentive. Moving forward, how will these marketing tactics play a role for the company and also help in luring those customers in?

MIKE TATTERSFIELD: So one of the things the company's been focused on the community and its history. So it's been doing fundraising for 50-plus years where Boy Scouts or Girl Scouts would come in and pick Krispy Kreme up. Clearly, 2020, where they couldn't get all the access inside of the shop, fundraising turned down. So we really stepped into the communities and gave health care, as you talked about, the teachers, the seniors, we gave away 30 million donuts last year.

And even this year, you can see how we've made that and we call it our acts of joy, foundational to the calendars. And this is not just the American calendar. These are the calendars where Krispy Kreme operates around the 30 countries of the world. So giving back to the community is absolutely part of our DNA.

That vaccine promotion that we started in March, we've given away 2 million donuts so far. And if you show your CDC card, you get an original glazed today. If you come tomorrow, you get another one, all the way to 21. So it's about how we do that.

The really interesting part is, because we only have less than 400 donut shops, when people make the journey, they tend to pick up a dozen or so over that shared occasion. And we've seen that how it really works.

BRIAN SOZZI: Mike, one of your chief rivals, Dunkin' Brands, which is now under private ownership, they have made a pivot the past three years, more coffee, breakfast sandwiches. Do you anticipate making some of those changes now that you're a public company and are going to have to really aggressively grow sales and profits?

MIKE TATTERSFIELD: So think about that again. I talk about these amazing specialty donut shops, right? We like them that they're less than 400. We'll build a few of them on a yearly basis, not a lot because that's where you get the production.

The unique thing about our business model that's different is to get access to where the customer is at. You don't need to build all these donut shops. A coffee house model requires extensive buildout to get a daily ritual as coffee.

Our incidence is about 2.5 times a year. We've grown that about 20% by focusing on donuts, focusing on the shared occasions. And then we drive frequency by gaining access to where the customer is at. So as they build a network effect-- so you can either get at that in a fresh shop, again that's e-commerce or even in a wholesale shop, that's what uniquely different. We focus on the donuts.

And we really leverage these specialty, amazing hot light shops that we have. We love them. And to give you an idea, last year, we sold 1.3 billion donuts. I love that. It's great about just the focus on being a donut company. You can see with our ticker, it's about donuts.

BROOKE DIPALMA: And switching, pivoting a bit, subsidiary brand Insomnia Cookies recently opened its 200th location in Pennsylvania. Moving forward, that really is a digital-first company. How are you looking at the footprint of those locations? And might we see ghost kitchens in order to fulfill this demand and expand that brand?

MIKE TATTERSFIELD: Yeah. Insomnia's just an incredible brand. It's warm cookies delivered, led by founder Seth Berkowitz, who's just done a brilliant job as he's thought about how do you bring cookies from an e-commerce and delivery model, very similar from how do you get a shared dozens or more to customers where they're at.

They continue to have a strong buildout program. And so you'll see that aspect. The buildout of a cookie shop is inexpensive. So we can see them continue to use a very similar approach to what they've done in their past. They've just crossed their 200th location. But they'll look at omnichannel, which they're already doing with delivery and e-commerce.

But again, love the margins of cookies and donuts. When you have great gross margins on those two products and you have a capital-efficient model to get them to the customer, you can really build a great business.

BRIAN SOZZI: Mike you've had, really, one interesting career. So you spent-- and I'm just going off your LinkedIn profile here. 12 years at Yum brands. Then you went to go work at Lululemon, where you were the COO. Then you ran Noah, a bagel company. Then you ran Caribou Coffee here. And now you're back at Krispy Kreme. Why do you like the morning category so much? And what made you get involved with the food industry?

MIKE TATTERSFIELD: I've been a merchant my whole life. I grew up in Mexico if you didn't know that. And my father really taught me a lot of trades from being an entrepreneur a lot in my life. So I've always been attracted to just amazing brands that you can build a unique culture, whether it's food, whether it's clothing. I even did a stint in Limited brands. But it's the business model and the ability to build something that can actually lead in the marketplace.

And then the effectiveness of-- can the brand and the culture drive a position where that business can absolutely dominate in its case? So with coffee businesses or Yum brands where you learn that global scale, I love those types of brands where they're pretty dominant in what they do every day. I've been very fortunate. I love my family because they've been very patient as we've moved around the world a little bit.

BRIAN SOZZI: That's a good point. Well, welcome back to public markets, Krispy Kreme CEO, Mike Tattersfield, good luck on your journey. I'm sure we'll talk to you soon. And good to see Yahoo Finance food reporter Brooke DiPalma.

MIKE TATTERSFIELD: You got all those donuts. Remember about shared occassions. You got to share those, Brain.

BRIAN SOZZI: I have to. I have 30,000 calories in my kitchen. I'm trying to fast here. So I'm going to have to--

MIKE TATTERSFIELD: All right. There's a lot there. Really appreciate connecting. Thank you to all the Krispy Kremers who show up every day. Take care, guys.

BRIAN SOZZI: You got it.