1 00:00:02,654 --> 00:00:03,264 Serving more than 2 00:00:03,394 --> 00:00:05,179 three million customers a day, 3 00:00:05,266 --> 00:00:06,745 doughnuts are an industry 4 00:00:06,876 --> 00:00:08,878 worth over $7 billion. 5 00:00:10,880 --> 00:00:12,838 Today, New York City has a Dunkin' Donuts 6 00:00:12,925 --> 00:00:16,277 nearly every five blocks, 7 00:00:16,364 --> 00:00:18,018 but in the early 20th century, 8 00:00:18,148 --> 00:00:19,715 doughnuts are far from common. 9 00:00:21,108 --> 00:00:24,285 The doughnut was not really popular, 10 00:00:24,372 --> 00:00:27,723 known, understood, or even available in America. 11 00:00:29,159 --> 00:00:30,465 Until two dropouts... 12 00:00:30,595 --> 00:00:31,596 We're gonna make the best doughnuts 13 00:00:31,683 --> 00:00:32,467 you've ever tasted. 14 00:00:34,599 --> 00:00:37,428 Build one of the country's first chains, 15 00:00:37,515 --> 00:00:39,561 turning doughnuts into an industry. 16 00:00:41,606 --> 00:00:44,174 But not far behind are two food truck owners 17 00:00:44,305 --> 00:00:46,872 with a dream of building a franchising empire. 18 00:00:47,003 --> 00:00:49,136 You want us to sell 32 different flavors of doughnuts? 19 00:00:49,223 --> 00:00:50,093 No! 20 00:00:50,224 --> 00:00:51,181 52. 21 00:00:51,268 --> 00:00:52,052 Kicking off a race 22 00:00:52,182 --> 00:00:54,315 to bring doughnuts to the world. 23 00:00:54,402 --> 00:00:56,491 They were putting quantity over quality. 24 00:00:58,101 --> 00:00:59,320 I think they know they can't beat us. 25 00:01:01,061 --> 00:01:03,237 They'll reinvent breakfast 26 00:01:03,367 --> 00:01:05,674 and give America the coffee break. 27 00:01:05,761 --> 00:01:07,893 Dunkin' Donuts finds themselves 28 00:01:08,024 --> 00:01:10,200 at this make or break point 29 00:01:10,331 --> 00:01:13,638 where they need something to propel them over the top. 30 00:01:13,725 --> 00:01:16,989 And one partnership won't survive the ride. 31 00:01:17,077 --> 00:01:18,600 What are you doing? 32 00:01:44,191 --> 00:01:46,018 It's 1937, 33 00:01:47,977 --> 00:01:49,544 and Americans have been living 34 00:01:49,674 --> 00:01:51,633 through the economic misery of the Great Depression 35 00:01:53,069 --> 00:01:54,636 for nearly a decade. 36 00:01:54,766 --> 00:01:56,464 People are really short on cash. 37 00:01:56,551 --> 00:01:58,248 They're looking for ways to get a meal 38 00:01:58,335 --> 00:01:59,815 however they can. 39 00:01:59,902 --> 00:02:01,121 Hershey's has Mr. Goodbar, 40 00:02:01,251 --> 00:02:02,557 which has a lot of peanuts in it. 41 00:02:02,644 --> 00:02:04,515 Five cents makes a great lunch. 42 00:02:04,602 --> 00:02:06,735 It's interesting to see these different products 43 00:02:06,865 --> 00:02:11,566 being kind of reinvented as lunch instead of just a treat 44 00:02:13,002 --> 00:02:14,090 because people were hungry out there. 45 00:02:15,831 --> 00:02:17,485 Snacks like Moon Pies, 46 00:02:17,615 --> 00:02:20,836 3 Musketeers bars and Ritz crackers begin to catch on. 47 00:02:22,838 --> 00:02:23,795 During the depression, 48 00:02:23,926 --> 00:02:26,276 you suddenly have entrepreneurs 49 00:02:26,407 --> 00:02:29,323 creating snacks for three cents or a nickel 50 00:02:29,453 --> 00:02:35,546 that were original, fun to eat, not expensive, filling. 51 00:02:44,729 --> 00:02:46,644 In Winston-Salem, North Carolina, 52 00:02:46,731 --> 00:02:48,690 two brothers are looking to capitalize 53 00:02:48,777 --> 00:02:52,172 on the cheap snack craze, but with something new. 54 00:02:56,785 --> 00:02:59,831 Vernon Rudolph has spent weeks crisscrossing the country, 55 00:02:59,918 --> 00:03:02,182 searching for the perfect place to start his business. 56 00:03:04,314 --> 00:03:05,446 This place is just great. 57 00:03:06,795 --> 00:03:07,752 It really is, isn't it? 58 00:03:07,883 --> 00:03:08,710 No! 59 00:03:10,233 --> 00:03:12,757 Vernon Rudolph and his brother, Lewis, 60 00:03:12,888 --> 00:03:14,716 by the time they got to Winston-Salem, 61 00:03:14,803 --> 00:03:18,328 they had $25, but Vernon was intuitive. 62 00:03:18,415 --> 00:03:19,721 He was driven. 63 00:03:19,851 --> 00:03:22,767 Lewis was maybe a little more reserved, 64 00:03:22,898 --> 00:03:24,291 but they complemented each other. 65 00:03:26,423 --> 00:03:28,164 So, what are you planning on doing here? 66 00:03:29,905 --> 00:03:31,646 We're gonna make the best doughnuts you've ever tasted. 67 00:03:35,606 --> 00:03:38,653 The likely origin of the doughnut in the United States 68 00:03:38,783 --> 00:03:43,397 is from the Dutch immigrant food called oily cakes. 69 00:03:47,052 --> 00:03:49,011 They're these fried little cakes 70 00:03:49,141 --> 00:03:50,273 that really get their start 71 00:03:50,404 --> 00:03:52,928 with the Dutch colony in New York. 72 00:03:55,496 --> 00:03:57,062 The modern cake-style doughnut 73 00:03:57,149 --> 00:04:00,109 starts developing a following during World War I. 74 00:04:02,807 --> 00:04:06,898 The Salvation Army Lassies, as they were called, 75 00:04:06,985 --> 00:04:09,684 on the front lines and they're trying to make treats 76 00:04:09,771 --> 00:04:10,598 for the boys in the trenches. 77 00:04:12,861 --> 00:04:16,038 They have white flour, they have lard, they have sugar, 78 00:04:16,168 --> 00:04:18,432 then they think, "Well, let's make doughnuts," right? 79 00:04:19,781 --> 00:04:21,348 This is enables these soldiers 80 00:04:21,435 --> 00:04:23,959 to get a taste for doughnuts, 81 00:04:24,089 --> 00:04:27,092 but it really isn't the popular treat. 82 00:04:30,008 --> 00:04:31,401 Even though the doughnut is dubbed 83 00:04:31,532 --> 00:04:35,666 Food of the Century at the 1934 World's Fair, 84 00:04:35,753 --> 00:04:38,234 three years later, they still haven't caught on. 85 00:04:40,236 --> 00:04:42,369 The doughnut is lost in the shadows 86 00:04:42,456 --> 00:04:45,502 with the other cupcakes and cakes and baked goods 87 00:04:45,633 --> 00:04:48,636 that are sold in local neighborhood bakeries. 88 00:04:51,378 --> 00:04:52,770 But Rudolph believes he's found 89 00:04:52,857 --> 00:04:54,816 the perfect place to open shop. 90 00:04:56,470 --> 00:04:57,993 I need this month's rent upfront. 91 00:04:59,429 --> 00:05:00,735 What brings you to Winston-Salem? 92 00:05:02,345 --> 00:05:04,695 He read the name off a pack of cigarettes. 93 00:05:07,655 --> 00:05:09,744 As they were out searching for a place, 94 00:05:09,831 --> 00:05:12,181 Vernon found himself in Peoria, Illinois 95 00:05:12,268 --> 00:05:15,315 on a street corner, and pulled a pack 96 00:05:15,402 --> 00:05:17,795 of camel cigarettes out of his pocket. 97 00:05:17,926 --> 00:05:21,190 And he saw on the package Winston-Salem, North Carolina. 98 00:05:22,670 --> 00:05:24,933 And he thought, "Well if they can support 99 00:05:25,020 --> 00:05:27,501 the national cigarette industry like that, 100 00:05:29,024 --> 00:05:30,939 we should be able to make it there." 101 00:05:31,069 --> 00:05:32,462 While most industries struggled 102 00:05:32,549 --> 00:05:34,812 to stay afloat, 103 00:05:34,899 --> 00:05:38,642 tobacco remained big business during the Great Depression, 104 00:05:38,729 --> 00:05:41,689 as cigarette use increased by 65%. 105 00:05:44,953 --> 00:05:47,564 And with one of the nation's largest cigarette factories 106 00:05:47,651 --> 00:05:51,046 just down the street, Rudolph sees opportunity. 107 00:05:54,441 --> 00:05:56,356 It's 21, 22- 108 00:05:56,443 --> 00:05:58,662 Vernon Rudolph sinks his last dollar 109 00:05:58,749 --> 00:06:01,186 into opening a doughnut factory. 110 00:06:01,273 --> 00:06:04,929 So, Vernon Rudolph's dream was to turn doughnuts 111 00:06:05,060 --> 00:06:07,541 into an industry, and he was driven to do that. 112 00:06:09,891 --> 00:06:11,632 He had a vision for what this could be. 113 00:06:17,289 --> 00:06:19,596 To do it, Vernon is using a recipe 114 00:06:19,683 --> 00:06:21,381 borrowed from his uncle's bakery, 115 00:06:23,295 --> 00:06:25,994 and it's one he believes can produce a doughnut 116 00:06:26,124 --> 00:06:29,432 different than anything available at the time. 117 00:06:29,519 --> 00:06:31,739 This recipe that his uncle bought 118 00:06:31,826 --> 00:06:33,393 from this New Orleans chef 119 00:06:33,523 --> 00:06:37,875 was a yeast-risen doughnut that contains potato in it, 120 00:06:38,006 --> 00:06:42,227 which gives it this very unique, soft, sweet pliability, 121 00:06:42,358 --> 00:06:46,406 really unlike any pastry or any baked good experience. 122 00:06:46,536 --> 00:06:49,757 You put it in your mouth and it quite literally liquefies 123 00:06:49,844 --> 00:06:50,932 when it hits your tongue. 124 00:06:52,847 --> 00:06:54,849 The original recipe calls for 125 00:06:54,936 --> 00:06:56,633 the development of a cream base. 126 00:06:56,720 --> 00:06:58,679 And when that was added to flour, 127 00:06:58,766 --> 00:07:01,116 it made the dough, that when fried, was crispy. 128 00:07:03,727 --> 00:07:06,687 And so, seizing on the opportunities presented 129 00:07:06,774 --> 00:07:08,950 by the vast success of the tobacco industry 130 00:07:09,080 --> 00:07:10,952 in Winston-Salem, North Carolina, 131 00:07:12,301 --> 00:07:14,738 Vernon Rudolph opens the doughnut company 132 00:07:14,869 --> 00:07:16,784 that would eventually change 133 00:07:16,871 --> 00:07:18,438 the doughnut universe as we know it. 134 00:07:21,615 --> 00:07:23,312 Krispy Kreme will give rise 135 00:07:24,356 --> 00:07:26,402 to a $40 billion industry, 136 00:07:27,882 --> 00:07:30,145 selling seven and a half million doughnuts a day 137 00:07:31,276 --> 00:07:34,062 across 12,000 locations. 138 00:07:38,936 --> 00:07:43,114 But for now, the Rudolphs' customers are limited 139 00:07:43,245 --> 00:07:47,031 to grocers willing to stock this new type of doughnut. 140 00:07:47,162 --> 00:07:49,512 And with orders barely trickling in, 141 00:07:49,599 --> 00:07:51,296 they can't pay next month's rent. 142 00:07:51,427 --> 00:07:53,168 At that time, Krispy Kreme 143 00:07:53,298 --> 00:07:56,476 was solely a wholesale business. 144 00:07:56,606 --> 00:07:57,607 They would make the doughnuts 145 00:07:57,738 --> 00:07:59,696 and sell them to local markets. 146 00:07:59,783 --> 00:08:04,222 So, they depended on other people 147 00:08:04,353 --> 00:08:06,050 to sell their doughnuts. 148 00:08:06,181 --> 00:08:08,705 And that is, and probably will always be, 149 00:08:08,792 --> 00:08:11,099 a super difficult way to succeed. 150 00:08:12,100 --> 00:08:13,493 So, if you can imagine, 151 00:08:13,580 --> 00:08:15,364 there were no doughnut shops, right? 152 00:08:15,451 --> 00:08:16,974 That wasn't a thing. 153 00:08:17,061 --> 00:08:20,369 And Americans were familiar with bakeries, right? 154 00:08:20,500 --> 00:08:22,763 So there wasn't like a standalone place 155 00:08:22,850 --> 00:08:24,199 that you could get a doughnut. 156 00:08:27,419 --> 00:08:28,899 Come on. 157 00:08:36,864 --> 00:08:38,387 I'm sorry, you can only get our doughnuts 158 00:08:38,474 --> 00:08:39,823 at the local grocer. 159 00:08:39,910 --> 00:08:40,650 I'm so sorry. 160 00:08:40,737 --> 00:08:42,783 No! 161 00:08:42,870 --> 00:08:44,001 Is that another one? 162 00:08:44,088 --> 00:08:46,003 Yup, fifth time this morning. 163 00:08:46,134 --> 00:08:47,091 They're mostly the workers 164 00:08:47,222 --> 00:08:49,137 from the cigarette factory up the street. 165 00:08:49,267 --> 00:08:50,921 Keep saying that they can smell the doughnuts 166 00:08:51,052 --> 00:08:52,619 every time they step out for a break. 167 00:08:55,186 --> 00:08:56,797 Could have sold them one. 168 00:08:56,884 --> 00:08:58,973 You sell to one, you gotta sell to all of them. 169 00:08:59,103 --> 00:09:00,714 We can't have people knocking on the door all day. 170 00:09:00,844 --> 00:09:02,629 We'll never get anything done. 171 00:09:02,716 --> 00:09:03,499 Right. 172 00:09:05,457 --> 00:09:06,241 Right. - Look. 173 00:09:07,590 --> 00:09:10,071 We make the doughnuts, the grocers sell 'em. 174 00:09:10,201 --> 00:09:10,898 Hmm? 175 00:09:12,029 --> 00:09:13,204 When you start a business, 176 00:09:13,335 --> 00:09:14,205 there is gonna be failures, 177 00:09:14,292 --> 00:09:16,033 there's gonna be difficulties. 178 00:09:16,164 --> 00:09:18,470 You have to kind of visualize what the world might be 179 00:09:18,601 --> 00:09:20,908 and pivot, and shift, 180 00:09:22,562 --> 00:09:24,520 because not everything is gonna go according to your plan. 181 00:09:28,480 --> 00:09:31,266 Retail wasn't something that was on the radar, 182 00:09:31,396 --> 00:09:33,485 but Vernon was opportunistic. 183 00:09:33,616 --> 00:09:35,226 He looked for any way that he could, 184 00:09:35,357 --> 00:09:36,793 you know, sell a doughnut. 185 00:10:02,645 --> 00:10:05,256 What are you doing? 186 00:10:05,343 --> 00:10:06,606 Putting in a service window. 187 00:10:10,348 --> 00:10:13,482 Krispy Kreme breaks into the retail market, 188 00:10:13,613 --> 00:10:15,571 hoping it's a big step towards creating 189 00:10:15,658 --> 00:10:17,878 the country's first doughnut store chain. 190 00:10:19,836 --> 00:10:23,013 But they don't know that another visionary 191 00:10:23,144 --> 00:10:26,234 with the same idea is lying in wait. 192 00:10:37,985 --> 00:10:40,944 There you go, sir, half a dozen, enjoy. 193 00:10:41,031 --> 00:10:43,686 10 Years before the drive-through is invented, 194 00:10:43,817 --> 00:10:46,210 Vernon Rudolph turns his doughnut factory 195 00:10:46,341 --> 00:10:48,822 into a store with a service window. 196 00:10:48,952 --> 00:10:50,693 It was a stroke of genius 197 00:10:50,780 --> 00:10:53,914 to move from wholesale to retail, 198 00:10:54,044 --> 00:10:58,179 because as good as the Krispy Kreme doughnut is, 199 00:10:58,309 --> 00:11:00,094 when you buy it at a market, 200 00:11:00,224 --> 00:11:02,879 there is nothing like getting a Krispy Kreme 201 00:11:02,966 --> 00:11:05,055 from a Krispy Kreme. 202 00:11:05,186 --> 00:11:07,754 When hot, the Krispy Kreme doughnut 203 00:11:07,841 --> 00:11:10,191 is nothing short of transcendent. 204 00:11:10,321 --> 00:11:11,801 And there you are. 205 00:11:11,932 --> 00:11:14,021 The move catapults Krispy Kreme 206 00:11:14,151 --> 00:11:16,240 into a Winston-Salem landmark 207 00:11:16,371 --> 00:11:18,025 as the service window becomes a boom 208 00:11:18,112 --> 00:11:19,548 for Rudolph's bottom line. 209 00:11:21,028 --> 00:11:22,856 At the time, doughnuts were sold 210 00:11:22,986 --> 00:11:25,510 20 cents a dozen in wholesale. 211 00:11:25,597 --> 00:11:28,470 Doughnuts at retail were sold 25 cents to the dozen. 212 00:11:28,600 --> 00:11:29,558 Doing great, guys. 213 00:11:30,907 --> 00:11:33,040 Now, 16 years before McDonald's 214 00:11:33,170 --> 00:11:35,303 begins their franchising empire, 215 00:11:35,390 --> 00:11:38,872 Rudolph eyes opening more hybrid doughnut factory stores. 216 00:11:40,700 --> 00:11:42,223 And this might be the perfect time. 217 00:11:46,401 --> 00:11:49,578 A growing political movement could have a drastic effect 218 00:11:49,665 --> 00:11:52,233 on the doughnut's chance for success. 219 00:11:52,320 --> 00:11:54,365 The unionization movement in America 220 00:11:54,452 --> 00:11:56,454 really develops in this period 221 00:11:56,585 --> 00:11:59,109 and unions were designed on the part of workers 222 00:11:59,240 --> 00:12:01,242 to be able to ensure that their rights 223 00:12:01,329 --> 00:12:02,591 are gonna be respected. 224 00:12:04,419 --> 00:12:06,726 In response to union concerns, 225 00:12:06,856 --> 00:12:10,338 the federal government sets restrictions on employers, 226 00:12:10,425 --> 00:12:13,558 and enacts the Fair Labor and Standards Act, 227 00:12:13,689 --> 00:12:17,519 resulting in an eight-hour workday, 30-minute lunch breaks, 228 00:12:17,649 --> 00:12:22,393 and more and more employers offering workers break times. 229 00:12:23,351 --> 00:12:24,787 This is gonna create new markets, 230 00:12:24,918 --> 00:12:26,180 new opportunities for entrepreneurs 231 00:12:26,310 --> 00:12:29,183 seeking to speak to that market specifically. 232 00:12:29,313 --> 00:12:31,533 And who's there to deliver food in that break, 233 00:12:31,620 --> 00:12:34,449 who could do so in 10 minutes before you get back to work? 234 00:12:37,060 --> 00:12:39,759 Krispy Kreme starts expanding to new markets, 235 00:12:42,283 --> 00:12:43,763 while outside of Boston, 236 00:12:45,765 --> 00:12:49,246 Bill Rosenberg and his business partner, Harry Winouker, 237 00:12:49,333 --> 00:12:51,292 run a successful food truck business, 238 00:12:53,120 --> 00:12:55,557 selling sandwiches, pastries, and coffee 239 00:12:55,687 --> 00:12:57,777 to workers on their breaks. 240 00:13:01,911 --> 00:13:03,826 Bill Rosenberg grew up in the suburbs of Boston, 241 00:13:03,913 --> 00:13:05,480 and he needed to drop out of school 242 00:13:05,610 --> 00:13:07,047 to help support his family. 243 00:13:08,700 --> 00:13:11,399 So as an eighth grader, 14 years old, 244 00:13:11,529 --> 00:13:15,229 he has to deliver telegrams and do odd jobs. 245 00:13:15,316 --> 00:13:18,101 He learned how to be resourceful. 246 00:13:18,188 --> 00:13:20,538 By 1946, they're making enough money 247 00:13:20,669 --> 00:13:22,714 to open their first brick and mortar location, 248 00:13:22,802 --> 00:13:24,238 but with a unique twist. 249 00:13:26,022 --> 00:13:28,851 So Bill notices that coffee and doughnuts 250 00:13:28,938 --> 00:13:32,072 make a 40% of their sales. 251 00:13:32,159 --> 00:13:34,552 He gets the idea that they should create 252 00:13:34,683 --> 00:13:37,381 a new brand around coffee and doughnuts. 253 00:13:37,512 --> 00:13:39,166 And he firmly believes 254 00:13:39,253 --> 00:13:41,690 that he can spread that across the country. 255 00:13:43,039 --> 00:13:44,606 Bill understands that workers 256 00:13:44,693 --> 00:13:46,347 only had a small window of time, 257 00:13:46,477 --> 00:13:48,566 and people wanted on-the-go foods, 258 00:13:48,653 --> 00:13:50,307 but this is a gamble. 259 00:13:50,438 --> 00:13:52,788 I mean, there weren't doughnut shops 260 00:13:52,875 --> 00:13:54,703 and there were barely even coffee shops. 261 00:13:54,834 --> 00:13:55,878 Coffee was a dream. 262 00:13:55,965 --> 00:13:56,836 It wasn't a place. 263 00:14:01,753 --> 00:14:02,798 A little closer to you. 264 00:14:02,885 --> 00:14:03,930 A little more. 265 00:14:04,017 --> 00:14:05,496 Okay, that's perfect. 266 00:14:05,583 --> 00:14:09,065 Harry Winouker is Bill Rosenberg's brother-in-law. 267 00:14:09,152 --> 00:14:13,591 He owns about quarter of the company and he's a numbers guy. 268 00:14:13,722 --> 00:14:18,161 Not really the ambitious entrepreneur that Bill is. 269 00:14:18,248 --> 00:14:20,685 So there's already a little bit of built-in tension. 270 00:14:24,385 --> 00:14:25,386 How's it looking. 271 00:14:25,473 --> 00:14:26,648 So far, so good. 272 00:14:26,735 --> 00:14:28,650 Should be able to open in a week on schedule. 273 00:14:30,043 --> 00:14:31,174 Can you be here tomorrow morning? 274 00:14:31,261 --> 00:14:32,436 We have a bread delivery at eight, 275 00:14:32,567 --> 00:14:33,829 cheese and butter coming at 8:30. 276 00:14:33,960 --> 00:14:35,135 Oh, I canceled those. 277 00:14:36,876 --> 00:14:38,138 What do you mean canceled? 278 00:14:38,225 --> 00:14:40,618 We're selling only our two best items. 279 00:14:40,705 --> 00:14:41,793 Bill, you can't just sell doughnuts and coffee. 280 00:14:41,881 --> 00:14:43,099 That's not even a full meal. 281 00:14:43,186 --> 00:14:44,231 That's the whole point, it's a snack. 282 00:14:44,318 --> 00:14:45,797 It's a quick breakfast. 283 00:14:45,885 --> 00:14:48,278 People can sit and eat for five or 10 minutes, 284 00:14:48,365 --> 00:14:50,193 or they can take it to go and eat in their cars. 285 00:14:50,280 --> 00:14:52,935 And you just can't decide this without talking to me. 286 00:14:53,066 --> 00:14:55,329 You don't get it, but you will. 287 00:15:00,029 --> 00:15:01,901 Despite his partner's objections, 288 00:15:04,816 --> 00:15:06,514 Rosenberg sinks all the profits 289 00:15:06,644 --> 00:15:08,298 from their food truck business 290 00:15:08,429 --> 00:15:10,605 into this novel coffee and doughnut shop. 291 00:15:15,262 --> 00:15:18,352 He goes to the highest-end Boston hotels, 292 00:15:18,482 --> 00:15:21,224 and he finds out where they get their coffee from. 293 00:15:21,311 --> 00:15:24,401 And it's a company called La Terrain Coffee Company, 294 00:15:24,488 --> 00:15:27,883 because he believes that high-quality product 295 00:15:27,970 --> 00:15:30,755 is what's going to sell to the consumer. 296 00:15:30,842 --> 00:15:35,325 He also charges, initially, 10 cents for a cup of coffee, 297 00:15:35,456 --> 00:15:38,285 which was twice the going rate at the time. 298 00:15:39,982 --> 00:15:41,679 This is an idea that Starbucks 299 00:15:41,810 --> 00:15:43,464 is gonna take to the bank later. 300 00:15:45,727 --> 00:15:47,163 Rosenberg's vision will spawn 301 00:15:47,250 --> 00:15:49,644 the second largest restaurant chain in America, 302 00:15:51,428 --> 00:15:53,343 serving three million customers a day 303 00:15:53,430 --> 00:15:55,476 and worth over $9 billion. 304 00:15:58,653 --> 00:16:04,746 But in 1948, Rosenberg and Winouker unveiled their first 305 00:16:04,833 --> 00:16:07,488 of what will become over 13,000 locations, 306 00:16:08,837 --> 00:16:10,665 right now called 307 00:16:13,755 --> 00:16:15,235 Open Kettle. 308 00:16:20,066 --> 00:16:23,330 You make doughnuts in a large vat called an open kettle. 309 00:16:24,940 --> 00:16:29,292 Open Kettle was the original name, but not really, 310 00:16:30,380 --> 00:16:31,468 what's the word, a good name? 311 00:16:33,122 --> 00:16:35,124 Isn't an open kettle like, you know, 312 00:16:35,211 --> 00:16:37,126 200 degrees of burning hot oil, 313 00:16:37,213 --> 00:16:39,302 like, is that what customers want? 314 00:16:39,389 --> 00:16:40,608 I don't know. 315 00:16:40,695 --> 00:16:41,870 But sales weren't really happening. 316 00:16:44,525 --> 00:16:47,354 While Open Kettle gets off to a shaky start, 317 00:16:55,536 --> 00:16:56,841 by 1948, 318 00:16:59,757 --> 00:17:02,891 Krispy Kreme has grown to seven locations, 319 00:17:02,978 --> 00:17:05,981 serving thousands of customers warm, fresh doughnuts 320 00:17:06,068 --> 00:17:07,809 direct from the factory floor. 321 00:17:08,897 --> 00:17:11,291 The idea of a warm doughnut, 322 00:17:11,421 --> 00:17:13,684 I mean, I would just microwave the cold doughnuts, 323 00:17:13,771 --> 00:17:16,122 but Krispy Kreme created a revolution 324 00:17:16,209 --> 00:17:17,384 when it comes to doughnuts. 325 00:17:21,518 --> 00:17:23,129 But making the doughnuts by hand 326 00:17:23,216 --> 00:17:24,478 presents challenges. 327 00:17:25,957 --> 00:17:27,611 I picked these up from each of our factories. 328 00:17:27,698 --> 00:17:28,569 You see the problem. 329 00:17:39,058 --> 00:17:39,884 They're different? 330 00:17:41,538 --> 00:17:42,800 Not necessarily a bad thing. 331 00:17:42,887 --> 00:17:43,584 Of course, it is. 332 00:17:46,195 --> 00:17:46,978 When you're cooking for a business, 333 00:17:47,109 --> 00:17:48,937 you have to be consistent all the time, 334 00:17:49,024 --> 00:17:50,069 'cause just think about the first time 335 00:17:50,156 --> 00:17:51,026 you went to a restaurant and you had 336 00:17:51,113 --> 00:17:53,159 the most awesome whatever it is, 337 00:17:53,246 --> 00:17:55,465 and when you go back again and it's not the same, 338 00:17:55,596 --> 00:17:58,729 it's very important from day one it's the same bite 339 00:17:58,860 --> 00:18:01,341 going to the same person all the time. 340 00:18:01,471 --> 00:18:03,299 Consistency, right? 341 00:18:03,386 --> 00:18:05,258 That's who we are. 342 00:18:05,345 --> 00:18:07,434 Walk into any Krispy Kreme and it's the same 343 00:18:07,521 --> 00:18:10,741 fresh, warm doughnuts at ever single location, 344 00:18:10,828 --> 00:18:12,221 as if we made them ourselves. 345 00:18:14,093 --> 00:18:15,746 Good luck being in 10 places at once. 346 00:18:16,921 --> 00:18:18,836 Maybe I don't have to be. 347 00:18:22,275 --> 00:18:24,015 There's so many variables 348 00:18:24,146 --> 00:18:26,714 in making a baked product like this. 349 00:18:26,801 --> 00:18:29,064 The doughnuts were made by treating dough 350 00:18:29,151 --> 00:18:30,674 and cutting one by hand, 351 00:18:30,761 --> 00:18:32,372 and the doughnuts were dropped in, 352 00:18:32,502 --> 00:18:34,635 they had to turn 'em with a drumstick one at a time. 353 00:18:34,722 --> 00:18:36,767 So, no two were the same. 354 00:18:43,687 --> 00:18:46,821 He knew there had to be a better way 355 00:18:46,908 --> 00:18:49,476 to have the same doughnut in every store. 356 00:18:51,608 --> 00:18:53,175 If Rudolph wants to be the first 357 00:18:53,306 --> 00:18:55,830 to mass-produce doughnuts for the nation, 358 00:18:55,917 --> 00:18:58,572 he'll need to reinvent how they're made. 359 00:19:10,453 --> 00:19:12,325 In Massachusetts... 360 00:19:12,412 --> 00:19:13,239 At the rate we're going, we'll be 361 00:19:13,326 --> 00:19:15,284 out of money in another week. 362 00:19:15,371 --> 00:19:17,982 By 1949, Bill Rosenberg's 363 00:19:18,069 --> 00:19:20,028 innovative coffee and doughnut shop, 364 00:19:20,115 --> 00:19:22,596 Open Kettle, is failing to catch on. 365 00:19:24,206 --> 00:19:26,469 I hate to say, I told you so. 366 00:19:26,556 --> 00:19:28,123 There is so much on the line 367 00:19:28,210 --> 00:19:30,299 for Bill Rosenberg at this moment. 368 00:19:30,386 --> 00:19:34,390 He has staked his career on this idea 369 00:19:34,521 --> 00:19:37,176 of coffee and doughnuts and on this restaurant. 370 00:19:38,351 --> 00:19:39,613 And there's no stopping Bill 371 00:19:39,743 --> 00:19:41,180 when he has an idea in his head. 372 00:19:44,095 --> 00:19:47,142 I had dinner at the Howard Johnson's last night. 373 00:19:47,229 --> 00:19:48,796 They have 28 flavors of ice cream. 374 00:19:49,666 --> 00:19:51,233 28. 375 00:19:51,320 --> 00:19:53,235 That's a huge variety. 376 00:19:53,366 --> 00:19:55,194 How many flavors of doughnut can you think of? 377 00:19:55,281 --> 00:19:57,587 Plain, glazed, yeasted and a cruller. 378 00:19:57,674 --> 00:19:58,501 That's all anyone has. 379 00:19:58,632 --> 00:20:00,155 Exactly. 380 00:20:00,286 --> 00:20:02,418 I have 32 so far. 381 00:20:02,505 --> 00:20:04,594 So you want us to sell 32 different flavors of doughnuts? 382 00:20:04,725 --> 00:20:05,552 No! 383 00:20:05,682 --> 00:20:06,466 52. 384 00:20:07,684 --> 00:20:10,296 52, that's insane. 385 00:20:10,383 --> 00:20:13,690 People could come in here once a week for a whole year, 386 00:20:13,777 --> 00:20:15,214 try a different doughnut every time. 387 00:20:16,519 --> 00:20:17,651 No one else is doing that. 388 00:20:31,621 --> 00:20:33,014 That's great. 389 00:20:33,144 --> 00:20:34,755 Let's call it a chocolate cake. 390 00:20:36,887 --> 00:20:38,933 It was really kind of capturing 391 00:20:39,020 --> 00:20:41,240 what people desired in food. 392 00:20:41,327 --> 00:20:42,241 Options, right? 393 00:20:42,371 --> 00:20:43,938 So they weren't just crullers, 394 00:20:44,068 --> 00:20:45,766 and they weren't just glazed, 395 00:20:45,896 --> 00:20:48,029 and they weren't just chocolate. 396 00:20:48,116 --> 00:20:49,248 They were everything. 397 00:20:49,378 --> 00:20:51,598 You want nuts, we'll do nuts. 398 00:20:51,728 --> 00:20:53,600 You want caramel, we'll do caramel. 399 00:20:53,687 --> 00:20:55,428 He brought this whole idea 400 00:20:55,515 --> 00:20:58,518 of product development to doughnuts. 401 00:20:58,605 --> 00:20:59,736 Jelly. 402 00:20:59,823 --> 00:21:00,563 Is that raspberry? 403 00:21:01,695 --> 00:21:03,131 Let's do another with strawberry, 404 00:21:04,480 --> 00:21:06,743 then do raspberry and strawberry again, 405 00:21:08,092 --> 00:21:09,442 but for put sugar on the outside. 406 00:21:09,572 --> 00:21:10,921 Hm? 407 00:21:11,008 --> 00:21:11,792 Hm. 408 00:21:13,184 --> 00:21:16,405 He's innovating on a culinary level. 409 00:21:16,492 --> 00:21:19,930 Would we have a bacon maple doughnut today, 410 00:21:20,017 --> 00:21:21,628 and all these other kinds of varieties 411 00:21:21,715 --> 00:21:23,369 if there was no Bill Rosenberg? 412 00:21:23,499 --> 00:21:24,457 Probably not. 413 00:21:26,241 --> 00:21:27,938 As Rosenberg tries to turn his business around 414 00:21:28,025 --> 00:21:30,158 with an unmatched amount of variety, 415 00:21:36,686 --> 00:21:38,209 Vernon Rudolph... 416 00:21:38,297 --> 00:21:40,734 Here you go, sir, half a dozen, enjoy. 417 00:21:40,821 --> 00:21:42,997 Relentlessly searches for a better way 418 00:21:44,520 --> 00:21:46,870 to make his perfect Krispy Kreme doughnut 419 00:21:46,957 --> 00:21:48,307 the same everywhere. 420 00:21:50,918 --> 00:21:54,617 Food entrepreneurs are people who believe in their recipe, 421 00:21:54,704 --> 00:21:57,316 who believe in their product, 422 00:21:57,403 --> 00:22:02,408 who spend years developing and crafting something perfect. 423 00:22:03,844 --> 00:22:05,846 And so you really have to admire that dedication. 424 00:22:07,326 --> 00:22:08,849 I can't believe you built this thing. 425 00:22:11,025 --> 00:22:12,461 How does it work? 426 00:22:14,681 --> 00:22:17,161 You want to use the right amount of dough, 427 00:22:17,292 --> 00:22:19,294 to keep track of your ingredients, 428 00:22:19,381 --> 00:22:22,689 and you want every doughnut to be as consistent 429 00:22:22,776 --> 00:22:25,126 in terms of size, shape, and execution 430 00:22:25,256 --> 00:22:26,954 as the last one they had. 431 00:22:27,041 --> 00:22:28,869 It's impossible to do that by hand, 432 00:22:28,956 --> 00:22:31,088 no matter how well trained the baker. 433 00:22:31,175 --> 00:22:33,221 Well, that's where automation comes in. 434 00:22:35,615 --> 00:22:37,138 Dough goes in here, right? 435 00:22:37,268 --> 00:22:40,054 It comes out over here and into the oil, then rinks. 436 00:22:40,141 --> 00:22:42,317 Then these paddles take the frying doughnuts 437 00:22:42,404 --> 00:22:44,754 and they flip them over at just the right time. 438 00:22:49,716 --> 00:22:51,152 Rudolph's cutting-edge machine 439 00:22:51,239 --> 00:22:53,067 is the first to fully automate 440 00:22:53,197 --> 00:22:55,069 the entire doughnut-making process. 441 00:22:56,679 --> 00:22:59,073 He calls it the Ring-King Junior. 442 00:23:00,683 --> 00:23:02,816 And not only does it produce uniform doughnuts, 443 00:23:02,903 --> 00:23:06,559 but it can churn out over 700 of them an hour. 444 00:23:06,689 --> 00:23:08,561 It was all about mass production. 445 00:23:08,648 --> 00:23:11,520 I mean, this is visionary. 446 00:23:11,607 --> 00:23:15,916 The ingenuity involved made a lot of noise in the industry. 447 00:23:17,526 --> 00:23:19,310 His automated process remains 448 00:23:19,398 --> 00:23:21,400 the standard in doughnut-making today. 449 00:23:23,097 --> 00:23:24,185 They're almost as excited about the machine 450 00:23:24,272 --> 00:23:25,795 as they're about the doughnuts. 451 00:23:25,882 --> 00:23:27,406 This really is something. 452 00:23:31,235 --> 00:23:32,367 And it will give rise 453 00:23:32,454 --> 00:23:34,848 to another revolutionary idea. 454 00:23:41,028 --> 00:23:43,334 Meanwhile, before Open Kettle attempts 455 00:23:43,465 --> 00:23:46,555 to launch an unprecedented 52 flavors, 456 00:23:46,642 --> 00:23:49,253 Bill Rosenberg needs to make another major change 457 00:23:49,340 --> 00:23:51,386 to the struggling shop. 458 00:23:51,517 --> 00:23:54,389 We just had to do something about the name of the store. 459 00:23:54,476 --> 00:23:56,086 The name, why are we changing the name? 460 00:23:56,173 --> 00:23:58,175 Nobody knows what an open kettle is. 461 00:23:58,262 --> 00:23:59,786 When Bill wants something, 462 00:23:59,916 --> 00:24:02,484 he does not stop before he gets it. 463 00:24:02,571 --> 00:24:05,574 And Harry Winouker gets very frustrated 464 00:24:05,705 --> 00:24:09,491 because he tends to make decisions unilaterally. 465 00:24:09,578 --> 00:24:11,841 You can't just change the name of the store. 466 00:24:11,972 --> 00:24:12,929 Sure I can. 467 00:24:15,323 --> 00:24:18,979 Okay, we need a new name for this place 468 00:24:19,066 --> 00:24:20,328 and it has to say doughnut. 469 00:24:21,242 --> 00:24:21,982 Any ideas? 470 00:24:23,070 --> 00:24:24,941 How about Doughnut Den? 471 00:24:25,028 --> 00:24:26,334 Delicious doughnuts. 472 00:24:26,465 --> 00:24:27,335 No. 473 00:24:27,422 --> 00:24:28,162 What else? 474 00:24:31,252 --> 00:24:32,601 What do you do with a doughnut? 475 00:24:33,950 --> 00:24:34,995 I've seen more than a few customers 476 00:24:35,125 --> 00:24:37,214 dunk theirs into their coffee. 477 00:24:37,301 --> 00:24:38,259 Gross. 478 00:24:42,655 --> 00:24:44,874 I think nowadays, people don't really 479 00:24:44,961 --> 00:24:48,922 dunk doughnuts in coffee, but I'm asking you now 480 00:24:49,009 --> 00:24:52,186 to go back to the middle of the 20th century, 481 00:24:55,015 --> 00:24:58,235 when it was how these things were savored. 482 00:25:00,237 --> 00:25:02,457 The richness of the milk, 483 00:25:02,588 --> 00:25:05,591 and that sort of dark creamy bitterness of the coffee 484 00:25:05,678 --> 00:25:08,245 would complement the sweetness of the doughnut, 485 00:25:08,332 --> 00:25:09,682 it was the perfect synergy. 486 00:25:16,558 --> 00:25:18,473 Rosenberg relaunches his store 487 00:25:18,560 --> 00:25:21,041 with a new name, Dunkin' Donuts, 488 00:25:24,392 --> 00:25:26,829 putting them on a path to finally being able 489 00:25:26,916 --> 00:25:29,179 to compete with Krispy Kreme. 490 00:25:31,965 --> 00:25:34,097 This is the first of what will eventually become 491 00:25:34,228 --> 00:25:37,971 13,000 Dunkin' Donuts locations worldwide. 492 00:25:40,190 --> 00:25:42,889 But only one partner will cash in. 493 00:25:56,555 --> 00:26:02,082 By 1950, Dunkin' Donuts is raking in $5,000 a week, 494 00:26:03,431 --> 00:26:05,738 and Rosenberg is ready to push his concept 495 00:26:05,825 --> 00:26:07,435 beyond this one location. 496 00:26:09,002 --> 00:26:10,960 He knew he had caught lightning in a bottle. 497 00:26:11,047 --> 00:26:13,746 He knew he had something unique that people loved. 498 00:26:13,876 --> 00:26:18,011 And if he was ever going to expand, the time was now. 499 00:26:18,098 --> 00:26:21,797 He wants to do something incredibly inventive 500 00:26:21,928 --> 00:26:26,149 and groundbreaking: start franchises. 501 00:26:26,280 --> 00:26:27,498 While Baskin-Robbins, 502 00:26:27,629 --> 00:26:28,630 Kentucky Fried Chicken 503 00:26:28,761 --> 00:26:31,502 and Dairy Queen have begun to franchise, 504 00:26:31,590 --> 00:26:36,029 by 1954, the concept is still in its infancy. 505 00:26:36,159 --> 00:26:39,032 Even McDonald's at the time has only two locations. 506 00:26:43,471 --> 00:26:45,168 We can start looking for a second location. 507 00:26:45,255 --> 00:26:46,561 A second location? 508 00:26:46,692 --> 00:26:47,910 And a third and a fourth. 509 00:26:47,997 --> 00:26:50,086 This is gonna be huge, Harry. 510 00:26:50,217 --> 00:26:51,261 Stores everywhere. 511 00:26:51,348 --> 00:26:54,656 I'm not interested in stores everywhere. 512 00:26:54,787 --> 00:26:56,745 Bill wants to grow, be successful, 513 00:26:56,832 --> 00:26:59,661 try new things, strike out on new paths, 514 00:26:59,748 --> 00:27:02,403 and Harry wants to stay the course. 515 00:27:02,490 --> 00:27:05,406 To him, it's about the bottom line, risks, 516 00:27:05,493 --> 00:27:08,409 present the possibility of loss. 517 00:27:10,237 --> 00:27:11,586 As the Dunkin' Donuts partnership 518 00:27:11,673 --> 00:27:13,066 comes to a head, 519 00:27:21,988 --> 00:27:23,816 Vernon Rudolph looks to capitalize 520 00:27:23,903 --> 00:27:26,993 on customers' interest in his doughnut-making process 521 00:27:27,123 --> 00:27:29,082 by giving them a front row seat. 522 00:27:31,388 --> 00:27:32,955 Vernon Rudolph believed 523 00:27:33,042 --> 00:27:34,653 that there was something fascinating 524 00:27:34,740 --> 00:27:36,916 in watching the doughnuts 525 00:27:37,046 --> 00:27:40,833 just travel down this river of bubbling oil 526 00:27:40,963 --> 00:27:44,358 as they floated and browned and got golden and crispy, 527 00:27:44,445 --> 00:27:48,841 and then got enrobed in this gorgeous sugary glazed coating, 528 00:27:49,929 --> 00:27:51,974 so that you ate with your eyes, 529 00:27:52,105 --> 00:27:53,628 you ate with your nose, 530 00:27:53,759 --> 00:27:56,762 before the doughnut ever touched your lips. 531 00:27:59,286 --> 00:28:02,332 Customers flood in to witness the spectacle 532 00:28:02,463 --> 00:28:04,857 Rudolph calls doughnut theater. 533 00:28:08,077 --> 00:28:10,863 This new unique feature allows Krispy Kreme 534 00:28:10,950 --> 00:28:13,039 to truly set itself apart. 535 00:28:14,388 --> 00:28:16,433 And as it spreads throughout the Southern US, 536 00:28:16,520 --> 00:28:19,480 they develop a hardcore fan base. 537 00:28:19,610 --> 00:28:22,918 I grew up in the South and folks in the South, 538 00:28:23,049 --> 00:28:25,660 we are Krispy Kreme doughnut people. 539 00:28:25,791 --> 00:28:27,444 We grew up with Krispy Kreme 540 00:28:27,575 --> 00:28:29,795 and we stick by Krispy Kreme today. 541 00:28:31,535 --> 00:28:35,322 By 1960, Krispy Kreme has 29 stores 542 00:28:35,452 --> 00:28:38,586 in 12 states, with no signs of slowing down. 543 00:28:43,634 --> 00:28:47,073 While one partnership thrives, the other is still at odds. 544 00:28:49,684 --> 00:28:52,034 Harry Winouker, ever the cautious bean counter 545 00:28:52,121 --> 00:28:53,688 looking at the bottom line said, 546 00:28:53,775 --> 00:28:55,734 "We're doing fine with the stores we have. 547 00:28:55,821 --> 00:28:57,736 We don't need to start creating stores 548 00:28:57,823 --> 00:28:59,302 for other people to run." 549 00:28:59,433 --> 00:29:01,087 So now there's friction, 550 00:29:01,174 --> 00:29:03,742 over Bill Rosenberg's desire to expand, 551 00:29:03,829 --> 00:29:05,918 Harry Winouker's resistance to expansion, 552 00:29:08,094 --> 00:29:11,924 and eventually they decide to dissolve the partnership. 553 00:29:13,403 --> 00:29:17,581 Bill Rosenberg pays Harry $350,000, 554 00:29:17,668 --> 00:29:21,498 which is the equivalent to about $3.5 million today, 555 00:29:21,629 --> 00:29:24,763 to buy out his 50% stake of the company. 556 00:29:24,850 --> 00:29:27,983 And this was a very difficult move for Bill. 557 00:29:28,114 --> 00:29:30,203 He has to take out a second mortgage 558 00:29:30,333 --> 00:29:33,554 and borrow money in order to make the deal. 559 00:29:35,643 --> 00:29:38,864 Harry Winouker's 50% stake in Dunkin' Donuts 560 00:29:38,994 --> 00:29:42,084 would today be valued at over $4 billion. 561 00:29:44,913 --> 00:29:46,654 Now with sole control, 562 00:29:46,741 --> 00:29:48,961 Rosenberg quickly opens five locations, 563 00:29:50,832 --> 00:29:54,227 with plans to open 100 stores in three years. 564 00:30:04,150 --> 00:30:06,587 He brings in his 26-year-old son, Bob, 565 00:30:06,717 --> 00:30:09,938 a recent Harvard business graduate, to help. 566 00:30:13,550 --> 00:30:15,639 But as they look to push south, 567 00:30:15,726 --> 00:30:18,599 there's another doughnut chain standing in their way. 568 00:30:43,406 --> 00:30:45,060 It's delicious. 569 00:30:45,191 --> 00:30:46,714 That's it, there's no other flavors? 570 00:30:48,629 --> 00:30:51,197 How is this place doing so much better than our store? 571 00:30:51,327 --> 00:30:53,460 Well, they're selling them for half the price of ours 572 00:30:53,547 --> 00:30:55,636 and they are still warm when you buy them. 573 00:30:57,638 --> 00:30:59,422 Even if we make our doughnuts fresher, 574 00:30:59,553 --> 00:31:02,121 we can't afford to match Krispy Kreme's price. 575 00:31:03,905 --> 00:31:04,645 You're right. 576 00:31:05,994 --> 00:31:07,213 But we're not gonna compete. 577 00:31:11,043 --> 00:31:12,392 Who's in charge there? 578 00:31:12,522 --> 00:31:14,046 A guy named Vernon Rudolph. 579 00:31:15,482 --> 00:31:16,396 Get him on the phone. 580 00:31:18,877 --> 00:31:21,357 I want to talk to Vernon Rudolph. 581 00:31:33,108 --> 00:31:35,023 By the early 1960s, 582 00:31:35,110 --> 00:31:39,027 Dunkin' Donuts closes in on 100 locations, 583 00:31:39,158 --> 00:31:40,942 vaulting past Krispy Kreme 584 00:31:41,029 --> 00:31:43,379 as the largest doughnut chain in the country, 585 00:31:43,466 --> 00:31:45,512 more than tripling their total. 586 00:31:45,599 --> 00:31:48,254 And it's changing the way Americans eat. 587 00:31:49,429 --> 00:31:51,605 Break time is now becoming synonymous 588 00:31:51,692 --> 00:31:52,911 with coffee and doughnuts. 589 00:31:54,651 --> 00:31:57,741 Ad campaigns pushing the idea of a drink and a snack 590 00:31:57,828 --> 00:32:00,875 coin the phrase, "Coffee-breaks". 591 00:32:01,006 --> 00:32:05,314 It was really becoming convenient for Americans 592 00:32:05,401 --> 00:32:07,055 to have these two items together. 593 00:32:07,186 --> 00:32:09,928 So it was that that Bill kind of put together, 594 00:32:10,015 --> 00:32:12,582 this concept of this delicious drink 595 00:32:12,669 --> 00:32:15,368 with this on-the-go food that became Dunkin' Donuts. 596 00:32:18,545 --> 00:32:19,894 As Bill Rosenberg attempts 597 00:32:19,981 --> 00:32:22,201 to take over the entire Eastern seaboard, 598 00:32:23,854 --> 00:32:26,466 Krispy Kreme has a stranglehold on the south. 599 00:32:32,124 --> 00:32:32,907 Hello? 600 00:32:32,994 --> 00:32:34,169 This is Vernon. 601 00:32:34,300 --> 00:32:35,431 Vernon Rudolph, Bill Rosenberg. 602 00:32:35,518 --> 00:32:36,911 How are you? 603 00:32:37,042 --> 00:32:38,434 What can I do for you, Mr. Rosenberg. 604 00:32:38,565 --> 00:32:40,784 Let me cut to the chase here. 605 00:32:40,871 --> 00:32:42,351 Your stores and your product are great, 606 00:32:42,482 --> 00:32:44,963 but you really can't compete with Dunkin' Donuts. 607 00:32:45,093 --> 00:32:46,834 So what if we played for the same team? 608 00:32:48,618 --> 00:32:50,664 Dunkin' Donuts is interested in purchasing Krispy Kreme. 609 00:32:55,843 --> 00:32:56,670 Hello? 610 00:32:58,802 --> 00:33:00,108 I don't know what to say. 611 00:33:00,195 --> 00:33:02,458 I'd have to talk it over with my brother. 612 00:33:05,505 --> 00:33:06,985 Sure. 613 00:33:07,115 --> 00:33:08,812 Yeah, that's what you need to do? 614 00:33:08,899 --> 00:33:10,162 Think about it, get back to me. 615 00:33:10,292 --> 00:33:11,511 We can talk numbers when you do, 616 00:33:11,598 --> 00:33:13,600 but believe me, they'll be good numbers. 617 00:33:18,692 --> 00:33:20,607 If Vernon Rudolph accepts his offer, 618 00:33:20,737 --> 00:33:23,392 Rosenberg will have Dunkin' Donuts in position 619 00:33:23,523 --> 00:33:25,786 to take over the rest of the country. 620 00:33:37,972 --> 00:33:40,105 It has to be a lot of money. 621 00:33:40,235 --> 00:33:41,628 We could retire. 622 00:33:41,715 --> 00:33:42,629 We'd be set for life. 623 00:33:44,239 --> 00:33:45,936 Vernon Rudolph had established something 624 00:33:46,067 --> 00:33:47,851 that was unique there. 625 00:33:47,982 --> 00:33:49,505 And people loved the product. 626 00:33:49,636 --> 00:33:50,376 They love the brand. 627 00:33:50,463 --> 00:33:51,725 They love the experience. 628 00:33:58,949 --> 00:34:00,864 I don't want to sell. 629 00:34:00,995 --> 00:34:02,910 We built this place, right? 630 00:34:03,041 --> 00:34:04,912 And I want to keep growing it our way. 631 00:34:08,524 --> 00:34:11,092 Vernon was wrapped up in the growth of Krispy Kreme. 632 00:34:11,179 --> 00:34:13,573 He was gonna be the one that made it an industry. 633 00:34:21,624 --> 00:34:22,408 Not interested. 634 00:34:24,758 --> 00:34:26,368 I've been thinking, 635 00:34:26,455 --> 00:34:29,154 what if we add new flavors to the menu? 636 00:34:29,241 --> 00:34:30,590 You know, things that might appeal in the south. 637 00:34:30,720 --> 00:34:31,808 We have plenty of flavors. 638 00:34:31,939 --> 00:34:33,245 The doughnuts aren't the problem. 639 00:34:33,332 --> 00:34:36,204 To turn Dunkin' Donuts into a national chain, 640 00:34:36,335 --> 00:34:39,033 the Rosenbergs will now need a new strategy. 641 00:34:39,164 --> 00:34:41,731 Dunkin' Donuts finds themselves 642 00:34:41,862 --> 00:34:43,907 at this make or break point 643 00:34:43,994 --> 00:34:47,868 where they need something to propel them over the top 644 00:34:47,955 --> 00:34:51,828 and make them this iconic national brand. 645 00:34:53,874 --> 00:34:56,398 Bob Rosenberg pitches his father on a plan 646 00:34:56,485 --> 00:34:59,793 to take over, not just the south, but the entire country. 647 00:35:02,100 --> 00:35:05,364 In 1968, Dunkin' Donuts goes public. 648 00:35:06,843 --> 00:35:09,542 So an IPO, stands for Initial Public Offering. 649 00:35:09,629 --> 00:35:12,980 Very simply put, it allows you to now go 650 00:35:13,067 --> 00:35:16,026 to the general public and get money from anybody 651 00:35:16,157 --> 00:35:17,898 that can afford to buy your stock. 652 00:35:17,985 --> 00:35:20,640 But now the expectation of every investor 653 00:35:20,770 --> 00:35:22,903 is that the stock price is gonna go up. 654 00:35:25,732 --> 00:35:27,951 They are only the third food service company 655 00:35:28,082 --> 00:35:31,433 to do so, after McDonald's and Kentucky Fried Chicken. 656 00:35:34,044 --> 00:35:38,614 The influx of cash drives the company towards 300 stores. 657 00:35:38,701 --> 00:35:40,573 And Rosenberg's dream of the country's 658 00:35:40,703 --> 00:35:43,837 first national doughnut chain comes to fruition. 659 00:35:47,841 --> 00:35:50,496 But investors are hungry for more growth. 660 00:35:51,845 --> 00:35:54,543 They were putting quantity over quality, 661 00:35:54,630 --> 00:35:58,112 and many of the franchisees were losing trust. 662 00:35:58,243 --> 00:35:59,548 They felt that the expansion 663 00:35:59,679 --> 00:36:02,247 was more important than they were. 664 00:36:02,377 --> 00:36:05,075 This becomes a major crisis for the company. 665 00:36:05,206 --> 00:36:07,774 The board wants Bill to fire his son. 666 00:36:10,690 --> 00:36:13,562 Dunkin' Donuts' stock plummets, 667 00:36:13,693 --> 00:36:17,262 forcing the closure of over 100 stores. 668 00:36:20,090 --> 00:36:24,704 So now, people are less willing to buy franchises. 669 00:36:26,967 --> 00:36:29,578 The growth of Dunkin' Donuts stalls, 670 00:36:29,665 --> 00:36:31,754 and they are just at the precipice 671 00:36:31,885 --> 00:36:35,280 where they could become this iconic titan, 672 00:36:35,367 --> 00:36:39,632 this national brand, or they could potentially collapse. 673 00:36:43,375 --> 00:36:44,898 To turn business around, 674 00:36:45,028 --> 00:36:47,292 Bob Rosenberg needs a miracle. 675 00:36:51,905 --> 00:36:53,907 And it may have just walked in the door, 676 00:36:55,474 --> 00:36:58,216 with two successful franchisees 677 00:36:58,303 --> 00:36:59,913 who have an interesting new product. 678 00:37:01,131 --> 00:37:02,437 I figured this might be 679 00:37:02,568 --> 00:37:05,179 of some interest to you, Mr. Rosenberg. 680 00:37:20,586 --> 00:37:22,588 His father's company on the line, 681 00:37:22,675 --> 00:37:25,591 Bob Rosenberg finds two franchisees 682 00:37:25,678 --> 00:37:30,335 with surprisingly strong sales, Robert and Edna Demery. 683 00:37:32,859 --> 00:37:34,687 One day, it dawned on me. 684 00:37:34,774 --> 00:37:36,254 Why are we just cutting out the centers 685 00:37:36,341 --> 00:37:38,168 and throwing them away? 686 00:37:38,299 --> 00:37:40,301 Using a cutter invented by Edna, 687 00:37:40,432 --> 00:37:43,304 the Demerys make perfect doughnut holes 688 00:37:43,435 --> 00:37:46,655 1/5 the size of a standard doughnut. 689 00:37:46,742 --> 00:37:47,830 They're selling like hot cakes. 690 00:37:47,961 --> 00:37:48,918 The kids love 'em, 691 00:37:49,049 --> 00:37:51,051 and our business is up 20% 692 00:37:51,138 --> 00:37:52,444 since we started selling them. 693 00:37:59,189 --> 00:38:00,495 The Rosenbergs quickly roll out 694 00:38:00,582 --> 00:38:02,889 the new doughnut hole company-wide, 695 00:38:02,976 --> 00:38:05,239 with a name inspired by a classic movie, 696 00:38:06,545 --> 00:38:08,503 known to millions. 697 00:38:11,419 --> 00:38:13,595 The Wizard of Oz was the latest 698 00:38:13,726 --> 00:38:15,162 I ever got to stay up as a kid. 699 00:38:15,249 --> 00:38:16,903 It was a big event. 700 00:38:22,387 --> 00:38:25,215 In 1974, Dunkin' Donuts debuts 701 00:38:25,303 --> 00:38:27,783 their newest icon, the munchkin. 702 00:38:29,132 --> 00:38:32,962 The munchkin was really genius because Bill's son, Bob, 703 00:38:33,093 --> 00:38:35,878 he takes a look at the happy meal and he understands 704 00:38:36,009 --> 00:38:38,011 that by packaging products together, 705 00:38:38,141 --> 00:38:39,708 people will end buying more. 706 00:38:39,839 --> 00:38:41,884 It wasn't about just buying one doughnut 707 00:38:42,015 --> 00:38:43,190 or a couple doughnuts. 708 00:38:43,321 --> 00:38:46,236 All of a sudden, people were able to buy 709 00:38:46,324 --> 00:38:49,762 36, 24 in a little carrying case. 710 00:38:51,154 --> 00:38:52,547 The munchkin is unlike 711 00:38:52,678 --> 00:38:55,637 anything else on the market, small but mighty. 712 00:38:55,724 --> 00:39:00,338 The treat appeals to a $20 billion consumer market: kids, 713 00:39:01,991 --> 00:39:03,732 and propels Dunkin' Donuts' growth into heights 714 00:39:03,863 --> 00:39:06,953 few chains ever have, or ever will match. 715 00:39:11,000 --> 00:39:12,611 The munchkin will go on to cement 716 00:39:12,741 --> 00:39:15,570 Dunkin' Donuts' status as the most recognized 717 00:39:15,701 --> 00:39:18,617 and successful doughnut chain in the world. 718 00:39:18,747 --> 00:39:21,837 Bill Rosenberg was an entrepreneurial visionary. 719 00:39:21,968 --> 00:39:26,886 And his belief in franchising is the key to his legacy. 720 00:39:27,669 --> 00:39:30,803 His son, Bob, said he could sell the sand on the beach, 721 00:39:30,933 --> 00:39:34,502 not unlike Ray Kroc of the McDonald's brand. 722 00:39:34,633 --> 00:39:37,200 Bob Rosenberg continues to run Dunkin' Donuts 723 00:39:37,331 --> 00:39:40,160 until his retirement in 1998 724 00:39:40,290 --> 00:39:43,555 when the company has over $2 billion in sales. 725 00:39:45,121 --> 00:39:48,037 Bob Rosenberg had a bit of a rough start, 726 00:39:48,124 --> 00:39:50,605 but he makes some key decisions, 727 00:39:50,736 --> 00:39:53,260 especially around brand recognition. 728 00:39:54,957 --> 00:39:59,745 In the early 1980s, he hires Michael Vale 729 00:39:59,832 --> 00:40:03,052 to be the actor to play Fred the Baker. 730 00:40:03,139 --> 00:40:05,968 Time to make the doughnuts. 731 00:40:06,055 --> 00:40:10,799 This becomes a wildly popular advertising campaign. 732 00:40:10,930 --> 00:40:14,324 In the end, Dunkin' Donuts is where it is today, 733 00:40:14,455 --> 00:40:17,415 as much because of Bob as because of Bill. 734 00:40:20,766 --> 00:40:21,941 Today, there are over 735 00:40:22,028 --> 00:40:25,205 13,000 Dunkin' Donut stores worldwide, 736 00:40:25,335 --> 00:40:28,208 more than Burger King, Taco Bell, and Dominoes, 737 00:40:28,295 --> 00:40:31,429 and the company is worth almost $9 billion, 738 00:40:32,778 --> 00:40:35,128 selling almost three billion doughnuts 739 00:40:35,215 --> 00:40:38,523 and two billion cups of coffee a year. 740 00:40:38,653 --> 00:40:42,265 Bill Rosenberg took a big leap of faith 741 00:40:42,352 --> 00:40:44,703 and the leap of faith that paid off. 742 00:40:46,139 --> 00:40:49,403 I'm drinking Dunkin' Donuts coffee right now. 743 00:40:49,490 --> 00:40:50,883 Thanks, Bill. 744 00:40:53,973 --> 00:40:55,235 For Krispy Kreme, 745 00:40:55,365 --> 00:40:58,064 the Rudolph brothers find success by sharing 746 00:40:58,194 --> 00:41:00,458 the magic of doughnut-making with the world, 747 00:41:02,242 --> 00:41:04,331 and Krispy Kreme becomes more than just a doughnut shop. 748 00:41:05,593 --> 00:41:07,682 It's an American experience. 749 00:41:09,728 --> 00:41:13,340 Vernon Rudolph was not a cutthroat businessman. 750 00:41:13,471 --> 00:41:16,561 He was a sweet, good-natured guy, 751 00:41:16,648 --> 00:41:21,087 and he was just determined to make something of himself. 752 00:41:21,217 --> 00:41:23,524 And he creates a doughnut unlike any doughnut 753 00:41:23,655 --> 00:41:25,483 I've had anywhere else in the country, 754 00:41:26,614 --> 00:41:28,747 anywhere else in the world. 755 00:41:31,184 --> 00:41:34,274 Since being surpassed in 1963, 756 00:41:34,361 --> 00:41:38,583 Krispy Kreme has never matched Dunkin's financial success, 757 00:41:38,670 --> 00:41:41,194 but Vernon Rudolph succeeded in his dream 758 00:41:41,281 --> 00:41:43,762 to turn doughnuts into its own industry. 759 00:41:45,764 --> 00:41:48,810 Today, Krispy Kreme continues to spread the gospel 760 00:41:48,941 --> 00:41:52,466 of hot doughnuts at nearly 12,000 locations worldwide, 761 00:41:53,859 --> 00:41:56,470 selling over $1 billion. 762 00:42:00,169 --> 00:42:01,649 Both Krispy Kreme and Dunkin' Donuts 763 00:42:01,780 --> 00:42:03,521 continue to evolve today. 764 00:42:03,608 --> 00:42:06,480 I think people now see Dunkin' Donuts 765 00:42:06,567 --> 00:42:09,091 as the place they go to start their day, 766 00:42:09,222 --> 00:42:11,877 whereas Krispy Kreme is where they go 767 00:42:11,964 --> 00:42:14,923 at the end of their day for that sweet treat. 768 00:42:15,010 --> 00:42:16,795 And I think that's what's so great, 769 00:42:16,925 --> 00:42:18,753 that no matter where in the country you are, 770 00:42:18,884 --> 00:42:20,886 no matter what time of day it is, 771 00:42:20,973 --> 00:42:23,149 there is a doughnut to match your mood 772 00:42:23,236 --> 00:42:25,325 and to make life worth living.