Original subtitles

Serving more than

three million customers a day,

doughnuts are an industry

worth over $7 billion.

Today, New York City has a Dunkin' Donuts

nearly every five blocks,

but in the early 20th century,

doughnuts are far from common.

The doughnut was not really popular,

known, understood, or even available in America.

Until two dropouts...

We're gonna make the best doughnuts

you've ever tasted.

Build one of the country's first chains,

turning doughnuts into an industry.

But not far behind are two food truck owners

with a dream of building a franchising empire.

You want us to sell 32 different flavors of doughnuts?

No!

52.

Kicking off a race

to bring doughnuts to the world.

They were putting quantity over quality.

I think they know they can't beat us.

They'll reinvent breakfast

and give America the coffee break.

Dunkin' Donuts finds themselves

at this make or break point

where they need something to propel them over the top.

And one partnership won't survive the ride.

What are you doing?

It's 1937,

and Americans have been living

through the economic misery of the Great Depression

for nearly a decade.

People are really short on cash.

They're looking for ways to get a meal

however they can.

Hershey's has Mr. Goodbar,

which has a lot of peanuts in it.

Five cents makes a great lunch.

It's interesting to see these different products

being kind of reinvented as lunch instead of just a treat

because people were hungry out there.

Snacks like Moon Pies,

3 Musketeers bars and Ritz crackers begin to catch on.

During the depression,

you suddenly have entrepreneurs

creating snacks for three cents or a nickel

that were original, fun to eat, not expensive, filling.

In Winston-Salem, North Carolina,

two brothers are looking to capitalize

on the cheap snack craze, but with something new.

Vernon Rudolph has spent weeks crisscrossing the country,

searching for the perfect place to start his business.

This place is just great.

It really is, isn't it?

No!

Vernon Rudolph and his brother, Lewis,

by the time they got to Winston-Salem,

they had $25, but Vernon was intuitive.

He was driven.

Lewis was maybe a little more reserved,

but they complemented each other.

So, what are you planning on doing here?

We're gonna make the best doughnuts you've ever tasted.

The likely origin of the doughnut in the United States

is from the Dutch immigrant food called oily cakes.

They're these fried little cakes

that really get their start

with the Dutch colony in New York.

The modern cake-style doughnut

starts developing a following during World War I.

The Salvation Army Lassies, as they were called,

on the front lines and they're trying to make treats

for the boys in the trenches.

They have white flour, they have lard, they have sugar,

then they think, "Well, let's make doughnuts," right?

This is enables these soldiers

to get a taste for doughnuts,

but it really isn't the popular treat.

Even though the doughnut is dubbed

Food of the Century at the 1934 World's Fair,

three years later, they still haven't caught on.

The doughnut is lost in the shadows

with the other cupcakes and cakes and baked goods

that are sold in local neighborhood bakeries.

But Rudolph believes he's found

the perfect place to open shop.

I need this month's rent upfront.

What brings you to Winston-Salem?

He read the name off a pack of cigarettes.

As they were out searching for a place,

Vernon found himself in Peoria, Illinois

on a street corner, and pulled a pack

of camel cigarettes out of his pocket.

And he saw on the package Winston-Salem, North Carolina.

And he thought, "Well if they can support

the national cigarette industry like that,

we should be able to make it there."

While most industries struggled

to stay afloat,

tobacco remained big business during the Great Depression,

as cigarette use increased by 65%.

And with one of the nation's largest cigarette factories

just down the street, Rudolph sees opportunity.

It's 21, 22-

Vernon Rudolph sinks his last dollar

into opening a doughnut factory.

So, Vernon Rudolph's dream was to turn doughnuts

into an industry, and he was driven to do that.

He had a vision for what this could be.

To do it, Vernon is using a recipe

borrowed from his uncle's bakery,

and it's one he believes can produce a doughnut

different than anything available at the time.

This recipe that his uncle bought

from this New Orleans chef

was a yeast-risen doughnut that contains potato in it,

which gives it this very unique, soft, sweet pliability,

really unlike any pastry or any baked good experience.

You put it in your mouth and it quite literally liquefies

when it hits your tongue.

The original recipe calls for

the development of a cream base.

And when that was added to flour,

it made the dough, that when fried, was crispy.

And so, seizing on the opportunities presented

by the vast success of the tobacco industry

in Winston-Salem, North Carolina,

Vernon Rudolph opens the doughnut company

that would eventually change

the doughnut universe as we know it.

Krispy Kreme will give rise

to a $40 billion industry,

selling seven and a half million doughnuts a day

across 12,000 locations.

But for now, the Rudolphs' customers are limited

to grocers willing to stock this new type of doughnut.

And with orders barely trickling in,

they can't pay next month's rent.

At that time, Krispy Kreme

was solely a wholesale business.

They would make the doughnuts

and sell them to local markets.

So, they depended on other people

to sell their doughnuts.

And that is, and probably will always be,

a super difficult way to succeed.

So, if you can imagine,

there were no doughnut shops, right?

That wasn't a thing.

And Americans were familiar with bakeries, right?

So there wasn't like a standalone place

that you could get a doughnut.

Come on.

I'm sorry, you can only get our doughnuts

at the local grocer.

I'm so sorry.

No!

Is that another one?

Yup, fifth time this morning.

They're mostly the workers

from the cigarette factory up the street.

Keep saying that they can smell the doughnuts

every time they step out for a break.

Could have sold them one.

You sell to one, you gotta sell to all of them.

We can't have people knocking on the door all day.

We'll never get anything done.

Right.

Right. - Look.

We make the doughnuts, the grocers sell 'em.

Hmm?

When you start a business,

there is gonna be failures,

there's gonna be difficulties.

You have to kind of visualize what the world might be

and pivot, and shift,

because not everything is gonna go according to your plan.

Retail wasn't something that was on the radar,

but Vernon was opportunistic.

He looked for any way that he could,

you know, sell a doughnut.

What are you doing?

Putting in a service window.

Krispy Kreme breaks into the retail market,

hoping it's a big step towards creating

the country's first doughnut store chain.

But they don't know that another visionary

with the same idea is lying in wait.

There you go, sir, half a dozen, enjoy.

10 Years before the drive-through is invented,

Vernon Rudolph turns his doughnut factory

into a store with a service window.

It was a stroke of genius

to move from wholesale to retail,

because as good as the Krispy Kreme doughnut is,

when you buy it at a market,

there is nothing like getting a Krispy Kreme

from a Krispy Kreme.

When hot, the Krispy Kreme doughnut

is nothing short of transcendent.

And there you are.

The move catapults Krispy Kreme

into a Winston-Salem landmark

as the service window becomes a boom

for Rudolph's bottom line.

At the time, doughnuts were sold

20 cents a dozen in wholesale.

Doughnuts at retail were sold 25 cents to the dozen.

Doing great, guys.

Now, 16 years before McDonald's

begins their franchising empire,

Rudolph eyes opening more hybrid doughnut factory stores.

And this might be the perfect time.

A growing political movement could have a drastic effect

on the doughnut's chance for success.

The unionization movement in America

really develops in this period

and unions were designed on the part of workers

to be able to ensure that their rights

are gonna be respected.

In response to union concerns,

the federal government sets restrictions on employers,

and enacts the Fair Labor and Standards Act,

resulting in an eight-hour workday, 30-minute lunch breaks,

and more and more employers offering workers break times.

This is gonna create new markets,

new opportunities for entrepreneurs

seeking to speak to that market specifically.

And who's there to deliver food in that break,

who could do so in 10 minutes before you get back to work?

Krispy Kreme starts expanding to new markets,

while outside of Boston,

Bill Rosenberg and his business partner, Harry Winouker,

run a successful food truck business,

selling sandwiches, pastries, and coffee

to workers on their breaks.

Bill Rosenberg grew up in the suburbs of Boston,

and he needed to drop out of school

to help support his family.

So as an eighth grader, 14 years old,

he has to deliver telegrams and do odd jobs.

He learned how to be resourceful.

By 1946, they're making enough money

to open their first brick and mortar location,

but with a unique twist.

So Bill notices that coffee and doughnuts

make a 40% of their sales.

He gets the idea that they should create

a new brand around coffee and doughnuts.

And he firmly believes

that he can spread that across the country.

Bill understands that workers

only had a small window of time,

and people wanted on-the-go foods,

but this is a gamble.

I mean, there weren't doughnut shops

and there were barely even coffee shops.

Coffee was a dream.

It wasn't a place.

A little closer to you.

A little more.

Okay, that's perfect.

Harry Winouker is Bill Rosenberg's brother-in-law.

He owns about quarter of the company and he's a numbers guy.

Not really the ambitious entrepreneur that Bill is.

So there's already a little bit of built-in tension.

How's it looking.

So far, so good.

Should be able to open in a week on schedule.

Can you be here tomorrow morning?

We have a bread delivery at eight,

cheese and butter coming at 8:30.

Oh, I canceled those.

What do you mean canceled?

We're selling only our two best items.

Bill, you can't just sell doughnuts and coffee.

That's not even a full meal.

That's the whole point, it's a snack.

It's a quick breakfast.

People can sit and eat for five or 10 minutes,

or they can take it to go and eat in their cars.

And you just can't decide this without talking to me.

You don't get it, but you will.

Despite his partner's objections,

Rosenberg sinks all the profits

from their food truck business

into this novel coffee and doughnut shop.

He goes to the highest-end Boston hotels,

and he finds out where they get their coffee from.

And it's a company called La Terrain Coffee Company,

because he believes that high-quality product

is what's going to sell to the consumer.

He also charges, initially, 10 cents for a cup of coffee,

which was twice the going rate at the time.

This is an idea that Starbucks

is gonna take to the bank later.

Rosenberg's vision will spawn

the second largest restaurant chain in America,

serving three million customers a day

and worth over $9 billion.

But in 1948, Rosenberg and Winouker unveiled their first

of what will become over 13,000 locations,

right now called

Open Kettle.

You make doughnuts in a large vat called an open kettle.

Open Kettle was the original name, but not really,

what's the word, a good name?

Isn't an open kettle like, you know,

200 degrees of burning hot oil,

like, is that what customers want?

I don't know.

But sales weren't really happening.

While Open Kettle gets off to a shaky start,

by 1948,

Krispy Kreme has grown to seven locations,

serving thousands of customers warm, fresh doughnuts

direct from the factory floor.

The idea of a warm doughnut,

I mean, I would just microwave the cold doughnuts,

but Krispy Kreme created a revolution

when it comes to doughnuts.

But making the doughnuts by hand

presents challenges.

I picked these up from each of our factories.

You see the problem.

They're different?

Not necessarily a bad thing.

Of course, it is.

When you're cooking for a business,

you have to be consistent all the time,

'cause just think about the first time

you went to a restaurant and you had

the most awesome whatever it is,

and when you go back again and it's not the same,

it's very important from day one it's the same bite

going to the same person all the time.

Consistency, right?

That's who we are.

Walk into any Krispy Kreme and it's the same

fresh, warm doughnuts at ever single location,

as if we made them ourselves.

Good luck being in 10 places at once.

Maybe I don't have to be.

There's so many variables

in making a baked product like this.

The doughnuts were made by treating dough

and cutting one by hand,

and the doughnuts were dropped in,

they had to turn 'em with a drumstick one at a time.

So, no two were the same.

He knew there had to be a better way

to have the same doughnut in every store.

If Rudolph wants to be the first

to mass-produce doughnuts for the nation,

he'll need to reinvent how they're made.

In Massachusetts...

At the rate we're going, we'll be

out of money in another week.

By 1949, Bill Rosenberg's

innovative coffee and doughnut shop,

Open Kettle, is failing to catch on.

I hate to say, I told you so.

There is so much on the line

for Bill Rosenberg at this moment.

He has staked his career on this idea

of coffee and doughnuts and on this restaurant.

And there's no stopping Bill

when he has an idea in his head.

I had dinner at the Howard Johnson's last night.

They have 28 flavors of ice cream.

28.

That's a huge variety.

How many flavors of doughnut can you think of?

Plain, glazed, yeasted and a cruller.

That's all anyone has.

Exactly.

I have 32 so far.

So you want us to sell 32 different flavors of doughnuts?

No!

52.

52, that's insane.

People could come in here once a week for a whole year,

try a different doughnut every time.

No one else is doing that.

That's great.

Let's call it a chocolate cake.

It was really kind of capturing

what people desired in food.

Options, right?

So they weren't just crullers,

and they weren't just glazed,

and they weren't just chocolate.

They were everything.

You want nuts, we'll do nuts.

You want caramel, we'll do caramel.

He brought this whole idea

of product development to doughnuts.

Jelly.

Is that raspberry?

Let's do another with strawberry,

then do raspberry and strawberry again,

but for put sugar on the outside.

Hm?

Hm.

He's innovating on a culinary level.

Would we have a bacon maple doughnut today,

and all these other kinds of varieties

if there was no Bill Rosenberg?

Probably not.

As Rosenberg tries to turn his business around

with an unmatched amount of variety,

Vernon Rudolph...

Here you go, sir, half a dozen, enjoy.

Relentlessly searches for a better way

to make his perfect Krispy Kreme doughnut

the same everywhere.

Food entrepreneurs are people who believe in their recipe,

who believe in their product,

who spend years developing and crafting something perfect.

And so you really have to admire that dedication.

I can't believe you built this thing.

How does it work?

You want to use the right amount of dough,

to keep track of your ingredients,

and you want every doughnut to be as consistent

in terms of size, shape, and execution

as the last one they had.

It's impossible to do that by hand,

no matter how well trained the baker.

Well, that's where automation comes in.

Dough goes in here, right?

It comes out over here and into the oil, then rinks.

Then these paddles take the frying doughnuts

and they flip them over at just the right time.

Rudolph's cutting-edge machine

is the first to fully automate

the entire doughnut-making process.

He calls it the Ring-King Junior.

And not only does it produce uniform doughnuts,

but it can churn out over 700 of them an hour.

It was all about mass production.

I mean, this is visionary.

The ingenuity involved made a lot of noise in the industry.

His automated process remains

the standard in doughnut-making today.

They're almost as excited about the machine

as they're about the doughnuts.

This really is something.

And it will give rise

to another revolutionary idea.

Meanwhile, before Open Kettle attempts

to launch an unprecedented 52 flavors,

Bill Rosenberg needs to make another major change

to the struggling shop.

We just had to do something about the name of the store.

The name, why are we changing the name?

Nobody knows what an open kettle is.

When Bill wants something,

he does not stop before he gets it.

And Harry Winouker gets very frustrated

because he tends to make decisions unilaterally.

You can't just change the name of the store.

Sure I can.

Okay, we need a new name for this place

and it has to say doughnut.

Any ideas?

How about Doughnut Den?

Delicious doughnuts.

No.

What else?

What do you do with a doughnut?

I've seen more than a few customers

dunk theirs into their coffee.

Gross.

I think nowadays, people don't really

dunk doughnuts in coffee, but I'm asking you now

to go back to the middle of the 20th century,

when it was how these things were savored.

The richness of the milk,

and that sort of dark creamy bitterness of the coffee

would complement the sweetness of the doughnut,

it was the perfect synergy.

Rosenberg relaunches his store

with a new name, Dunkin' Donuts,

putting them on a path to finally being able

to compete with Krispy Kreme.

This is the first of what will eventually become

13,000 Dunkin' Donuts locations worldwide.

But only one partner will cash in.

By 1950, Dunkin' Donuts is raking in $5,000 a week,

and Rosenberg is ready to push his concept

beyond this one location.

He knew he had caught lightning in a bottle.

He knew he had something unique that people loved.

And if he was ever going to expand, the time was now.

He wants to do something incredibly inventive

and groundbreaking: start franchises.

While Baskin-Robbins,

Kentucky Fried Chicken

and Dairy Queen have begun to franchise,

by 1954, the concept is still in its infancy.

Even McDonald's at the time has only two locations.

We can start looking for a second location.

A second location?

And a third and a fourth.

This is gonna be huge, Harry.

Stores everywhere.

I'm not interested in stores everywhere.

Bill wants to grow, be successful,

try new things, strike out on new paths,

and Harry wants to stay the course.

To him, it's about the bottom line, risks,

present the possibility of loss.

As the Dunkin' Donuts partnership

comes to a head,

Vernon Rudolph looks to capitalize

on customers' interest in his doughnut-making process

by giving them a front row seat.

Vernon Rudolph believed

that there was something fascinating

in watching the doughnuts

just travel down this river of bubbling oil

as they floated and browned and got golden and crispy,

and then got enrobed in this gorgeous sugary glazed coating,

so that you ate with your eyes,

you ate with your nose,

before the doughnut ever touched your lips.

Customers flood in to witness the spectacle

Rudolph calls doughnut theater.

This new unique feature allows Krispy Kreme

to truly set itself apart.

And as it spreads throughout the Southern US,

they develop a hardcore fan base.

I grew up in the South and folks in the South,

we are Krispy Kreme doughnut people.

We grew up with Krispy Kreme

and we stick by Krispy Kreme today.

By 1960, Krispy Kreme has 29 stores

in 12 states, with no signs of slowing down.

While one partnership thrives, the other is still at odds.

Harry Winouker, ever the cautious bean counter

looking at the bottom line said,

"We're doing fine with the stores we have.

We don't need to start creating stores

for other people to run."

So now there's friction,

over Bill Rosenberg's desire to expand,

Harry Winouker's resistance to expansion,

and eventually they decide to dissolve the partnership.

Bill Rosenberg pays Harry $350,000,

which is the equivalent to about $3.5 million today,

to buy out his 50% stake of the company.

And this was a very difficult move for Bill.

He has to take out a second mortgage

and borrow money in order to make the deal.

Harry Winouker's 50% stake in Dunkin' Donuts

would today be valued at over $4 billion.

Now with sole control,

Rosenberg quickly opens five locations,

with plans to open 100 stores in three years.

He brings in his 26-year-old son, Bob,

a recent Harvard business graduate, to help.

But as they look to push south,

there's another doughnut chain standing in their way.

It's delicious.

That's it, there's no other flavors?

How is this place doing so much better than our store?

Well, they're selling them for half the price of ours

and they are still warm when you buy them.

Even if we make our doughnuts fresher,

we can't afford to match Krispy Kreme's price.

You're right.

But we're not gonna compete.

Who's in charge there?

A guy named Vernon Rudolph.

Get him on the phone.

I want to talk to Vernon Rudolph.

By the early 1960s,

Dunkin' Donuts closes in on 100 locations,

vaulting past Krispy Kreme

as the largest doughnut chain in the country,

more than tripling their total.

And it's changing the way Americans eat.

Break time is now becoming synonymous

with coffee and doughnuts.

Ad campaigns pushing the idea of a drink and a snack

coin the phrase, "Coffee-breaks".

It was really becoming convenient for Americans

to have these two items together.

So it was that that Bill kind of put together,

this concept of this delicious drink

with this on-the-go food that became Dunkin' Donuts.

As Bill Rosenberg attempts

to take over the entire Eastern seaboard,

Krispy Kreme has a stranglehold on the south.

Hello?

This is Vernon.

Vernon Rudolph, Bill Rosenberg.

How are you?

What can I do for you, Mr. Rosenberg.

Let me cut to the chase here.

Your stores and your product are great,

but you really can't compete with Dunkin' Donuts.

So what if we played for the same team?

Dunkin' Donuts is interested in purchasing Krispy Kreme.

Hello?

I don't know what to say.

I'd have to talk it over with my brother.

Sure.

Yeah, that's what you need to do?

Think about it, get back to me.

We can talk numbers when you do,

but believe me, they'll be good numbers.

If Vernon Rudolph accepts his offer,

Rosenberg will have Dunkin' Donuts in position

to take over the rest of the country.

It has to be a lot of money.

We could retire.

We'd be set for life.

Vernon Rudolph had established something

that was unique there.

And people loved the product.

They love the brand.

They love the experience.

I don't want to sell.

We built this place, right?

And I want to keep growing it our way.

Vernon was wrapped up in the growth of Krispy Kreme.

He was gonna be the one that made it an industry.

Not interested.

I've been thinking,

what if we add new flavors to the menu?

You know, things that might appeal in the south.

We have plenty of flavors.

The doughnuts aren't the problem.

To turn Dunkin' Donuts into a national chain,

the Rosenbergs will now need a new strategy.

Dunkin' Donuts finds themselves

at this make or break point

where they need something to propel them over the top

and make them this iconic national brand.

Bob Rosenberg pitches his father on a plan

to take over, not just the south, but the entire country.

In 1968, Dunkin' Donuts goes public.

So an IPO, stands for Initial Public Offering.

Very simply put, it allows you to now go

to the general public and get money from anybody

that can afford to buy your stock.

But now the expectation of every investor

is that the stock price is gonna go up.

They are only the third food service company

to do so, after McDonald's and Kentucky Fried Chicken.

The influx of cash drives the company towards 300 stores.

And Rosenberg's dream of the country's

first national doughnut chain comes to fruition.

But investors are hungry for more growth.

They were putting quantity over quality,

and many of the franchisees were losing trust.

They felt that the expansion

was more important than they were.

This becomes a major crisis for the company.

The board wants Bill to fire his son.

Dunkin' Donuts' stock plummets,

forcing the closure of over 100 stores.

So now, people are less willing to buy franchises.

The growth of Dunkin' Donuts stalls,

and they are just at the precipice

where they could become this iconic titan,

this national brand, or they could potentially collapse.

To turn business around,

Bob Rosenberg needs a miracle.

And it may have just walked in the door,

with two successful franchisees

who have an interesting new product.

I figured this might be

of some interest to you, Mr. Rosenberg.

His father's company on the line,

Bob Rosenberg finds two franchisees

with surprisingly strong sales, Robert and Edna Demery.

One day, it dawned on me.

Why are we just cutting out the centers

and throwing them away?

Using a cutter invented by Edna,

the Demerys make perfect doughnut holes

1/5 the size of a standard doughnut.

They're selling like hot cakes.

The kids love 'em,

and our business is up 20%

since we started selling them.

The Rosenbergs quickly roll out

the new doughnut hole company-wide,

with a name inspired by a classic movie,

known to millions.

The Wizard of Oz was the latest

I ever got to stay up as a kid.

It was a big event.

In 1974, Dunkin' Donuts debuts

their newest icon, the munchkin.

The munchkin was really genius because Bill's son, Bob,

he takes a look at the happy meal and he understands

that by packaging products together,

people will end buying more.

It wasn't about just buying one doughnut

or a couple doughnuts.

All of a sudden, people were able to buy

36, 24 in a little carrying case.

The munchkin is unlike

anything else on the market, small but mighty.

The treat appeals to a $20 billion consumer market: kids,

and propels Dunkin' Donuts' growth into heights

few chains ever have, or ever will match.

The munchkin will go on to cement

Dunkin' Donuts' status as the most recognized

and successful doughnut chain in the world.

Bill Rosenberg was an entrepreneurial visionary.

And his belief in franchising is the key to his legacy.

His son, Bob, said he could sell the sand on the beach,

not unlike Ray Kroc of the McDonald's brand.

Bob Rosenberg continues to run Dunkin' Donuts

until his retirement in 1998

when the company has over $2 billion in sales.

Bob Rosenberg had a bit of a rough start,

but he makes some key decisions,

especially around brand recognition.

In the early 1980s, he hires Michael Vale

to be the actor to play Fred the Baker.

Time to make the doughnuts.

This becomes a wildly popular advertising campaign.

In the end, Dunkin' Donuts is where it is today,

as much because of Bob as because of Bill.

Today, there are over

13,000 Dunkin' Donut stores worldwide,

more than Burger King, Taco Bell, and Dominoes,

and the company is worth almost $9 billion,

selling almost three billion doughnuts

and two billion cups of coffee a year.

Bill Rosenberg took a big leap of faith

and the leap of faith that paid off.

I'm drinking Dunkin' Donuts coffee right now.

Thanks, Bill.

For Krispy Kreme,

the Rudolph brothers find success by sharing

the magic of doughnut-making with the world,

and Krispy Kreme becomes more than just a doughnut shop.

It's an American experience.

Vernon Rudolph was not a cutthroat businessman.

He was a sweet, good-natured guy,

and he was just determined to make something of himself.

And he creates a doughnut unlike any doughnut

I've had anywhere else in the country,

anywhere else in the world.

Since being surpassed in 1963,

Krispy Kreme has never matched Dunkin's financial success,

but Vernon Rudolph succeeded in his dream

to turn doughnuts into its own industry.

Today, Krispy Kreme continues to spread the gospel

of hot doughnuts at nearly 12,000 locations worldwide,

selling over $1 billion.

Both Krispy Kreme and Dunkin' Donuts

continue to evolve today.

I think people now see Dunkin' Donuts

as the place they go to start their day,

whereas Krispy Kreme is where they go

at the end of their day for that sweet treat.

And I think that's what's so great,

that no matter where in the country you are,

no matter what time of day it is,

there is a doughnut to match your mood

and to make life worth living.