Posted on 10/12/2005 9:32:36 AM PDT by BenLurkin
PALMDALE - If you're hooked on Krispy Kreme doughnuts, you'll have to drive to Burbank or Van Nuys now to get your sugary fixes. As of Monday, the company's Palmdale franchise was boarded up, its "Hot Now" sign dark and its display racks empty after four years of operation.
Krispy Kreme outlets in Southern California are operated by Great Circle Family Foods LLC.
On Tuesday, Great Circle marketing manager Amy Inabinet said the company "decided to close the (Palmdale) location as part of an effort to consolidate our resources."
"We're using this opportunity to re-invest in the company and focus on providing the same level of service and quality that Southern Californians have come to expect from Krispy Kreme," Inabinet said.
Great Circle has no plans to reopen the Palmdale outlet or to open any others in the Antelope Valley in the near future, she said.
For now, "Burbank or Van Nuys are probably the closest" outlets for Krispy Kreme cravers, Inabinet said.
In September 2001, the opening of Palmdale's Krispy Kreme at 540 West Rancho Vista Blvd. (Ave. P) drew lines of vehicles and hundreds of customers. In its first three hours, the outlet sold more than 10,000 doughnuts.
In addition to the loss of its famous baked goods, the closure means the loss of jobs for about 72 people who shared 21 shifts a week to cover the store's 24-hour, seven-day operation.
On Sept. 29, two of Great Circle's partners, Richard Reinis and Roger Glickman, filed a lawsuit against Krispy Kreme in Los Angeles County Superior Court.
According to a report in USA Today, the lawsuit alleges that Krispy Kreme misappropriated money paid by Great Circle for marketing and advertising.
The lawsuit also alleges that Krispy Kreme systematically inflated its prices and engaged in deceptive business practices.
In a statement released Thursday, Krispy Kreme officials said they would "vigorously defend" the company against the lawsuit.
The Great Circle lawsuit is one of several filed against the doughnut chain in recent months. One lawsuit alleges that Krispy Kreme employees lost millions of dollars in retirement savings because company executives hid evidence of declining sales and profits.
A number of company shareholders also have filed lawsuits, which have been consolidated in a single action alleging that Krispy Kreme issued false and misleading statements about its financial condition, including false financial results.
In August, a special investigative committee composed of Michael Sutton, formerly chief accountant of the Securities and Exchange Commission, and Lizanne Thomas of the Jones Day law firm concluded that Krispy Kreme should restate its earnings downward by $22.2 million for fiscal 2001-04 and by $3.4 million for previous years.
Krispy Kreme employees involved in the errors have left the company, according to the committee's report.
Krispy Kreme remains the target of a criminal inquiry by federal prosecutors in New York and is under investigation by the SEC.
The company's Web site states that the chain, headquartered in Winston-Salem, N.C., has about 360 factory outlets and 50 satellite outlets in 45 states and a number of other countries, including in Canada, Mexico, Australia, the United Kingdom and South Korea.
"BYE-BYE - Now sitting as an unmarked building, except for the notices in the windows telling former customers where in the Los Angeles area they can now buy Krispy Kreme doughnuts, Krispy Kreme has closed its doors on Rancho Vista Boulevard (Avenue P) in Palmdale." RON SIDDLE Valley Press
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