Krispy Kreme will shutter another 21 outlets - slashing their range by almost half - as a restructure plan announced last week takes effect.



The locally owned Australian arm of Krispy Kreme, currently in voluntary administration, brings the number of stores closed to 24, eliminating 186 part-time and causal jobs, as well as 15 full-time positions.

The closures include 15 stores in NSW, five in Victoria and one in Queensland, adding to the three outlets shut in the ACT last week.

After a sweet start, Krispy Kreme Australia's profits have been on a downhill slide. Credit:Joe Armao

Loading

“A further 27 retail outlets will remain open and trading as usual as the voluntary administration process continues,” the company said in a statement.



“A further 61 employees from the closed stores have been given jobs in surrounding stores,” the company said, noting that all financial obligations to companies will be met in full.

The company said last month it had appointed Smith Hancock for a month-long restructuring of the business, announcing that it was at risk of not meeting its financial obligations. Krispy Kreme blamed unprofitable locations and high rents at some stores.



In a sign that snack food retailers are under pressure, Baskin Robbins and Cookie Man franchise holder Allied Brands also recently went into voluntary administration, after the company lost its licence to operate 92 ice-cream stores in Australia.



Disappointment



“We are all so disappointed,” said one four-year veteran of a Krispy Kreme location on NSW’s Central Coast, who declined to give her name.



“We were told we would receive redundancy but since speaking with Smith Hancock I have discovered all creditor claims are on hold until after the meeting on December 3.”



The former employee was told by the administrators that she could be waiting from one to six month for payments and wages owed.



The company's revenue rose 6.9 per cent to $57.9 million in 2009, according to Dun & Bradstreet's Company 360 business information service.



Net profit margins rose only $62,000 or 0.1 per cent over the same period.



The company said last week, in announcing it was going into voluntary administration, that falling sales, pricey rents, and high distribution costs put Krispy Kreme at risk of insolvency.



Krispy Kreme opened locally in 2003. The Australian company has the sole right to use the Krispy Kreme brand name in Australia and New Zealand. The business is fully owned by KKA Holdings.



czappone@fairfax.com.au



BusinessDay, with AAP