Krispy Kreme’s Brilliant Vertical Integration Model

N.C. Children’s Hospital Named After Cheap Doughnuts that Can Cause Kids Expensive Health Problems that Require Treatment at its Branded Hospital

In a baffling sellout, N.C. Children’s Hospital announced last month that the renowned health care facility would be christened Krispy Kreme Challenge Children’s Specialty Clinic.

The university clinic appears to have made the decision based upon a measly $1 million that the doughnut corporation plans to raise on behalf of the clinic over the next five years and $1 million raised over the past 10 years. Krispy Kreme is not even donating the money from its own coffers, but instead is raising the money through a ridiculous race in which participants scarf down its high calorie, sugar-laden doughnuts while running.

I applaud Krispy Kreme for its ingenious strategy. Win the endorsement of a well-respected health care clinic to lend credibility to your unhealthy product. Brand a popular road race to further associate fried dough with athleticism and superior health. Then market your product that contributes to obesity, diabetes and heart disease at the very hospital from which your consumers will soon need to purchase services. And pay close to nothing for this powerful advertising campaign.

Money comes from race participants and local business sponsors, not Krispy Kreme

The yearly grants presented to N.C. Children’s Hospital come out of the pockets of race registrants and local businesses that sponsor the event, not from the Krispy Kreme corporation.

The race is organized by a University of North Carolina on-campus organization Park Scholarships through the 501(3)(c) nonprofit K2 Challenge, Inc.

According to K2 Challenge’s 2013 IRS filings, 8000 race registrants paid a total of $250,000. Fundraising events brought in $13,000. The remaining $23,000 in revenue was attributed to all other contributions, grants and gifts, which I assume means the event sponsors.

The top sponsors in the event include a car dealership, radio stations, sports equipment retailers, a medical supply company and a music venue. A local Krispy Kreme franchisee is listed as a Silver fourth tier contributor, which requires sponsorship of just $1,000. Notably absent is a donation from the Krispy Kreme corporation itself.

$20,0000 for doughnuts was written off as an expense. So, apparently Krispy Kreme does not even donate the actual doughnuts to the event.

Krispy Kreme contributes nothing but branded signage, and reaps the benefits of looking like the good guys while the residents and business owners of Raleigh foot the bill to support the Krispy Kreme hospital. Really, this is a brilliant plan.

Krispy Kreme Challenge: Eat more than one day's calories in one hour while running

The Krispy Kreme Challenge website proudly proclaims its mantra:“2400 calories, 12 doughnuts, 5 miles, 1 hour.” This describes the Krispy Kreme Challenge for which the children’s hospital is named. Race participants run 5 miles in under an hour and wolf down a dozen glazed donuts at the halfway mark.

The dozen glazed donuts contain a total of 2400 calories. In other words, Krispy Kreme makes a game out of eating more than one full day’s worth of calories in one hour. In addition to the insane calories, participants also consume 120 grams of added sugar — that equals more than four times the recommended amount for men and close to five times the amount recommended for women per day. And, the 1,200 calories of bad fat in the dozen doughnuts far exceeds what an individual should consume in one day.

Running five miles will not burn those excessive calories, nor will it control the spike in blood glucose levels that could be dangerous for a person with undiagnosed diabetes and that is  simply counter to anybody’s concept of healthiness.

A children's hospital should not be named after a doughnut

The Krispy Kreme Challenge Children’s Specialty Clinic is known for its specialists in immunology, cardiology, endocrinology, diabetes, gastroenterology, metabolism, hematology, learning and development, pulmonology and urology. Children who need treatment in these areas would be better off refraining from eating the excessive calories, sugar and unhealthy fats contained in a dozen glazed Krispy Kreme doughnuts.

But, sadly, many children who visit the Krispy Kreme hospital will make the misguided connection between doughnuts and good health that Krispy Kreme intends. Doctors are also put in conflict if they advise patients to lay off the sweets even though they work for a hospital named after a doughnut.

We really can’t blame kids for adopting unhealthy lifestyles when health care providers are branded with the name of a doughnut glutton contest. And we can’t really blame Krispy Kreme for devising this brilliant marketing scheme. But folks at N.C. Children’s Hospital, you could do better. I hope you will reconsider your decision and bestow a more appropriate name that honors your young patients and the professionals who serve them.

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