Location Data Says Krispy Kreme’s Times Square Plan May Be Half-Baked

Image above by Ryan McGuire.

I read with interest Krispy Kreme’s plans to forge ahead with the opening of their new flagship store at 1601 Broadway at West 48th Street, in the heart of New York’s Times Square. This follows the quiet recent openings of new Krispy Kreme locations in the Bronx, Harlem, Midtown, the Financial District, and on the second level of Penn Station.

As someone who studies human mobility in New York routinely, I am compelled to question the pandemic-era business logic behind this aggressive expansion. The world will go back to normal or something like it one day, but, by using our human mobility data sets and assuming a continuation of current trends, we can see there is little evidence that these new Krispy Kreme locations will draw enough foot traffic in the coming months and quarters to survive, let alone thrive. 

Of the current Krispy Kreme locations on Manhattan Island, Penn Station is by far the busiest, and foot traffic there was less than 10% of its pre-pandemic high as of August 21. That shrank from 30% about a month prior. Traffic for the store is continuing to fall on average, and the trend is downward. Net-net, we must conclude that business at Krispy Kreme’s busiest NYC location is slow and, for now, getting slower.

Most of Krispy Kreme’s other new stores in NYC have opened too recently for us to review much long-term data, but it is fair to assume that the Bronx, Harlem, Midtown and FiDi locations are in similarly dire straits. Why? Using our Neighborhood Insights tool, we can examine human mobility in four distinct categories down to the Census Block Group (CBG) level — the smallest area unit used by the U.S. Census Bureau.

Collectively, the CBGs where Krispy Kreme’s new stores are located are in an unrecovered state with most reporting traffic down between 70 and 90% across all categories, with no clear trend. Only the raw volume of foot traffic from the Penn Station store pulls up Krispy Kreme’s overall human mobility draw, but that’s just an anomaly based on the broader traffic patterns in that public venue. Beyond that outlier, there’s nothing in the data for the CBGs where the FiDi, Midtown, Harlem, and Bronx stores reside that indicates those Krispy Kreme locations are doing any better than other local brands.

This brings us back to the new Krispy Kreme Times Square flagship store, smack in the middle of some of the world’s most expensive, and now largely empty, real estate. Traffic in the four surrounding CBGs is down 80% or more versus 2019, and they are not trending towards recovery. The specific CBG in which the Krispy Kreme Times Square store will reside is one of the least-recovered in New York and indeed all of America. 

Compared to the day before shutdown, foot traffic around what will soon be Krispy Kreme’s new flagship location is down 86% overall. Tourist traffic is down 94%, worker traffic is down 89%, and resident traffic is down 70% and falling. There is no indication of much change anytime soon.

Finally, every restaurant and retailer we looked at in the four connected CBGs around Krispy Kreme’s new location near 48th and Broadway has lost a comparable amount of traffic since shutdown began (80 to 90% or more), and the recovery trend in the area is universally flat. In short, Times Square is empty, and that may be the only show in town for some time to come.

It is laudable that Krispy Kreme continues to invest in new locations and property development and to create jobs and services at a time when neighborhood businesses are shuttering their doors around the city and country. I also recognize and appreciate the benefit of having a modern, flagship location in a — hopefully — soon-to-recover tourist center in one of the world’s great cities.

That said, upon review of the areas around these locations, it is reasonable to wonder if Krispy Kreme’s new stores will draw enough foot traffic to rise to the challenge over the coming quarters. Certainly, Krispy Kreme and parent company JAB Holdings could use human mobility data to decrease the brand’s odds of falling flat in a rough NYC market.

Thomas Walle is CEO and co-founder of Unacast.

Tags:
No Previous Post
Next Post

Heard on the Street, Episode 57: Streamlining the Digital Ad Stack