Cash pooling and “de-pooling” with Krispy Kreme

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Cash pooling and “depooling” with Krispy Kreme 

Tim Faley 

Welcome, everyone. My name is Tim Faley. I'm an executive director in our Global Treasury Management Working Capital Solutions product team, focusing on liquidity management and cash concentration solutions. I'm honored to be here today with James Krikorian from Krispy Kreme. And James, I'll turn it over to you. 

James Krikorian
James Krikorian, vice president, treasurer, Krispy Kreme, Inc. I'm the global treasurer for Krispy Kreme, and I work closely with all the lenders, and I'm equally honored to be here with Wells Fargo, one of our most important banks globally. 

Faley
Can you give an overview of Krispy Kreme’s relationship with Wells Fargo? 

Krikorian
Wells Fargo is our primary domestic cash management bank, but we've expanded the relationship into things such as liquidity, but also in leasing and in other areas of work. 

Faley
And how does Krispy Kreme approach liquidity management? 

Krikorian
It's actually fairly simple. So for us it's about accessing debt, accessing the cash, and offsetting them. So it's primarily about cash optimization and with liquidity being trapped in the U.S. within our various JVs, leveraging some of your transaction services has allowed us to lower our interest expense. 

Faley
And what liquidity risks or other types of risks are you trying to manage when you're thinking of your liquidity management structure? 

Krikorian
It's really about cash flow, more about making sure that as cash is available, that the debt is maturing to offset those higher interest expenses. And that's why having real time access to the cash is so important. For example, implementing a passive sweep product called the Stagecoach Sweep has both enhanced the yield on what I can't sweep to my debt. It does it for me. 

We love it because of the automatic accruing of interest, because as you can imagine, a lot of our joint venture partners, though we're the majority owner, the minority wants to make sure they get their ample interest income. Or said differently, if they happen to be borrowing money, because it is a two-way pooling structure, that we're getting what we deserve from the said JV. 

I spent the first 5 to 6 years of my career at Krispy building the cash pool up, but interestingly, in 2024 we actually did something called de-pooling, where we sold our majority stake in Insomnia Cookies, and we actually had a de-pool. So that was kind of counterintuitive, but just as useful as we rotated down into a minority stake, we wanted them out of our pool just to mitigate some of the risk. 

Faley
Do you take advantage of the self-service capabilities that we offer through Vantage around the intercompany reporting side of the product? 

Krikorian
We do, in fact; we have a team in the U.S. of myself and my analyst. Two people in a global treasury, you need self-service. You need functionality, you need to leverage, in this scenario, Wells Fargo as the back office. And without technology, without dependable service, without people, it's very difficult to do my job effectively. 

Faley
What do you look for in a banking partner? It sounds like some of the capabilities are really important, having that support as a kind of a back office for you. 

Krikorian
I need a diversified banking group. When I say diversified, it's not just large bank, small bank, it's also U.S. bank versus Japanese bank. We really want a diversification, but we also want long term relationships. Wells Fargo has been in our credit since the take-private back in 2016, and they continue to grow the relationship together. 

Faley
From a team perspective, I know you work very closely with some of our product partners and our implementation partners. How important is that to you having that support? 

Krikorian
It may sound a bit strange when I say it's about the three P’s and no, it's not price, price, price, it's people, people, people. And it could be the four P’s or the five P’s, depending how many times you want to say people. Wells Fargo has the right culture for Krispy Kreme and they have the right people for Krispy Kreme. 

Faley
Great. Just from a general banking perspective, outside of liquidity management, what other priorities do you have that Wells Fargo is helping you achieve? 

Krikorian
It’s about wallet share. It's about making sure that we can grow profitably together. And without the right balance of profitable products, Wells Fargo cannot continue to invest in its infrastructure. And without the right type of products that we're paying for, we can’t grow as a company. So again, it is very much an ecosystem. 

Faley
Great. And what other important metrics are you trying to meet when you're looking at banking partners or when you’re in your day-to-day operations? 

Krikorian
Just like, you know your clients very well, we need to know our lenders very well. So having a local bank, and Wells Fargo goes from the west coast to the east coast as does Krispy. So I do think knowing who you're banking with, knowing that they're here for the long term is very important for that relationship. 

So with cash pooling, Wells Fargo had the cash forecasting. They had the pooling capabilities. So I was able to gravitate towards what was comfortable, which was client analysis statements, more towards the pooling structures in the technology that Wells Fargo had well developed. So to be able to work with your team, it was really just a very natural discussion to say, let's roll up our sleeves and get to work. And we built a pool as we started to create joint ventures with Insomnia Cookies in 2018. Awesome Donut was the L.A. JV in 2018.  W.K.S. Krispy Kreme in 2019. it was all these U.S. JVs that screamed for a cash pooling product that you had. So I just kept layering them in. 

We released publicly that we sold 40% of our 75% stake in Insomnia Cookies in the month of July 2024. What I did was, de-pooled. So I almost did the reverse. I'm used to building things up, not tearing things down. But that was one area of just sort of reverse engineering of something that we all already did. And the cool part? Your team that was building it up in 2018, was the same people that I was working when I was tearing it down in 2024. 

Faley
So when you talk about technology and innovation that the bank offers, is there any examples of how we've innovated and included Krispy Kreme in the product development process and made sure that we were taking your needs into account as we continue to develop the products? 

Krikorian
Yeah, whether it's the rollout or the refresh of Vantage, they're always doing interviews, always doing case studies, always doing pilots. I'm also a member of Wells Fargo Advisory Council. I've never experienced a bank that has such a thirst for understanding their clients’ needs. And whether we're building a pooling structure and they're referring to it as a source account and I'm referring to it as a child or a parent or a header, we need to use the same language. Words matter. Market convention matters, because once you flip it on, everybody needs to be on the same page. Because something will go wrong. So it's not a question of when it will go wrong. It's just knowing who to call when it does. 

And it's a two-way street and having these relationships with your client experts only matters when you actually have tenure. And every once in a while, they'll still reach out to me when they're refreshing something, changing something, and it just makes me feel part of the Wells Fargo family. And maybe it's because I am. 

Faley
Yeah, and I like that about working at Wells Fargo, because I think even in a product role, we're encouraged, like you said, to interact with our clients. We’re not siloed in building the products. We're trying to incorporate our clients into that process, whether it's building a new product, managing existing one, or just handling day to day operations like that. 

Krikorian
It's working. It's absolutely working. Keep up the good work, and I'm loving it. 

Disclaimer:
Global Treasury Management products and services are provided by Wells Fargo Bank, N.A. Wells Fargo Bank, N.A. is a bank affiliate of Wells Fargo & Company. Wells Fargo Bank, N.A. is not liable or responsible for obligations of its affiliates. Deposits held in non-U.S. branches, subsidiaries or affiliates are not FDIC or CDIC insured. Deposit products offered by Wells Fargo Bank, N.A. Member FDIC. 

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