Four years as Baker & McKenzie chairman in Chicago might have given John McGuigan a taste for high calorie donuts, but as Krispy Kreme Australia CEO he wasn't able to trim the fat sufficiently to save it from going into administration.
It was announced yesterday (1 November) that Krispy Kreme Australia has been placed into the hands of administrators.
The donut company, based on the American Krispy Kreme brand, launched in Australia in 2003, with McGuigan appointed CEO and one of the company's major shareholders.
McGuigan left Bakers after 25 years at the firm in 1998, to start the investment and advisory company hunter bay Partners.
Another Bakers alumni, John Atkinson, who was a partner with the firm in Hong Kong and New York, is also a director with Krispy Kreme Australia.
Atkinson was at Bakers for 11 years and is also a director of hunter bay.
Krispy Kreme went into voluntary administration after it revealed it owes $15 million to John Kinghorn, the co-founder of RAMS Home Loans company and a significant investor in the company.
Kinghorn is now the non-executive chairman of RHG Mortgage Corporation Limited, after selling the RAMS brand name to Westpac in November 2007.
McGuigan is also a non-executive director of RHG Limited.
Krispy Kreme has incurred significant financial losses, including posting a $12 million loss in 2008, of which only $62,400 was recouped as a profit last year.
Analysts have cited a weakening retail market, a poor choice of location for many of the company's 50 Australian stores, failure to diversify into more health conscious food products and what the investment website smart company called "a high-cost distribution model", that meant fresh product was delivered to stores daily, contributed to its current financial situation.
On starting in Australia, Krispy Kreme adopted an aggressive marketing and public relations strategy, giving out free donuts at major events such as Tropfest. McGuigan, who acquired the rights to develop the Krispy Kreme donut business in Australia and New Zealand in 2002, was often cited in the press talking about the company.
In 2008 he was pictured in the Daily Telegraph, surrounded by donuts, in relation to a promotion that was offering Krispy Kreme customers the chance to meet their mortgage repayments for six months.