Krispy Kreme has once again reported dismal results, falling well short of second-quarter expectations. This isn't surprising given last year's unwise acquisition of Montana Mills, a cafe chain that Krispy Kreme more recently shut down. That acquisition was the first symptom of a management team losing focus on making doughnuts profitably and instead giving in to empire-building temptations.

A more local example of this phenomenon has occured on Columbus Avenue and 71st Street. Two years ago, Harry's Burritos decided to open an ice cream stand in the miniscule storefront between 71st and 72nd Street. At first, it was a beautifully basic business model: you could get chocolate or vanilla soft-serve cones. Those were the only two choices, and demand was strong. Costs of running the business were cheap because they didn't even need cups. Among all kinds of gourmet ice cream shops nearby, the little ice cream stand was an oasis of simplicity.

Over time, this ice cream stand became too ambitious. First it added cups; then it added other flavors; and then it added all kinds of toppings and mix-ins. The number of labor permutations required for each customer multiplied exponentially, and the vendors had trouble articulating all of the choices on the menu.

When the winter of 2002-2003 arrived, they added soup--five or more flavors, to boot--and renamed the store "Soup and Scoop." Anecdotal evidence from my daily walk past this storefront suggested demand had plummeted--on many days it was too warm for soup, but too cold for scoop. And looking at the menu was becoming a dizzying experience with all of the choices.

By early 2004, Soup and Scoop closed. If they had stayed with the same basic business model of chocolate and vanilla cones, with low costs and high margins, I think they would still be in business. They could have adapted this basic model for the winter season by offering two kinds of soup in one size.

Making doughnuts doesn't mean you know how to run a restaurant chain. And maybe a simple ice cream stand will arise from people other than burrito experts.