Selling Krispy Kreme doughnuts at McDonald’s will end July 2, the two companies announced. The partnership began last last year, and Charlotte-based Krispy Kreme was able to sell doughnuts in about 2,400 of McDonald’s 13,500 stores, or about 18%, but it had trouble making a profit, says CEO Josh Charlesworth in a release.
“Our two companies partnered very closely, each supporting execution, marketing, and training, delivering a great consumer experience in approximately 2,400 McDonald’s restaurants,” says Charlesworth. “Ultimately, efforts to bring our costs in line with unit demand were unsuccessful, making the partnership unsustainable for us.”
Krispy Kreme will focus on making its doughnuts available through U.S. expansion of retail stores and capital-light international franchise growth. Krispy Kreme represented a small part of McDonald’s breakfast business, a core pillar of one of the three largest U.S. fast food chains.
“We were excited and pleased to partner with Krispy Kreme,” said Alyssa Buetikofer, McDonald’s USA’s chief marketing officer. “We had strong collaboration with Krispy Kreme and they delivered a great, high-quality product for us, and while the partnership met our expectations for McDonald’s and owner/operators, this needed to be a profitable business model for Krispy Kreme as well.”
Krispy Kreme operates in more than 40 countries. It has more than 350 stores in 42 states in addition to selling its doughnuts in thousands of retail stores.
The company reported a $33 million loss in the first quarter, and it discontinued its dividend for the first time since it went public in 2021. Shares have declined 74% this year through Monday, closing at $2.62. The stock, which has traded for more than $12.60 in the past year, was little changed today.
“We are shocked by the speed at which the story fell apart,” Truist Securities analyst Bill Chappell wrote in a May note, as reported by Bloomberg.
While a public company, Krispy Kreme shares are controlled by JAB Holding, a Luxembourg-based business that owns Panera Bread, Brueggers Bagels, Coty and other brands.