Dive Brief:
- Krispy Kreme is reassessing its McDonald’s deal, which currently serves doughnuts through 2,400 restaurants, and has halted further expansion of the program, according to an earnings release.
- Krispy Kreme said it is working with McDonald’s to analyze the deployment timelines for its doughnuts “while it works to achieve a profitable business model for all parties.”
- Earlier this year, Krispy Kreme and McDonald’s expanded their partnership to the New York City market, following expansions in the Upper South and Midwest last year. The doughnuts filled a hole in McDonald’s menu left by the elimination of the McCafé bakery lineup in 2023.
Dive Insight:
Krispy Kreme CEO Josh Charlesworth said on the brand’s Q1 2025 earnings call that early performance of the program was often good, but not sustained. Shortly after the initial launch, demand ended up dropping below expectations, “requiring intervention,” Charlesworth said.
Charlesworth added that the brand was working with McDonald’s to increase demand and simplify operations, though he did not specify what actions Krispy Kreme was taking. The CEO told analysts that he remains convinced of the utility of the partnership.
“We need to work together with them to identify levers to improve sales, simplify operations. And once we’re positioned for profitable growth, we’ll expand further,” Charlesworth said.
Krispy Kreme’s distribution points also posted lower sales due to a shifting consumer mix, the doughnut chain said. The brand’s weekly sales per door dropped sharply, hitting $587, down from $640 in the year-ago-quarter and $631 in Q4 2024.
The doughnut maker also said that, given macroeconomic troubles, it was suspending its guidance. Despite growing its points of access in the U.S. by 34.9%, organic revenue was down 2.6% year-over-year as a consumer pullback wiped out gains made in the scale of its network, according to its earnings release.
McDonald’s made no mention of Krispy Kreme in its earning call last week, but same-store sales at the Golden Arches have also fallen, down 3.6% year-over-year.
The sales trouble for Krispy Kreme is likely indicative of a broad-based consumer retreat from discretionary spending. All but a few restaurant brands saw same-store sales drop in the last quarter. Taco Bell and Chili’s were two brands that bucked the trend by pulling off aggressive, value-oriented strategies that built on multiple quarters of value-focused marketing and menu innovation.
Correction: A previous headline misstated the scope of Krispy Kreme's pause. Krispy Kreme is temporarily stopping the expansion of its McDonald’s partnership.
