Dive Brief:
- Krispy Kreme is happy with its ongoing market testing at roughly 160 McDonald’s locations in Kentucky, the company said on its Q2 earnings call.
- The test has given Krispy Kreme “deep knowledge of how the QSR channel is going to actually work,” Krispy Kreme president and CEO Mike Tattersfield told investors and analysts.
- McDonald’s cut the bulk of its McCafe pastry lineup in July, leaving a potential gap in the menu for Krispy Kreme to fill.
Dive Insight:
The chain plans to use its U.S. system as a big test case for QSR partnerships in its delivered-fresh-daily system, by which the company delivers doughnuts to participating locations. Tattersfield said the operational lessons from the test could unlock further expansion opportunities in the QSR segment.
On Krispy Kreme’s Q1 earnings call, Tattersfield said that while the chain was focused on its partnership with McDonald’s, there were other potential partners in the QSR space.
“What we've really started to look at as a channel is what's the opportunity in that channel within our existing [doughnut production] footprint and how could that work and then really push on from that,” Tattersfield said on the Q2 call.
Krispy Kreme is undertaking an assessment of its doughnut production capacity to determine how much it can expand its DFD business in the U.S., Josh Charlesworth, Krispy Kreme’s chief operating officer, said on the Q2 earnings call. That expansion could leverage existing production facilities and selective new facilities, he said, and could eventually bring the brand beyond its target of 15,000 domestic points of access.
“We're confident we could serve more McDonald's stores,” Charlesworth said. “But it's obviously up to them.”
McDonald’s did not immediately respond to a request for comment on possible expansion of its doughnut partnership.
