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CHARLOTTE, N.C. & CHICAGO - Krispy Kreme, Inc. (NASDAQ:DNUT) and McDonald’s USA announced Tuesday they will terminate their partnership effective July 2, 2025, citing profitability challenges.
The collaboration, which brought Krispy Kreme doughnuts to approximately 2,400 McDonald’s restaurants across the United States, is ending despite what both companies described as strong operational cooperation. According to InvestingPro data, Krispy Kreme has been facing significant financial headwinds, with negative earnings of -$0.13 per share over the last twelve months and rapidly declining cash reserves.
"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," said Alyssa Buetikofer, McDonald’s USA’s Chief Marketing and Customer Experience Officer.
Josh Charlesworth, Krispy Kreme CEO, explained the decision: "Ultimately, efforts to bring our costs in line with unit demand were unsuccessful, making the partnership unsustainable for us."
According to the press release, Krispy Kreme will refocus on its core growth strategy of expanding through high-volume retail distribution points and international franchise development. For McDonald’s, the doughnut offering represented a "small, non-material part" of its breakfast business. InvestingPro analysis reveals 16 additional key insights about Krispy Kreme’s financial health and market position, available in the comprehensive Pro Research Report.
The partnership termination comes as both companies reassess their business priorities. Krispy Kreme currently operates in more than 40 countries with over 17,500 fresh points of access, while McDonald’s maintains approximately 13,500 restaurants in the United States, with 95% independently owned and operated.
The announcement was made via a joint press release from both companies.
In other recent news, Krispy Kreme reported its first-quarter 2025 earnings, revealing a miss on earnings per share (EPS) expectations and a slight shortfall in revenue. The company posted an adjusted EPS of negative $0.05, falling short of the forecasted negative $0.04, with revenue at $375.2 million, just below the expected $385.11 million. In a strategic move, Krispy Kreme sold its remaining stake in Insomnia Cookies for $75 million, which it plans to use for debt reduction. Analysts have been adjusting their outlook on Krispy Kreme, with JPMorgan downgrading the stock from Overweight to Neutral, citing the company’s strategic shift and ownership concentration as factors. Evercore ISI also reduced its price target for the company to $3, down from $9, while maintaining an In Line rating, due to concerns about delayed product rollouts and profitability. Truist Securities lowered its rating from Buy to Hold, expressing concerns over the company’s recent performance and strategic execution. These developments reflect a period of adjustment for Krispy Kreme as it navigates challenges in its business strategy and financial performance.
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