A class action lawsuit was filed against Krispy Kreme (DNUT) by Levi & Korsinsky on May 16, 2025. The plaintiffs (shareholders) alleged that they bought DNUT stock at artificially inflated prices between February 25, 2025 and May 7, 2025 (Class Period) and are now seeking compensation for their financial losses. Investors who bought Krispy Kreme stock during that period can click here to learn about joining the lawsuit.
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Krispy Kreme is an American multinational doughnut company and coffeehouse chain. The company also sells its products through partnerships with leading retailers and online.
In 2022, Krispy Kreme entered a partnership with McDonald’s (MCD) to sell its doughnuts and other products at McDonald’s outlets, initially in a limited area, with plans to later expand to about 12,000 McDonalds locations by 2026. The two companies’ joint decision to end their partnership is at the heart of the current complaint.
Krispy Kreme’s Misleading Claims
According to the lawsuit, Krispy Kreme and two of its senior officers (the Defendants) repeatedly made false and misleading public statements throughout the Class Period. Particularly, they are accused of omitting truthful information about the Company’s partnership with McDonald’s, demand for its products at the fast-food restaurants, and ancillary issues, from SEC filings and related material.
During the Class Period, the defendants repeatedly praised the company’s partnership with McDonald’s and highlighted how it was boosting sales. For instance, Krispy Kreme noted in a press release that its Global Points of Access grew by 24.1%, backed by an accelerated U.S. expansion through 1,900 McDonald’s restaurants, in addition to other international growth.
Additionally, in an annual report filed on February 27, 2025, the company stated that it was excited about its partnership with McDonald’s and the national roll out to other locations.
Finally, in a press release dated April 23, 2025, the CEO stated that the management was pleased to welcome Bernardo Hees, former CEO of Kraft Heinz (KHC), to the board at a strategic time when Krispy Kreme was aiming to maximize shareholder value through profitable U.S. expansion and capital-light international growth.
However, subsequent events (mentioned below) reveal that the defendants failed to inform investors that demand for Krispy Kreme products declined materially at McDonald’s locations after the initial marketing launch and was expected to impact overall sales.
Plaintiffs’ Arguments
The plaintiffs maintain that the defendants deceived investors by lying and withholding critical information about the business practices and prospects during the Class Period. Importantly, the defendants are accused of misleading investors regarding the company’s unprofitable partnership with McDonald’s, which in fact resulted in declining average sales per door per week.
The information became clear before the market opened on May 8, 2025, when Krispy Kreme released disappointing results for the first quarter of fiscal 2025. DNUT’s sales fell below consensus estimates, while its net loss widened compared to the prior year period.
Additionally, the company warned that it was reassessing its deployment schedule with McDonald’s and withdrew its prior full year fiscal 2025 guidance, mainly due to uncertainty around the McDonald’s partnership. Following the news, DNUT stock plunged 24.7% the same day and fell a further 16.3% on May 9.
To conclude, the defendants misled investors about the company’s unfruitful partnership with McDonald’s and its decision to pause the expansion plans with the burger chain. Owing to these issues, DNUT stock has lost 73.5% year-to-date, causing massive damage to shareholder returns.
