Krispy Kreme (DNUT) Hit with Class Action Lawsuit Over McDonald’s Deal Fallout

Krispy Kreme (DNUT) is in trouble, not over its doughnuts but its partnership with McDonald’s (MCD).

The company’s investors have filed a class action lawsuit, alleging that Krispy Kreme misled shareholders about the success of its collaboration with McDonald’s.

It must be noted that the companies first entered into a partnership in October 2022, offering Krispy Kreme doughnuts at select McDonald’s locations in Louisville, Kentucky. After its success, they undertook a nationwide expansion in March 2024, with plans to roll out Krispy Kreme products to 12,000 McDonald’s locations by 2026.

However, by May 2025, Krispy Kreme revealed that demand had dropped below expectations, leading to a pause in expansion.

Key Allegations by Shareholders

The lawsuit, filed in U.S. District Court, claims that Krispy Kreme failed to disclose key financial risks tied to its McDonald’s deal. The lawsuit alleges that the company did not inform about the decline in demand and that McDonald’s sales drove lower revenue per store.

Investors argue that Krispy Kreme hid the key issues that led to artificially inflated stock prices between February 25 and May 7, 2025. Later, when the company admitted that the partnership was not as profitable as expected, DNUT stock plummeted by nearly 25%.

Also, several analysts downgraded DNUT stock, while others reduced their price targets, reflecting growing concerns about Krispy Kreme’s future performance.

Is DNUT a Good Buy Right Now?

Turning to Wall Street, DNUT stock has a Hold consensus rating based on two Buys, four Holds, and one Sell assigned in the last three months. At $5.78, the average Krispy Kreme stock price target implies a 95.27% upside potential.

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