Krispy Kreme (DNUT) will no longer sell its doughnuts at McDonald’s (MCD) after deciding it was leaving too much of a hole in its bottom line.
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Krispy Kreme said the troubled partnership with McDonald’s, which involved selling doughnuts at 2,400 stores, would end on July 2.
DNUT stock dropped 0.57% while McDonald’s beefed up 0.17%.
Costly Decision
Krispy Kreme’s Chief Executive Josh Charlesworth said that the joint decision to end the tie-up was down to costs.
“Ultimately, efforts to bring our costs in line with unit demand were unsuccessful, making the partnership unsustainable for us,” he said.
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.
Krispy Kreme hoped that it would make its products more readily available and accessible to customers in more places and help it become a national brand.
Expansion Pause
By May 2025, Krispy Kreme revealed that demand had dropped below expectations, leading to a pause in expansion.
The company’s investors also filed a class action lawsuit, alleging that Krispy Kreme misled shareholders about the success of its collaboration with McDonald’s.
Krispy Kreme has had a difficult period given continued economic uncertainty. In its Q1 results, it revealed that it was withdrawing its annual outlook. It also reported net revenue of $375.2 million, marking a 15.3% decline from the previous year, primarily due to the divestiture of a majority stake in Insomnia Cookies.
Following the end of the McDonald’s deal, Krispy Kreme said it would now focus on driving sustainable growth by making its doughnuts available in more high-volume retail locations and growing international franchises.
McDonald’s said that it was delighted with the Krispy Kreme product and that the partnership had met its expectations. However, it also understood Krispy Kreme’s need for a “profitable business model.”
Is MCD a Good Stock to Buy Now?
On TipRanks, MCD has a Moderate Buy consensus based on 11 Buy, 14 Hold and 1 Sell rating. Its highest price target is $364. MCD stock’s consensus price target is $328.89 implying an 13.41% upside.
