McDonald’s has recently announced plans to offer Krispy Kreme doughnuts at its fast-food restaurants across the United States. The initial phase of this rollout is expected to commence in the second half of the year, with aspirations of completion by the end of 2026. This strategic partnership entails McDonald’s becoming the sole fast-food collaborator with Krispy Kreme in the country.
Krispy Kreme has adopted a unique “hub and spoke” distribution model, which enhances its efficiency in producing and disseminating its delectable doughnuts. These hubs serve as either retail stores or doughnut factories, dispatching fresh doughnuts daily to various retail outlets like grocery stores and gas stations. Through this collaboration, Krispy Kreme aims to significantly increase its market presence, having already established delivery channels to 6,800 third-party stores as of December 31. With McDonald’s vast network of approximately 13,500 restaurants nationwide and plans to inaugurate 900 additional locations by 2027, the partnership is anticipated to facilitate Krispy Kreme’s expansion effectively.
By leveraging its existing infrastructure, primarily within doughnut shops with surplus capacity, Krispy Kreme intends to service around 6,000 of McDonald’s restaurants. Furthermore, the doughnut chain has been enhancing its production capabilities to cater to the additional demand from McDonald’s and other prospective clientele, including grocery and convenience stores seeking national suppliers. This strategic approach towards expanding distribution is poised to enhance the overall efficiency and productivity of Krispy Kreme’s network considerably over time.
Krispy Kreme’s doughnut shops have historically produced more inventory than what they could sell, positioning the chain to capitalize on the heightened demand from McDonald’s and new customers. Consequently, the increased production volume can be achieved at minimal additional costs, thereby bolstering the overall profitability of the distribution network. According to Krispy Kreme CEO Josh Charlesworth, this collaboration with McDonald’s serves as an accelerant in optimizing the growth of the fresh daily delivery channel.
The partnership between McDonald’s and Krispy Kreme commenced roughly 18 months ago, when the former began offering Krispy Kreme doughnuts at nine test restaurants. The overwhelmingly positive response from customers led to the expansion of the initiative to around 160 locations in Louisville and Lexington, Kentucky. Notably, these initial restaurants will continue offering Krispy Kreme doughnuts throughout the national rollout.
Customer demand during the trial phase exceeded the expectations of both chains, underscoring the popularity of Krispy Kreme doughnuts among McDonald’s patrons. As McDonald’s refines its bakery and breakfast offerings, the addition of Krispy Kreme doughnuts further augments its menu appeal. Customers can now enjoy classic options like original glazed, chocolate iced with sprinkles, and chocolate iced cream-filled doughnuts, available for individual purchase or in packs of six. Importantly, these doughnuts will be available for sale all day, enriching the overall dining experience for McDonald’s customers.
Looking ahead, Krispy Kreme envisions expanding its presence to over 100,000 points of access globally, a notable increase from its previous forecast of 75,000 locations. Presently, the chain’s doughnuts are distributed across more than 14,100 stores in 39 countries. Despite a 20% decline in Krispy Kreme’s shares over the past year, attributing to concerns of competition from weight loss treatments like Novo Nordisk’s Ozempic, the brand remains optimistic about its future trajectory.
Similar concerns about health trends impacting sales have weighed on McDonald’s as well, albeit the company’s stock has risen by 2% in the past year due to consumer preferences gravitating towards its cost-effective food and beverage offerings. With a market value of $201 billion, McDonald’s enduring popularity among consumers is poised to complement Krispy Kreme’s strategic expansion plans and potentially drive positive outcomes for both chains.