Dive Brief:
- Krispy Kreme and McDonald’s have decided to end their partnership effective July 2, the companies said in a press release Tuesday.
- The two companies paused the rollout of Krispy Kreme doughnuts across McDonald’s U.S. system last month to fine tune operations, but Krispy Kreme said Tuesday the program lacked long-term profitability.
- Krispy Kreme said it will focus on its two largest opportunities of profitable U.S. expansion in high-volume retailers and asset-light international franchise growth.
Dive Insight:
The two companies launched their partnership in 2022 and were rolling out Krispy Kreme doughnuts to new restaurants up until about February, when McDonald’s in New York City added them to the menu. The chains planned to expand the program nationwide by 2026.
But Krispy Kreme realized that the program’s early success could not be sustained. After the initial launch at stores, demand dropped below expectations. In May, Krispy Kreme said it would work with McDonald’s to boost demand and simplify operations.
Both companies worked closely in “supporting execution, marketing and training,” during the partnership, Krispy Kreme CEO Josh Charlesworth said in the press release. “Ultimately, efforts to bring our costs in line with unit demand were unsuccessful, making the partnership unsustainable for us.”
McDonald’s USA Chief Marketing and Customer Experience Officer Alyssa Buetikofer said the collaboration helped the QSR giant deliver a high-quality product. It met expectations for McDonald’s and its franchisees, but “it needed to be a profitable business model for Krispy Kreme as well.”
The partnership ultimately reached 2,400 McDonald’s restaurants, about 18% of its 13,500 domestic units.
Krispy Kreme is facing an investor lawsuit over the partnership. An investor filed a class action suit in May claiming the chain violated federal securities laws by making false claims over the success of the program and failing to disclose profitability struggles early enough.
