McDonald's and Krispy Kreme are terminating their business collaboration.
In a surprising turn of events, Krispy Kreme and McDonald's have announced the end of their partnership, effective next Tuesday. The collaboration, which began in 2023, aimed to bring Krispy Kreme doughnuts to McDonald's restaurants nationwide, but the economics proved unsustainable for Krispy Kreme.
The partnership, initially hailed as a sweet success, saw an increase in the number of places where Krispy Kreme's doughnuts were sold by 35%. However, this expansion did not translate into improved revenue for Krispy Kreme, as the company struggled to bring costs in line with demand at McDonald's locations.
Despite meeting McDonald's expectations for quality and operational standards, Krispy Kreme's inability to achieve profitability led to the decision to halt expansion to new McDonald's locations. The slow rollout of Krispy Kreme doughnuts at McDonald's means they cannot fully benefit from McDonald's marketing strength.
For McDonald's, while the partnership met their expectations for their breakfast business and owner/operators, profitability needed to be sustainable for both parties. Consequently, the companies jointly decided to end the partnership.
Krispy Kreme plans to refocus its growth strategy on profitable U.S. expansion through high-volume retail distribution and international franchise growth, rather than continuing in McDonald's restaurants. McDonald's, on the other hand, remains committed to offering affordable breakfast options but without Krispy Kreme doughnuts.
The profit issues and the relative decline in Krispy Kreme's stock have been ongoing since 2021. The temporary bump in Krispy Kreme's stock in 2023 was due to the McDonald's partnership announcement. However, the delay in the rollout of Krispy Kreme doughnuts at McDonald's came after Krispy Kreme announced a likely overhaul of its board of directors and a shift in focus to cost cuts.
This decision has not been without its consequences. Investors have sued Krispy Kreme over statements related to the partnership before the delay was announced. Adjusted EBITDA for Krispy Kreme declined 63%, and organic revenue in the U.S. declined 2.6% in the first quarter of this year. The partnership represented a small part of McDonald's breakfast business.
As the dust settles, both companies look towards the future, with Krispy Kreme focusing on profitable growth strategies and McDonald's continuing to offer affordable breakfast options. The end of this partnership marks a significant moment in the fast-food industry, signalling the importance of profitability in partnerships and the challenges of scaling operations in the modern market.
[1] BusinessWire. (2025, July 1). Krispy Kreme Doughnut Corporation and McDonald's Corporation Announce Agreement to Terminate U.S. Partnership. Business Wire. [2] Reuters. (2025, July 1). Krispy Kreme and McDonald's end U.S. partnership due to profitability concerns. Reuters. [3] The Wall Street Journal. (2025, July 1). Krispy Kreme and McDonald's End U.S. Partnership Over Profitability Concerns. The Wall Street Journal. [4] CNBC. (2025, July 1). McDonald's to stop selling Krispy Kreme doughnuts as partnership ends. CNBC.
- Krispy Kreme, in an effort to enhance profitability and focus on growth, will reconsider its strategies by prioritizing high-volume retail distribution and international franchise expansion, shifting away from investing in McDonald's restaurants.
- Despite the positive impact on customer experience, the partnership between Krispy Kreme and McDonald's failed to positively affect the restaurant finance, as the company struggled with the costs associated with the collaboration at McDonald's locations.
- In light of the end of their partnership, McDonald's will continue to uphold the key aspects of their business model, maintaining focus on offering affordable food-and-drink options, while Krispy Kreme aims to improve lifestyle choices for its customers by striving for sustainable growth through profitable expansion.
