McDonald’s and Krispy Kreme have announced a new partnership that will see Krispy Kreme doughnuts being sold at McDonald’s restaurants nationwide by the end of 2026. The rollout is set to start in the second half of this year and will take approximately two and a half years for Krispy Kreme to double its distribution to meet the demands of the partnership. McDonald’s will have the exclusive rights to sell Krispy Kreme doughnuts in the U.S.
Expansion Opportunities
Krispy Kreme’s “hub and spoke” model is an efficient way for the chain to produce and distribute its treats. With production hubs sending freshly made doughnuts daily to retail locations, the partnership with McDonald’s presents a major opportunity for Krispy Kreme to expand its reach. With existing distribution to 6,800 third-party stores, partnering with McDonald’s and potentially servicing 6,000 restaurants can significantly boost Krispy Kreme’s exposure.
Efficiency and Profitability
The increased demand from McDonald’s and new customers allows Krispy Kreme to maintain high production volumes without significantly increasing costs. This helps improve the overall efficiency and productivity of its distribution network, leading to increased profitability. The partnership with McDonald’s acts as an accelerator for Krispy Kreme’s growth in the deliver fresh daily channel.
The relationship between McDonald’s and Krispy Kreme began with a test phase where Krispy Kreme doughnuts were sold at nine McDonald’s restaurants. The success of the test phase led to an expansion to 160 restaurants across Kentucky. McDonald’s customers showed high demand for Krispy Kreme doughnuts during the test phase, exceeding expectations for both chains.
McDonald’s decision to add Krispy Kreme doughnuts to its menu helps strengthen its bakery and breakfast offerings. Customers will have the option to order original glazed, chocolate iced with sprinkles, and chocolate iced cream-filled doughnuts either individually or in packs of six. The doughnuts will be available for purchase all day at McDonald’s restaurants.
Global Reach and Market Outlook
Looking into the future, Krispy Kreme aims to expand its reach to over 100,000 points of access globally, up from its initial target of 75,000 locations. Currently, Krispy Kreme products are available in more than 14,100 stores across 39 countries. Despite a 20% decline in share value over the past year, Krispy Kreme remains optimistic about its growth prospects.
Concerns over the impact of weight loss drugs like Novo Nordisk’s Ozempic on Krispy Kreme’s sales have led to investor worries. McDonald’s has also faced similar concerns, although its strategic focus on affordable food and drinks has helped maintain a positive stock performance. McDonald’s currently holds a market value of $201 billion.
The partnership between McDonald’s and Krispy Kreme presents a significant growth opportunity for both chains. By expanding its distribution to McDonald’s restaurants nationwide, Krispy Kreme can increase its brand visibility and profitability. McDonald’s benefits from offering popular Krispy Kreme doughnuts to its customers, enhancing its breakfast and bakery offerings. Despite market challenges, both companies are optimistic about the future prospects of their partnership.
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