Ba-da-da-dada… DNUT is Hot Now! Krispy Kreme’s Partnership with McDonalds Goes National.

Krispy Kreme (DNUT) announced a significant expansion of its partnership with McDonald’s (MCD), projecting that its renowned donuts will be available in McDonald’s U.S. locations by the end of 2026. This news propelled Krispy Kreme’s shares up by 23% on Tuesday.

Initially piloted in 160 McDonald’s restaurants within the Lexington and Louisville, Kentucky areas since October 2022, the collaboration has now entered a phase of broader implementation. The companies intend to commence the gradual rollout of the program in the latter half of 2024. Notably, Krispy Kreme has agreed not to supply its donuts to any other quick-service restaurant in the U.S. until December 31, 2026, as part of the arrangement.

Krispy Kreme’s strategic vision involves expanding its presence to at least 75,000 points of access worldwide, encompassing quick-service restaurants and grocery stores, employing a hub-and-spoke distribution model. The company reported a notable increase of 2,300 access points by the end of 2023 compared to the preceding year, indicating robust growth momentum.

With McDonald’s boasting approximately 14,000 stores across the United States and plans to open 10,000 additional restaurants globally by 2027, the expanded partnership holds significant promise for both companies.

However, McDonald’s has faced challenges abroad due to boycott movements in certain international markets stemming from the Israel-Hamas conflict, coupled with challenging macroeconomic conditions in China, leading to subdued demand in its overseas outlets.

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Ba-da-da-dada… DNUT is Hot Now! Krispy Kreme’s Partnership with McDonalds Goes National.

Ashlee Vogenthaler

Markets Editor