Krispy Kreme reported net revenue growth of more than 7% during its second quarter, generating nearly $438.8 million, while the company’s organic sales jumped by 7.8% year-over-year.
This increase was driven largely by the acceleration of the company’s global points of access (POA), which jumped by 23.2% in Q2 to 15,853. During the past three years, its global points of access metric grew by an average of 19%, finishing 2023 with just over 14,000. Krispy Kreme chief executive officer Josh Charlesworth noted that this week the company will enter its 40th country with an opening in Morocco, illustrating the scope of Krispy Kreme’s growing access points.
Revenues were also buoyed by a digital sales increase of 22%, as well as an increase in its “Delivered Fresh Daily” business, which includes grocery stores, convenience stores, retailers, McDonald’s, and more. In addition to the company’s partnerships, DFD sales, which grew by 18% globally, were also driven by activations such as the Dolly Parton Southern Sweets collection, launched in May, and a Kit Kat partnership.
In the U.S., net revenue grew 8.2%, while organic revenue grew 8.4%. These results were also driven by specialty doughnut collections such as the Parton collection, the Total Solar Eclipse Doughnut, and “Minis for Mom.” Krispy Kreme also launched doughnut holes, called Doughnut Dots, for the first time in early June. Domestic DFD sales grew by 24%, while digital sales increased 26% in large part due to the chain’s relaunch of its loyalty program in April. There are now 15 million loyalty members, marking a 27% increase year-over-year.
Charlesworth said the “profitable nationwide expansion” in the domestic market is accelerating as the company grows partnerships and accelerates existing ones, including McDonald’s. The McDonald’s/Krispy Kreme partnership is expected to go national by the end of 2026 and will expand to Chicago this fall, from Kentucky where the test began in 2022 and expanded in Q1 2023. Charlesworth said Chicago was targeted because it’s the home of McDonald’s and Krispy Kreme has three existing hubs and spokes in the area with excess capacity.
“We are very pleased with our partnership with McDonald’s. We expect to serve fresh doughnuts in more than 1,000 McDonald’s restaurants by the end of the year, add 5,000 in 2025, and 6,000 in 2026, bringing us to more than 85% of the U.S. footprint,” Charlesworth said.
Krispy Kreme has a team working with the quick-service giant to ensure a seamless rollout and is hiring and training employees in manufacturing operations, upgrading its production lines, and optimizing its delivery logistics network with “improved routing” and fleet upgrades to make the McDonald’s rollout happen.
“We have a dedicated cross-functional team to make sure the facilities and our people are ready,” Charlesworth said. “We’re very focused on delivering a really high-quality service to the McDonald’s restaurants so that people get fresh doughnuts every day at the same quality level they expect in Krispy Kreme and other channels.”
Additionally, to reach its goal of 33,000 POA by 2026, Krispy Kreme is “exploring” the opportunity to expand its presence in Walmart locations and has agreed to expand with Target later this year. Charlesworth noted that the McDonald’s partnership has been a catalyst for these partnerships.
Insomnia Cookies sale
Krispy Kreme’s recent sale of Insomnia Cookies is improving the company’s financial profile, Charlesworth said. Chief financial officer Jeremiah Ashukian noted that the company received $127.4 million in cash proceeds upon closing the sale in mid-July and has since received an additional $45 million following Insomnia Cookies’ refinancing of inter-company debt.
“As a result, we expect our next leverage ratio to trend towards 3.5 times by year-end and remain on track to our long-term goal of 2 times to 2.5 times by the end of 2026,” Ashukian said.
Krispy Kreme updated its full-year guidance to reflect the removal of Insomnia from the second half of the year, including the removal of a previously forecasted $120 million of Insomnia revenue. The company now expects net revenue of $1.65 billion to $1.685 billion.
Contact Alicia Kelso at [email protected]
