McDonald’s has recently announced a partnership with Krispy Kreme to sell their doughnuts at McDonald’s restaurants nationwide by the end of 2026. This partnership will be exclusive for the fast-food giant in the U.S. McDonald’s plans to start the rollout in the second half of this year, but it will take approximately two and a half years for Krispy Kreme to more than double its distribution to meet the demands of the partnership. Krispy Kreme operates using a “hub and spoke” model where production hubs, either stores or doughnut factories, send freshly made doughnuts daily to locations like grocery stores and gas stations. This collaboration with McDonald’s provides Krispy Kreme a significant opportunity to expand its reach in the market.
Krispy Kreme operates in 6,800 third-party stores as of December 31, but with McDonald’s partnership, they aim to reach a wider audience. McDonald’s, with around 13,500 restaurants in the U.S. and planning 900 new locations by 2027, offers Krispy Kreme an extensive platform to distribute its doughnuts. This will also enable Krispy Kreme to increase its efficiency and productivity in the distribution network over time. Krispy Kreme has been working on expanding its capacity to meet the demand from McDonald’s as well as other new customers in grocery and convenience stores.
Krispy Kreme CEO Josh Charlesworth mentioned that the partnership with McDonald’s will not only improve the efficiency of the distribution network but also enhance profitability by leveraging the excess capacity of doughnut shops. The increased demand from McDonald’s and other new customers allows Krispy Kreme’s production lines to operate at higher volume without significant additional costs. This makes the system more profitable for Krispy Kreme and aligns with its goal to deliver fresh doughnuts daily across various channels.
The collaboration between McDonald’s and Krispy Kreme began a year and a half ago with a test phase where Krispy Kreme doughnuts were sold at nine McDonald’s restaurants. The success of this test led to an expansion to approximately 160 restaurants in Louisville and Lexington, Kentucky. The overwhelming demand from McDonald’s customers during the tests exceeded the expectations of both chains, paving the way for a nationwide rollout.
For McDonald’s, the addition of Krispy Kreme doughnuts is a strategic move to enhance its bakery and breakfast offerings. With a focus on coffee and now doughnuts, McDonald’s is catering to consumer preferences while streamlining its bakery menu by removing items like cinnamon rolls. Customers will have a variety of Krispy Kreme doughnuts to choose from, including the original glazed, chocolate iced with sprinkles, and chocolate iced cream-filled doughnuts, available individually or in packs of six, throughout the day.
Looking ahead, Krispy Kreme anticipates reaching over 100,000 points of access globally for its doughnuts, up from the previous estimate of 75,000 locations. This growth trajectory is part of the chain’s strategy to expand its presence in the global market, with operations in more than 39 countries and 14,100 stores currently. Despite a 20% decline in Krispy Kreme’s shares over the past year, the company remains optimistic about its growth potential and aims to capitalize on the partnership with McDonald’s to drive sales and market reach.
The collaboration between McDonald’s and Krispy Kreme marks an exciting chapter for both companies as they leverage each other’s strengths to expand their offerings and reach in the market. The partnership not only benefits both brands in terms of sales and market presence but also underscores the evolving consumer preferences for bakery and breakfast items. As the nationwide rollout progresses, McDonald’s customers can look forward to enjoying the delectable Krispy Kreme doughnuts alongside their favorite meals, contributing to an enhanced dining experience for all.
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