FINANCE
5 REASONS THE MCDONALD’S- KRISPY KREME PARTNERSHIP FAILED The Bottom Line: The relationship between the fast-food giant and the doughnut chain ended before it was even half complete. Here are five reasons why the partnership couldn’t work.
K rispy Kreme and McDonald’s mutually decided to end their partnership late last month, bringing to an end one of the more surprising collaborations the industry has seen in some time long before it was truly complete. Krispy Kreme could not sell enough doughnuts inside McDonald’s locations for it to profit from the venture. CEO Josh Charlesworth called the partnership “unsustainable” in a statement, a surprisingly strong comment in a press release, where such statements typically have any exciting commentary edited out of them. But why couldn’t the partnership work? Why could McDonald’s not sell enough Krispy Kreme doughnuts for that to be profitable, particularly given the attention it received? Here are five reasons. KRISPY KREME’S PROFIT CHALLENGES The biggest reason for the failure, frankly, is the company’s plunging profits. The doughnut chain’s adjusted EBITDA, or earnings before interest, taxes, depreciation and amortization, plunged 67% in the first quarter. Profit margins fell 670 basis points. It reported a $33.4 million net loss in the first quarter and an operating loss of $20.3 million. The company has long argued that its customers want more access to its doughnuts. But providing that access has thus far proven too expensive. Krispy Kreme simply can’t afford to continue its McDonald’s partnership—or any such relationship that isn’t working. Both McDonald’s and Krispy Kreme mentioned the doughnut chain’s lack of profitability in their statements. THAT’S NOT WHY PEOPLE GO TO MCDONALD’S People do not visit McDonald’s for doughnuts, or for pastries for that matter.
JONATHAN MAZE
JONATHAN.MAZE@INFORMA.COM
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RESTAURANT BUSINESS JULY 2025
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