Krispy Kreme, Inc (NASDAQ: $DNUT) is an American coffeehouse chain established in 1937 in North Carolina that has grown into an iconic global brand. It is famous for its melt-in-your-mouth Original Glazed doughnuts and wide selection of handcrafted treats, including cheesecake-filled doughnuts complemented by freshly brewed coffee and other beverages.
On Tuesday, March 26, 2024, Krispy Kreme and McDonald’s announced an expanded national partnership after a successful pilot program in Kentucky. The two iconic brands are teaming up to bring fresh Krispy Kreme doughnuts to McDonald’s restaurants nationwide by the end of 2026.
The McDonald’s Partnership
Beginning later in 2024, McDonald’s guests can indulge in three iconic Krispy Kreme doughnut offerings, sold individually or in half-dozen boxes. These freshly made doughnuts will arrive at participating McDonald’s daily and will be available all day.
“Our fans’ love for Krispy Kreme runs deep, and we can’t wait to make it even easier for them to satisfy their sweet tooth at McDonald’s restaurants across the country,” said Josh Charlesworth, Krispy Kreme’s President and CEO.
Tariq Hassan, McDonald’s USA’s Chief Marketing and Customer Experience Officer, echoed the excitement, stating, “This partnership is an exciting next step in our journey and a chance to unlock new business opportunities in the breakfast category and throughout the day.”
The partnership follows a successful test at 160 McDonald’s restaurants in Lexington and Louisville, Kentucky, where consumer demand exceeded expectations.
Krispy Kreme’s Expansion Plans
Beyond the McDonald’s partnership, Krispy Kreme is actively working to expand its reach and accessibility. By the end of 2026, the company expects to more than double its points of access, creating operating leverage through distribution density and production utilization.
Krispy Kreme has been scaling its supply chain, adding technology and new equipment, and enhancing field training to support its “Delivered Fresh Daily” expansion, which includes the phased rollout with McDonald’s.
Financial Highlights and Guidance
Krispy Kreme’s financial results for the fourth quarter and full year 2023 demonstrated strong growth fueled by expanding fresh doughnut accessibility worldwide. Q4 saw net revenue climb 11.4%, organic revenue rise 13.2%, adjusted EBITDA jump 14.7%, and adjusted EBITDA margins improved by 40 basis points. For the full year, net revenue grew 10.2%, organic revenue increased 12.2%, and adjusted EBITDA advanced 11.0%.
Krispy Kreme 2024 Guidance
In 2024, Krispy Kreme forecasts net revenue growth between 5% and 7%, organic revenue growth from 6% to 8%, and adjusted EBITDA growth from 8% to 11%. The company’s strategic initiatives to bring its signature treats to more consumers are driving positive financial momentum.
Celebrating with Freebies
To celebrate the sweet partnership with McDonald’s, Krispy Kreme offered a special treat for doughnut lovers on March 26: one FREE Original Glazed Doughnut for all guests visiting U.S. Krispy Kreme shops between 5 p.m. and 9 p.m.
Spring Minis Collection
In addition to the McDonald’s partnership, Krispy Kreme introduced an all-new Spring Minis Collection for a limited time, helping fans “hatch happy” this spring. The collection includes four miniature doughnut flavors: Mini Birds Nest Doughnut made with CADBURY Mini Eggs, Strawberry Egg Doughnut, Hatching Chick Doughnut, and Robin’s Egg Doughnut. These are available in-shop, for pickup or delivery via the Krispy Kreme app, website, and at select grocery stores.
With its expanded partnership with McDonald’s, growing accessibility through the “Delivered Fresh Daily” model, and innovative seasonal offerings, Krispy Kreme is poised to bring joy and deliciousness to even more doughnut fans nationwide.
As Josh Charlesworth stated, “We’re excited to help our fans ‘hatch happy’ with these all-new Spring Minis – from the first day of Spring through Easter Sunday.”
DNUT Stock Performance
DNUT shares surged over 33% on Tuesday, March 26, trading at $16.63 per share as of 02:26 PM EDT, with a single-day trading range of $14.34 – $16.75. DNUT shares are up 12.46% year-to-date and 7.70% in the past 12 months, compared to the over 30% gain of the S&P 500 in the same period.
The steep rise followed the company’s expanded nationwide partnership with McDonald’s. Krispy Kreme now expects to reach over 100,000 points of access globally for its iconic treats, up significantly from prior estimates of 75,000 locations.
With the McDonald’s deal fueling aggressive expansion plans, investors rallied behind shares, pushing the relative strength index to an elevated 74, signaling an overbought situation in the near term. Analysts view the McDonald’s partnership as a major win bolstering Krispy Kreme’s distribution capabilities and productivity over time.
Should You Consider Buying DNUT Stock In 2024?
Krispy Kreme could be an attractive investment opportunity in 2024. The expanded partnership with McDonald’s to bring its fresh doughnuts to thousands of McDonald’s restaurants nationwide is a significant growth driver. This deal will significantly increase its distribution reach and accessibility, potentially driving higher revenue and earnings growth.
Also, the company’s strong financial performance in 2023, with double-digit revenue, adjusted EBITDA growth, and positive guidance for 2024, further strengthens the investment case. However, carefully evaluating the stock’s valuation and potential risks before making any investment decisions is vital.
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