McDonald's will begin selling Krispy Kreme donuts at its fast food locations this year as part of a phased rollout that will bring the baked goods to its restaurants nationwide by the end of 2026.
Under a partnership announced Tuesday, Krispy Kreme will deliver three versions of its donuts — glazed, chocolate iced with sprinkles and chocolate iced with a cream filling — to McDonald's locations each morning. Customers can buy the donuts individually or in a box of six.
The rollout, which will begin in the second half of 2024, comes after the companies tested the partnership at 160 McDonald's locations in Kentucky and Indiana last year. Demand exceeded both companies' expectations, Krispy Kreme CEO Josh Charlesworth told CNBC.
The partnership could help McDonald's bolster its breakfast and coffee sales, especially as the company competes with Starbucks and Dunkin' for consumers willing to open their wallets for hot or iced drinks. The deal will also significantly expand Krispy Kreme's footprint in the U.S., as the donut chain currently has 377 locations, mostly in California and the South.
McDonald's has about 13,500 locations in the U.S., with about 95% operated by independent franchisees. Franchise owners will decide whether their locations will offer the donuts. The deal will more than double the locations where Americans can buy Krispy Kreme products, the companies said.
Shares of Krispy Kreme surged $3.66, or 29%, to $16.12 in Tuesday early afternoon trading. McDonald's shares were little changed at $279.01.
Free donuts on Tuesday
On Tuesday, Krispy Kreme will give one free glazed donut to anyone who visits a location between 5 p.m. and 9 p.m. to mark the McDonald's partnership.
"The top request we receive from consumers every day is, 'please bring Krispy Kreme to my town'," Krispy Kreme CEO Charlesworth said in a statement Tuesday.
For McDonalds, the Krispy Kreme deal marks a revamp of its breakfast bakery offerings after the chain discontinued selling blueberry muffins and apple fritters last year. The pastries — marketed as McCafé Bakery — launched in October 2020, but customer interest waned in the following years, a McDonald's spokesperson said at the time.
Earlier this year, McDonald's opened a new chain called CosMc's that focuses on coffee and other drinks as it challenges Starbucks and Dunkin' as a place for a quick pick-me-up.
Adding Krispy Kreme donuts gives McDonald's "a chance to unlock new business opportunities in the breakfast category and throughout the day," Tariq Hassan, chief marketing officer for McDonald's USA, said in a statement.
In a recent regulatory filing, Krispy Kreme announced an expanded partnership with McDonald's in Kentucky and Indiana. The one-year deal includes an option to renew annually, allowing these locations to continue selling Krispy Kreme products. This move follows a trend in the fast food industry, with Wendy's recently introducing Cinnabon treats nationwide and Pizza Hut adding Cinnabon-branded mini rolls to its menu in 2018.
