Prime Highlights
- McDonald’s to end Krispy Kreme doughnuts from July 2, 2025.
- Krispy Kreme to end the deal because cost and profitability at scale are low.
Key Facts
- The deal scaled up within a little more than one year to 2,400 McDonald’s restaurants.
- Krispy Kreme shares fell after multi-million-dollar losses.
Key Background
“McDonald’s Krispy Kreme doughnuts” were rolled out to the breakfast menu in March 2024 as a pilot but highly anticipated item. The rollout was first attempted in limited locations, later spread to approximately 2,400 restaurants with further plans for taking the offering to all 14,000 U.S. locations by 2026. Consumers welcomed the union of sweet items like Krispy Kreme’s Original Glazed to typical McDonald’s breakfast fare as a highly desired sweet menu option.
But the alliance was hampered by serious finance issues. Krispy Kreme, responsible for baking and distributing the doughnuts daily, was handicapped by McDonald’s restaurant size and logistics of distributing its restaurants nationwide. The effort at balancing delivery charges against demand failed, and the business was not sustainable. The company management cited prohibitively high costs and operational inefficiencies as the overall reason for the abrupt scrapping of the deal.
In spite of all the media frenzy over the McDonald’s alliance, Krispy Kreme reported severe financial losses for the first quarter of 2025, during which its stock fell more than 70%. The fast food giant chain reported, however, that customer response was positive and product quality on target, but profitability for Krispy Kreme was more important than product popularity.
McDonald’s clarified that doughnut sales were a small percentage of their whole breakfast business. Removing “Krispy Kreme from McDonald’s menus” symbolizes both firms’ strategic plans. McDonald’s will be turning inward to its value proposition of cheap eats with tightening consumer spending, while Krispy Kreme will turn outward to high-volume retail affiliations and global franchise growth. Menu removal on July 2, 2025, is the end of an era of fast-food experiments, indicating the challenge of profitability under mass collaboration.
