Krispy Kreme, Inc. (NASDAQ:DNUT) shares dropped as much as 7% before recovering slightly to close down 4% on Tuesday, following the announcement that the doughnut company and McDonald’s USA (NYSE:MCD) will end their partnership effective July 2, 2025.
The two companies said the decision was mutual after determining the business model was not financially sustainable for Krispy Kreme, despite meeting McDonald’s expectations. The collaboration, which covered around 2,400 McDonald’s locations, will officially conclude next year.
“Our two companies partnered very closely, each supporting execution, marketing, and training, delivering a great consumer experience in approximately 2,400 McDonald’s restaurants,” said Josh Charlesworth, Krispy Kreme CEO. “Ultimately, efforts to bring our costs in line with unit demand were unsuccessful, making the partnership unsustainable for us.”
McDonald’s Chief Marketing and Customer Experience Officer Alyssa Buetikofer added that while the partnership was strong and Krispy Kreme delivered a “high-quality product,” the arrangement needed to be profitable for both companies.
According to McDonald’s, Krispy Kreme accounted for a “small, non-material part” of its breakfast business. The fast-food chain reaffirmed its commitment to its breakfast strategy, which remains a key component of its business.
Krispy Kreme said it will now focus on expanding through high-volume retail distribution in the U.S. and pursuing capital-light franchise growth internationally to support sustainable future growth.