McDonald’s, Krispy Kreme to end U.S. donut sale partnership as costs mount

McDonald's restaurant signs are shown in in East Palestine, Ohio, Feb. 9, 2023. (AP Photo/Gene J. Puskar, File)

McDonald’s and donut maker Krispy Kreme said on Tuesday they would end their partnership in the United States by July, as the companies struggled to manage the costs associated with the venture.

Under the partnership, announced in March last year, McDonald’s planned to sell Krispy Kreme’s donuts as part of its breakfast menu at more than 14,000 stores in the U.S. But so far, the donuts were available at only 2,400 McDonald’s restaurants, according to the companies.

“Ultimately, efforts to bring our costs in line with unit demand were unsuccessful, making the partnership unsustainable for us,” Krispy Kreme CEO Josh Charlesworth said.

As part of the deal, Krispy Kreme had also agreed to not supply its donuts to any other quick service restaurant in the U.S. through the end of 2026.

The donut chain withdrew its annual forecast in May and said it was reassessing the deployment schedule for the program together with McDonald’s.

Krispy Kreme’s shares, which have lost about 70 per cent of their value this year, were up marginally in choppy premarket trade.

The donuts were part of McDonald’s crucial breakfast menu — a feature the restaurant chain has been trying to bolster by adding new items, bringing back crowd favorites and investing in marketing.

McDonald’s said Krispy Kreme was a small, non-material part of its breakfast business, which it referred to as a core pillar of its business strategy.

(Reporting by Juveria Tabassum in Bengaluru; Editing by Leroy Leo)