While Krispy Kreme‘s alternate-quarter numbers told a tough story, the donut chain is betting it can recover after a $441 million loss. The loss, mostly from one-time paper charges of $407 million, came as revenue slid to $379.8 million, down 13.5% from last year, after it sold most of Insomnia Cookies. Even without that sale, sales dropped less than 1%. Cash from its shops slipped $32.5 million out the door, and the firm made only $20.1 million in adjusted earnings. Rooting the effort, CEO Josh Charlesworth has charted a four-pillar turnaround plan built around refranchising, sharper return on capital, operational efficiency and quality growth. Delivery now accounts for roughly 15% of sales, another pivot adding both volume and volatility to margins.
New financial strategies now hinge on ditching heavy fixed costs and leaning on franchises. After ending the July deal with McDonald’s, about 2,400 McDonald’s doors shut, removing a pricey channel. Costs tied to that exit weighed on profit, but the chain says it will strip these costs out of the one-third quarter. The goal: shrink debt and chase a capital-light model where international owners pay to run new shops.
Operational challenges remain plain. Delivering fresh donuts drove up the bill for insurance and forced scheduling twists. Firms must still balance high-volume delivery with keeping enough money left over. Managers also face questions over how many “Hot Light Theater” shops can stay busy and how international plants can run at lower fixed cost under local partners.
To fix these gaps, the turnaround plan centers on brisk but profitable U.S. growth plus steady overseas franchise openings. A franchise owner funds the store, cuts the firm’s debt, and hands Krispy Kreme a royalty—an approach leaders say enhances return on capital and lifts operating margins.
The chain tallied 18,113 access spots worldwide even after the McDonald’s closures, a 14% jump, by leaning on other retail partners and simple store-in-store stands.
Stock watchers saw shares sink past $3.30, down more than 65% in a year. Non-GAAP numbers still missed Wall Street guesses, so traders stay focused on each next step. Executives stress they’re being open about the hurt and the fix. The firm sees its famous Original Glazed recipe holding buyer love across forty-plus nations, but admits the Q2 math of cost versus demand is not sustainable.
