Krispy Kreme’s Turnaround Sees Many Wins

Krispy Kreme’s Turnaround Sees Many Wins

Ben Coley

Tue, August 11, 2026 at 7:08 PM GMT+3 5 min read

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Krispy Kreme is beginning to show what its business is capable of.

The doughnut chain spent much of 2025 unwinding costly expansion, closing thousands of underperforming fresh-delivery points, and ending its nationwide McDonald's partnership. Now, CEO Josh Charlesworth sees evidence that the work is producing a healthier growth engine.

Krispy Kreme's second-quarter net revenue fell 13 percent to $331 million, a decline tied in large part to refranchising transactions in Japan and the Western U.S. Systemwide sales, excluding the impact of the discontinued McDonald's partnership, rose 2.6 percent. Adjusted EBITDA increased 43 percent to $28.8 million, marking a fourth consecutive quarter of growth, and adjusted EBITDA margin expanded 340 basis points to 8.7 percent.

The U.S. provided one of the clearest signs of progress. Organic revenue was essentially flat when including the McDonald's comparison, but increased 4.4 percent without it. Digital sales grew 8 percent, and Krispy Kreme's retail shops also contributed to the improvement.

"Growing but with much higher margins is a really good basis to then drive for long-term profitable growth," Charlesworth says.

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The improvement is visible across several pieces of the U.S. business.

On Krispy Kreme's earnings call, Charlesworth pointed to the Original Glazed doughnut, discounted second-dozen promotions, seasonal collections, and limited-time products as contributors to demand. The company said digital sales now account for roughly 22 percent of U.S. retail sales, supported by a loyalty program with nearly 18 million members. Loyalty members typically visit 30 percent more frequently than nonmembers.

Fresh delivery is undergoing an even more fundamental reset.

Krispy Kreme exited nearly 2,500 McDonald's distribution points and approximately 1,400 other underperforming doors last year. The company has since started rebuilding distribution selectively, adding roughly 450 doors year-to-date through retailers that include Walmart, Target, Kroger, and Sam's Club.

Average weekly sales per U.S. fresh-delivery door reached approximately $697 in Q2, up 33 percent year-over-year. Charlesworth said the majority of that increase came from removing weak locations, though new doors are producing stronger sales as Krispy Kreme applies tighter standards to where it expands.

"We have been very focused on making sure that we just add with those strategic partners where the conditions are right, where we see the traffic in that store," Charlesworth said.

Krispy Kreme has worked to secure more visible displays, particularly near checkout areas where an unplanned doughnut purchase can become a take-home item for a party, barbecue, or family gathering.

The company is also integrating more closely into retailers' e-commerce systems. Krispy Kreme products are available through Walmart.com, and Target.com availability is scheduled to begin in September. Charlesworth said getting Krispy Kreme products mapped into retailers' planograms allows workers filling online orders to reliably locate them.

"We haven't been able to be on that in the past, and now we will, which is pretty exciting," he says.

The opportunity does not require Krispy Kreme to construct a large new production network. U.S. production utilization is only approximately 25 percent. Existing facilities already serve more than 7,600 fresh-delivery doors nationwide, leaving considerable unused capacity. Additionally, Krispy Kreme currently reaches roughly 30 percent of the store networks operated by many of its key retail partners.

That combination gives the chain room to add distribution without repeating the capital requirements that accompanied earlier expansion.

"Doughnut production capacity is not our bottleneck," Charlesworth says. "There are thousands of locations, Walmarts, Targets, Costco, Sam's Clubs, Kroger's, Publix, where we know this program works, but we are not in yet."

Krispy Kreme wants new doors close enough to production facilities to preserve freshness and clustered tightly enough to make delivery routes productive. A retailer may appear attractive individually, Charlesworth explains, but the surrounding route also has to make financial sense.

"The thing that we, and I will make sure we're careful in, is that we don't rush after that opportunity without knowing in all cases that it's profitable growth," he says.

Refranchising is another major part of the turnaround plan.

Franchisees accounted for approximately 25 percent of systemwide sales last year. That figure has climbed to 42 percent following deals in Japan and the Western U.S., with Krispy Kreme targeting approximately 50 percent beginning next year.

The 50 percent figure is not intended as a permanent ceiling. In fact, the work set to be completed in markets like the U.K., Australia, Mexico, and Canada would put Krispy Kreme well north of that 50 percent benchmark.

International franchisees have opened much of the chain's new development this year. Krispy Kreme reported 59 new shops year-to-date, with all but two opened by franchisees, putting the company on track for at least 100 openings in 2026. New franchise agreements have also been signed for the Netherlands, Estonia, and Mauritius.

Growth opportunities also exist inside Krispy Kreme's existing customer base. Charlesworth has frequently described the brand as an infrequent purchase, with typical customers buying doughnuts two or three times per year, often for celebrations or sharing occasions.

The company sees room to lift that frequency without turning Krispy Kreme into an everyday purchase. Seasonal collections and limited-time flavors create additional occasions, and digital ordering gives loyalty members easier access to the brand.

"There are many special occasions, sharing moments, family events, birthday celebrations, seasonal occasions, Valentine's, Halloween, Saint Patrick's Day, that show that Krispy Kreme can be relevant," Charlesworth says. "So I do believe that frequency is a part of our model, whether it's in the shop or online."

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