Krispy Kreme Ends McDonald’s Partnership Citing $28.9M Costs and 13.5% Revenue Drop

Krispy Kreme has announced the termination of its partnership with McDonald’s, attributing the decision to unsustainable operating costs of $28.9 million, including lease impairment and termination expenses. The collaboration, launched to offer Krispy Kreme doughnuts at around 2,400 McDonald’s U.S. locations, was initially positioned as a transformative growth opportunity but failed to meet financial expectations. The announcement came alongside the chain’s Q2 2025 earnings report, which revealed significant losses linked to the partnership [1].

The partnership, which spanned roughly two years, required extensive operational support from both companies, including joint efforts in marketing, training, and execution. Despite these efforts, CEO Josh Charlesworth stated that aligning costs with unit demand proved unfeasible. The partnership was mutually agreed upon to be terminated, with the effective date set for July 2, 2025 [1].

The financial toll was evident in Krispy Kreme’s Q2 earnings, which reported a net loss of $441 million. This included $28.9 million in lease and termination costs and $22.1 million in asset charges. Revenue dropped 13.5% year-over-year to $379.8 million, missing analyst forecasts. Adjusted earnings per share were -$0.15, significantly below the projected -$0.03 [1].

In response, the company is pivoting to stabilize its financial position. This includes exiting unprofitable partnerships and refocusing on high-margin retail channels such as supermarket and convenience store collaborations. Krispy Kreme is also accelerating international franchise expansion and has plans to sell its remaining stake in Insomnia Cookies while refranchising markets in Australia, New Zealand, Mexico, and the U.K. to free up capital and lighten its balance sheet [1].

The partnership, however, had a minimal impact on McDonald’s. The fast-food giant reported robust Q2 2025 results, with global comparable sales rising 3.8% and U.S. same-store sales up 2.5%. Consolidated revenue increased to $6.84 billion, up 5% year-over-year, and net income rose 11% to $2.25 billion. CEO Chris Kempczinski reiterated a focus on menu innovation and digital investment, stating that breakfast remains a core pillar of the company’s strategy [1].

The failed collaboration underscores the risks associated with scaling niche products into the fast-food market. For Krispy Kreme, the road ahead includes cutting costs and repositioning for sustainable, profitable growth. Charlesworth expressed optimism about returning to profitability by Q3 2025 but acknowledged that the stock has declined nearly 70% since January, reflecting ongoing investor concerns [1].

Source: [1]title1.............................(https://fortune.com/2025/08/07/krispy-kreme-mcdonalds-partnership-unsustainable-operating-costs-earnings/)