Krispy Kreme Sells Remaining Stake in Insomnia Cookies for $75 Million

Krispy Kreme has sold its remaining stake in Insomnia Cookies for $75 million in cash, which it plans to use to pay down debt. The company will focus on its two main business opportunities: profitable US expansion and international franchise growth. This sale is part of Krispy Kreme's plan to improve its finances and grow worldwide through different distribution channels.

Krispy Kreme has recently sold its remaining stake in Insomnia Cookies for $75 million in cash, a significant move aimed at addressing its financial challenges. The company plans to use this cash to pay down debt, a critical step in its broader strategy to improve its financial health and drive growth. This sale is part of Krispy Kreme's ongoing turnaround plan, which focuses on profitable U.S. expansion and international franchise growth.

The company reported a 13.5% year-over-year revenue decline in Q2 2025, with net revenue falling to $379.8 million. This decline was driven by the termination of its McDonald’s USA partnership and the closure of underperforming locations [1]. The termination of the McDonald’s partnership, which added 2,400 distribution points, has left a void in transaction volumes, and U.S. organic growth remains stagnant. Despite these challenges, Krispy Kreme has taken steps to deleverage and refocus its strategy.

JPMorgan has downgraded the stock to "underweight," citing execution risks tied to the company’s turnaround plan and deteriorating business trends [2]. The company's reliance on refranchising diverges from successful models in the QSR sector, where operational efficiency and menu innovation have driven success. For instance, MOOYAH Burgers' success with standardized kitchen equipment and employee training highlights the importance of maintaining operational rigor—a challenge for Krispy Kreme as it cedes control to franchisees [3].

Krispy Kreme’s turnaround plan hinges on replacing 1,500 underperforming stores with 1,100 high-volume outlets by year-end and refocusing marketing on its iconic Original Glazed doughnut [1]. The company is also pursuing new retail channels, including Costco, Kroger, and Walmart, to offset the McDonald’s loss. Retail sentiment toward Krispy Kreme improved to bullish on Stocktwits, though message volume remained low [2].

Despite these efforts, shares have fallen over 60% in 2025 as investors demand clearer evidence of sustainable growth. Krispy Kreme’s debt levels, with total debt at $1.46 billion and a current ratio of 0.35, compound the challenges [1]. The company must demonstrate financial discipline and a coherent vision for revitalizing its brand in a crowded market for its turnaround plan to succeed.

References:
[1] Krispy Kreme Reports Second Quarter 2025 Financial Results and Announces Turnaround Plan [https://investors.krispykreme.com/news/news-releases/news-details/2025/Krispy-Kreme-Reports-Second-Quarter-2025-Financial-Results-and-Announces-Turnaround-Plan/default.aspx]
[2] JPMorgan downgrades Krispy Kreme to underweight [https://www.cnbc.com/2025/08/27/jpmorgan-downgrades-krispy-kreme-to-underweight-doubts-proposed-turnaround-plan.html]
[3] Krispy Kreme Earnings Call Transcript [https://www.investing.com/news/transcripts/earnings-call-transcript-krispy-kreme-q2-2025-shows-eps-miss-stock-drops-93CH-4177701]