Krispy Kreme Unveils Comprehensive Turnaround Plan for US Expansion and International Franchising Amid Margin Pressures.

Krispy Kreme outlined a plan to revamp its business, focusing on refranchising, improving capital returns, and expanding margins. The plan includes a halt to new U.S. company-owned store openings, a focus on profitable U.S. expansion, and capital-light international franchise growth. Management aims to emphasize sustainable growth and improve profitability.

Krispy Kreme, Inc. (NASDAQ: DNUT) has unveiled a comprehensive turnaround plan aimed at deleveraging its balance sheet and driving sustainable, profitable growth. The plan, announced on July 2, 2025, follows the company's second-quarter financial results, which highlighted significant challenges, including a 13.5% decline in net revenue and a $441.1 million GAAP net loss [1].

The turnaround plan focuses on four key components: refranchising, improving returns on invested capital, expanding margins, and driving sustainable, profitable U.S. growth. Krispy Kreme CEO Josh Charlesworth stated, "We are quickly removing our costs related to the McDonald's partnership and growing fresh delivery through profitable, high-volume doors with major customers. We expect to begin recouping profitability in the third quarter."

Refranchising will improve financial flexibility by restructuring international markets and the joint venture in the Western U.S. The company will also reduce capital intensity by leveraging existing assets and focusing on franchisee development. To expand margins, Krispy Kreme will enhance operational efficiency, including outsourcing U.S. logistics.

The plan also includes halting new U.S. company-owned store openings and focusing on profitable U.S. expansion. International franchise growth will be capital-light, with a focus on sustainable and profitable revenue streams. Additionally, the company has initiated the process to refranchise certain markets, including Australia, New Zealand, Japan, Mexico, and the U.K. and Ireland.

Krispy Kreme's second-quarter financial results reflect the work needed to maximize U.S. expansion and wider adoption of the capital-light international franchise model. Net revenue declined to $379.8 million, primarily due to the sale of a majority stake in Insomnia Cookies Holdings, LLC. Organic revenue declined by $2.9 million, or approximately 0.8%, as growth in Global Points of Access and Delivered Fresh Daily revenues were more than offset by planned reduced discounting and expected consumer softness leading to a decline in doughnut shop transaction volume [1].

The company's Adjusted EBITDA declined to $20.1 million, with a margin decline of 720 basis points to 5.3%. GAAP Net Loss was $441.1 million, compared to the prior year net loss of $4.9 million, which included non-cash goodwill and other asset impairment charges totaling $406.9 million [1].

Krispy Kreme's turnaround plan is designed to reduce leverage and deliver sustainable, profitable growth through refranchising, improving returns on capital, expanding margins, and driving sustainable, profitable U.S. growth. The company aims to emphasize sustainable growth and improve profitability in the coming quarters.

References:
[1] https://investors.krispykreme.com/news/news-releases/news-details/2025/Krispy-Kreme-Reports-Second-Quarter-2025-Financial-Results-and-Announces-Turnaround-Plan/default.aspx