Q4 2023 Krispy Kreme Inc Earnings Call
Participants
Stephanie Daukus; VP, IR; Krispy Kreme, Inc.
Josh Charlesworth; President & CEO; Krispy Kreme, Inc.
Jeremiah Ashukian; Chief Financial Officer, Executive Vice President; Krispy Kreme Inc
Luke Jobe; Analyst; JPMorgan Chase & Co.
Aisling Grueninger; Analyst; Piper Sandler Companies
Dan Guglielmo; Analyst; Capital One Financial Corp.
Andrew Wolf; Analyst; CL King & Associates Inc.
Presentation
Operator
Thank you for standing by. My name is [Mondip], and I will be your conference operator today. At this time, I'd like to welcome everyone to the Krispy Kreme fourth quarter 2023 earnings call. (Operator Instructions) I would now like to turn the call over to Ms. Stephanie Daukus, Vice President of Investor Relations. Ms. Daukus, please go ahead.
Stephanie Daukus
Thank you. Good morning, everyone, and welcome to Krispy Kreme's fourth quarter and full year 2023 earnings call. Thank you for joining us today. Our earnings release and associated earnings presentation, which we will be referencing during the call, are available on our investor relations website at investors.krispykreme.com.
Joining me on the call this morning are Josh Charlesworth, Chief Executive Officer; and Jeremiah Ashukian, Chief Financial Officer. After prepared remarks, there will be a question-and-answer session.
Before we begin, I would like to remind you that this call contains forward-looking statements made pursuant to the Safe Harbor provisions of the Private Securities and Litigation Reform Act of 1995, including statements of expectations, future events, or future financial performance. Forward-looking statements involve a number of inherent risks and uncertainties, and we caution investors that these risks could cause actual results to differ materially from those contained in any forward-looking statements. These factors and other risks and uncertainties are described in detail in the company's Form 10-K filed with the SEC for the year ended January 1, 2023, and then the other filings we make from time to time with the SEC. Forward-looking statements made today are only as of today. The company assumes no obligation to publicly update or revise any forward-looking statements, except as may be required by law.
Additionally, today's call will include certain non-GAAP financial measures. A reconciliation between non-GAAP financial measures and their closest comparable GAAP measure can be found in our fourth quarter 2023 earnings press release and Form 8-K filed today with the SEC and is also available at our investors.krispykreme.com website. With that, I'll turn the call over to Josh.
Josh Charlesworth
Good morning, everyone, and thank you for joining us today. I'm so excited for what is ahead of us at Krispy Kreme. Our strategy is clear to make our fresh doughnuts available in more places and keep reminding people of the joy that is Krispy Kreme, but a treat to share and give to others. We made great progress on this in 2023, with strong consumer demand and increased access to our fresh doughnuts in both existing and new markets around the world. We also improved profitability as we grew, demonstrating the productivity benefits of our unique hub-and-spoke operating model.
As we move forward in 2024, we will continue to offer new and exciting specialty premium doughnuts, upgrade of digital commerce capabilities, and expand the availability of our doughnuts around the world, including in our newest sales channels like club stores and quick service restaurants. We will also increase our efforts to modernize the making and moving of doughnuts to ensure we deliver high-quality profitable growth.
Let me summarize today's key messages. We continued to deliver double-digit organic revenue growth, with all markets and channels growing sales. We expanded profit margins by leveraging existing production hubs to support our growth, especially in the US, where operating leverage was strongest. Our ongoing strategy is to scale the business efficiently, providing more fresh points of access. There are now more than 14,100 places where you can buy our melt-in-your-mouth fresh doughnuts in 39 countries. Our focus on operating excellence means that we're building both a bigger and better Krispy Kreme business. And finally, we are introducing our 2024 outlook, with organic growth expected to translate into adjusted EBITDA expansion, reflecting our intent to drive increasingly profitable growth.
We delivered 13.2% organic revenue growth in the fourth quarter, ahead of our guide, and 12.2% organic revenue growth for the full year. This performance reflected strong consumer demand, with people choosing to celebrate Halloween, Thanksgiving, and the holiday season with premiums-priced specialty doughnuts from Krispy Kreme, including a Scooby Doo dozen and our first-ever Elf doughnut collection, celebrating the 20th anniversary of the family-favorite holiday movie.
Times like this help create tremendous excitement for the brand in 2023. And we finished the year with over 40 billion media impressions, reflecting how well Krispy Kreme's fresh and innovative doughnuts resonated with the consumer. E-commerce also continues to play a bigger role within our business, growing over 25% in the fourth quarter, driven by new loyalty members, which now total over 15 million, as well as operational improvements to our website, app, and in-shop availability.
Organic growth was also driven by adding new points of access, which increased by 743, a much stronger fourth-quarter expansion than in prior years, reflecting the growing demand from existing and new partners who want to make everybody's favorite fresh doughnuts available to their customers. The same goes for new countries, with Krispy Kreme opening in Ecuador and France in the fourth quarter, to add to Jamaica, Kazakhstan, Switzerland, Chile, and Costa Rica, which were all added earlier in the year.
The continued expansion of our hub-and-spoke model delivered productivity growth and increased profitability in the fourth quarter, with adjusted EBITDA margin improving 40 basis points to 14.2%. The hub-and-spoke model is becoming more productive as we add more points of access without adding significantly more production hubs. We ended 2023 with 2,300 more points of access than in 2022, mostly to deliver fresh daily displays in grocery and convenience stores. And we did this whilst adding net one production hub. The resulting increased utilization of our production hubs, most of which can still make twice as many doughnuts as they do today, made them more efficient and profitable. We also completed the optimization of our production hubs without spokes in 2023, closing legacy doughnuts shops which were not well suited to the strategy.
Our fourth-quarter and full-year results exemplify the success and power of a hub-and-spoke model. And in 2024, I look forward to us becoming a bigger and better Krispy Kreme by continuously improving our business operations as we grow. And the number one reason why someone may not buy a Krispy Kreme doughnut continues to be access and convenience. We've more than 2 million locations where we could in theory sell Krispy Kreme, at least in the markets we've targeted. The opportunity to expand availability is big.
We have previously shared our long-term goal of opening at least 75,000 points of access around the world, yet this still represents less than 3% of the total addressable market. And we are adding new customers all the time, such as Costco in international markets and McDonald's in the US, where we have been conducting an extended test in Kentucky for much of 2023. Our relationship with McDonald's remains strong, with discussions ongoing about further expansion, and we look forward to providing updates on our quick service restaurant plans through 2024. We also expect to launch Krispy Kreme in three to five new countries in 2024, with several priority markets identified in Europe as well as Brazil, where we just announced an exciting new partnership with the convenience store chain AmPm.
We have perfected the art of making our original glazed doughnut over the last 87 years and bringing joy to our consumers across the world. Yet there remains the opportunity to modernize the way we make and move our doughnuts, bringing efficiency to the process whilst maintaining consistent high quality and service levels.
We have started 2024 by making changes to our global leadership team to reflect these opportunities. In Angela Yochem, we are adding a new Chief Information Officer with deep digital technology experience across multiple industries. Our Global Supply Chain Leader, Sherif Riad, formerly of Mondelez, has stepped into the team, as our US Business Leader, Javier Rancaño, who has extensive QSR operations experience. As a leadership team, we are focused on quality fresh doughnuts in every channel every day, expanding the use of automated doughnut making and processing, and continuously improving our doughnut delivery capabilities as we support more and more points of access.
An example of this is a pilot we are just starting on select routes in LA. and DC to deliver our fresh doughnuts through a third-party logistics provider, still using dedicated Krispy Kreme trucks and drivers. As we focus on our core strategy of producing, selling, and distributing first doughnuts daily, we continue our [strategic view of insomnia cookies]. With that, I'll turn it over to Jeremiah to give further insight on our financial performance and provide an outlook for 2024.
Jeremiah Ashukian
Thanks, Josh, and good morning and strong double digit fourth quarter organic growth and improved profitability for the year, demonstrating the productivity benefits of a hub-and-spoke model. In the fourth quarter, we grew double digits on both the top and bottom line on a percentage basis, resulting in adjusted EBITDA margin expansion of 40 basis points year-over-year to 14.2% is our growth in all our markets, driven by high impact global brand activations of seasonal offerings, increased points of access and premiumization efforts. Adjusted EBITDA grew 14.7%, outpacing our revenue growth for the second consecutive quarter as we continue to realize cost efficiencies occur. The global business. Increased utilization been performed largely in line with expectations as we delivered 12.2% organic growth, increased adjusted EBITDA by 11% and expanded margins.
Organic growth accelerated to 13.2% in the fourth quarter. Notably, we saw growth across all our segments in 2023 on top of strong performance in 2022. In US segment, organic revenue grew 13.7% in the fourth quarter, driven by record holiday season, especially Donna offerings drove incremental sales through all channels, especially DFT and have positive impact on our sales. We also observed increased transaction values did a growth of our e-commerce channel. All of this was underpinned by our strategy of growing points of access, which grew 17.7% year over year with more than 300 DFT doors added in Q4 versus Q3 and over 1,000 doors added versus 2022 and insomnia cookies, we observe strong organic growth of 16.3% as well as sequential margin improvement from Q3.
That said, margins in the business remain pressured given the elevated cost of cocoa. The hub-and-spoke model first established in the UK and Australia is now well underway in the US for several cities seen marked improvements in profitability during the year as we added more points of access to the existing hubs. This as well as our ability to leverage pricing to offset inflation, explains the increase in sales for hub of 8.9% year over year. And the subsequent 120 basis point adjusted EBITDA margin improvement for the year.
In the international segment, organic revenue grew 9% year over year as we expanded points of access and leverage global campaigns over the holiday season to drive volume of our specialty doughnuts. Most notably, we executed our health specialty dominance in nine markets worldwide, leveraging a single set of mark materials seen great results, Mexico and the UK. Mexico was a substantial contributor to growth this quarter. We have nearly doubled points of access in Mexico through existing partners, such as OXO with meaningful room to continue expanding in the country. We also saw successful growth and new partners such as Costco in Australia, which continues to prove to be inefficient.
Customer adjusted EBITDA improved sequentially in the quarter to 20.6%, with margin expansion in both Australia and Mexico. Profitability continues to be pressured in the UK, and we're taking actions to improve productivity in the market development segment, organic revenue grew 19.2% in the fourth quarter as we continue our international expansion by opening 126 more points of access or a combination of theaters, fresh shops and DFT doors.
We opened two new markets Ecuador in France and expect that these to come trees alone can support one and 2000 further points of access. Most notably, Paris represented a record-breaking launch in the fourth quarter. The shop was our best performing shop worldwide on a sales basis in December.
Market development adjusted EBITDA grew 21.1% in the fourth quarter, with margins expanding by 120 basis points to 35.4%. Margin improvements were primarily driven by continued hub-and-spoke efficiencies in our equity on Japanese and Canadian markets.
As we continue to expand globally, we expect to see high returns and international franchises, JV structure of the French market as a prime example of our Capital Light model approach, which enables earnings flow through at significant margins for providing the option to take equity ownership of the market in the future.
As you heard from Josh earlier, we announced our future entry into Brazil using a similar approach for the year ending 2023. We delivered $0.27 and adjusted earnings per share, driven by improvements in adjusted EBITDA that were offset by higher than expected depreciation and amortization. As we continue to accelerate expansion both domestically and globally. It adds some near cookies and may choice for investments in anticipation of accelerated growth in the USDFD. business.
We also saw increased annual interest expense as a result of the higher interest rate environment. As a result, we saw adjusted diluted earnings per share finished lower than our original expectations. Our business fundamentals remain strong. We are confident in our ability to grow EPS despite remaining in the somewhat higher interest rate environment in 2024.
In 2023, we deployed some of our operating cash flow to strategically reduce our use of vendor financing, which had an impact on net cash from operations. Over the year, we reduced vendor financing by roughly $82 million, which provide a long-term tailwind of $3 million to $5 million on an annualized basis to adjusted EBITDA beginning in mid 2024. Despite these efforts, we are able to hold leverage flat through 2023, finishing the year at 4.1 times.
We have a healthy balance sheet having extended our maturity 2023. We closed the year with just under $40 million in cash and have access to ample liquidity through our revolver with an undrawn capacity of $150. We remain focused on the long-term health of the business and setting up our capital structure to support growth through a strong balance sheet. We expect to deliver in 2024, primarily to the growth of adjusted EBITDA and running the business with an eye towards efficiency and capital expenditures as well as managing working capital over the long term, we remain on track to be between 2.0 times and 2.5 times net leverage in 2026.
As we look forward to 2024 for providing our outlook for the full year, which assumes a nominal offerings, including insomnia cookies. For the full year 2024, we expect to deliver net revenue growth of 5% to 7%, organic revenue growth of 6% to 8%. Adjusted EBITDA growth of 8% to 11% and adjusted diluted earnings per share of between $0.27 and $0.31. After reporting strong double digit fourth-quarter and full-year organic growth in excess of our full year guide.
We remain confident in our 2024 guidance and our ability to drive operating leverage as we become more coordinated as a global company, we believe well positioned for sustainable, high-quality growth in the years to come, leveraging the tools, which helped us deliver a great finish to the year in 2023. As it relates to the first quarter, despite the harsh weather and broad parts of the US in January and lapping record-breaking sales in the first quarter of 2023 to 4%, we also expect adjusted EBITDA to grow in line with revenue growth. We will closely monitor and adapt to changes in the market and consumer environment, and I remain confident about the profitable growth potential of our business in 2024, and we're excited for a great year to come. With that, I'll turn it over to Josh for his closing remarks.
Josh Charlesworth
Thanks, Jeremiah. In summary, we are expanding availability by adding high-quality productive points of access, driving operating leverage to the efficiency of our operating model, and maximizing capital return both by leveraging existing capacity, and making selective investments in geographies which have limited access to Krispy Kreme today. All in, I look forward to us building a bigger and better Krispy Kreme in the years ahead. Operator, let's now open it up to Q&A, please.
Question and Answer Session
Operator
(Operator Instructions) Sara Senatore, Bank of America.
Hi, good morning, this is Jessica (inaudible), on for Sara Senatore. Thank you. So for last quarter, you said you had an advance quesitons about expanding the McDonald's partnership and were making investments in the US, but it looks like though, 160 or so restaurants testing for doughnuts have been unchanged since 3Q. And I know that the test release alluded to more growth in the quick service restaurant channel, but I want to see if there's any more color you could provide on that agreement. And I do have a couple more questions, but after that, I can ask them one at a time.
Josh Charlesworth
Sure. Good morning, Jessica. Yeah. Obviously, word is out in the success of our Delivered Fresh Daily doughnut program, several customer opportunities in existing and new channels around the world. Regarding quick service restaurants in the US, our focus does continue to be on McDonald's. Discussions are ongoing and productive about an expanded partnership. And we'll provide an update on that one when we have it. Okay. What was your second question?
So in the US and international markets, revenue growth was slightly less than points of access growth. I know you think in terms of growth in sales perhaps, but as we tried to forecast sales going forward, how should we think about new footprints of access? Is it fair to assume that now have lower volumes than the 16 basis points of access? And also is that driven by the time of door? And will that change if the accelerated expansion into the quick service industry was interesting.
Josh Charlesworth
Obviously the three international markets, the UK, Australia and Mexico and different situations. The UK Australia, much more developed in the grocery store customer mix in Mexico really really starting out with a big opportunity in in convenience stores and see you get a constant mix affect. The underlying performance is good on that you're going to get these mix effects for for the forecasting, especially in Mexico with the opportunity with the OXO convenience store chain.
Okay. Thank you. And could you remind us how much of your commodity basket you have locked in?
Jeremiah Ashukian
Yes, and I can take that, Jessica. And we started to put on cover on commodities early or in 2023. We do expect to see mid to high single digit inflation overall for 2024 from most of our commodities are now covered. About 75% of them are covered that off commodities that we actually can cover some as it made sense for us from a pricing perspective or just the security of supply perspective from a bit of a mixed bag within that kind of high single digit, mid to high-single digit inflation number amongst our cost structure, as we're forecasting inflation in excess of 20% on things like sugar, where the market remains around 10-year highs and low double digit inflation on things like cartons, which is a commodity we can hedge. But we do expect to see some deflation on key commodities like we and edible oils. I think it's important to note out just outside of commodities from a labor perspective, we do believe that will be subject to the wage increases in California. And as a result, we continue to expect to see high single digit to low double digit inflation on labor in 2024.
Okay. Thank you so much for your time.
Josh Charlesworth
Thank you.
Operator
John Ivankoe, JPMorgan.
Luke Jobe
Hey, team. This is Luke Jobe, on for John Ivankoe. Just wondering if you could give some language around specific changes to the current process or model that were that were focused on was specification to modernization of the dynamic in process and kind of especially delivery within the within. Thanks.
Josh Charlesworth
Sure. Thanks, Luke. I'll take that and get you picks up on our efforts to modernize the way we made a move. All our doughnuts, like goes all the way from the sort of digitization of the process through to the automation of the doughnut making itself. And then overlay onto upskilling our donor transportation all in, we're working to ensure the freshest doughnuts every time delivered as efficiently as possible.
We shared before the automation efforts. We have a line running in New York, which is now automatically feeling top paying and even packing the doughnuts, we're looking to perfectt that and then roll it out in time down. And then regarding the logistics, in particular, the rapid expansion of DFD. means that we're becoming more logistics becoming more and more important.
So we announced in today's call that we have a pilot covering select routes and DC. and LA. in that study are expected to take about four to six months. And the purpose of that has to work with a third party providers and see if we can maintain quality and service whilst being able to access new capabilities that they can bring and over time, improve our operations and indeed bring more efficiency. So it's an effort end to end to continuously improve doughnut, making a moving and I will provide updates as we learn more.
Luke Jobe
Great. Thanks.
Josh Charlesworth
You bet.
Operator
Bill Chappell, Truist.
Hi, good morning. This is Davis [Holcombe] on for Bill Chappell. Thanks for taking my question. I just wanted to know, as we saw that your guidance this year for fiscal year '24 includes operations for the iPhone via cookies, but we are or where do you know if you could provide a little bit of color on what the sales guide would be without the inclusion of insomnia equities?
Josh Charlesworth
Yes. I mean, number one, we're pleased with the performance of insomnia as the business continues to grow profitably and improve from sequentially. In terms of EBITDA, adjusted EBITDA improvement from we opened a record number of because the vagaries in 2023. We also talked about the growth rate at insolvent at 16.3% on the earnings call as well. Um, there continues to be lots of some opportunity on this business to expand both the US internationally. And we do expect it to continue to grow double digit in 2024. But just given the fact that we're in the process, as we said in Q3, we're conducting a strategic review and look forward to sharing more news about it that we can. I think in the last earnings call, I did let everybody know that we operate or the impact on insomnia would have a roughly 100 to 200 basis point impact on the top line.
Excellent. Thanks for the color. I'll pass it on.
Operator
Aisling Grueninger, Piper Sandler.
Aisling Grueninger
Hey, good morning. So CapEx came in as a percentage of revenue for it for 2023 at 7.2% and the new 2024 outlook, you're targeting seven to eight. We're just wondering how concrete of a number that is, does that include any incremental investments you would need to make if let's say, a QSR partnership was to come to fruition in 2024.
Josh Charlesworth
Yes, good morning, handling and so on. Our confidence in the DFT opportunity around the world and especially in the US, including QSR and such that we have thoughtfully started making additional investments in manufacturing capacity to support it. For example, we've secured new sites in Miami and Twin Cities and L.A. are all conversions of existing buildings looking to accelerate time to opening to keep up with with demand. And to clarify, though, the investments we're making there in broad support of the expansion DSD overall. So they're not dependent specifically, for example, on McDonald's, but the investments that we very much believe and make a lot of sense for our business going forward and in terms of bringing Krispy Kreme to more people in those in those new channels.
Aisling Grueninger
Great. Thanks for that. And my second question is on, I think we touched on this before, but it's been Slide 18 of your presentation. It's about average revenue per door per week for international. Just what's the dynamics behind? It's been the decrease year over year is it just opening the CFD. doors and less prime locations than the earlier locations? Or just any color would help things?
Josh Charlesworth
Yes, it's a great question. Apds internationally were impacted in '22 by the UK regulations that were put in place that's called HFSS., which required us to move where the locations were in the stores, which had an immediate step down in terms of productivity on moving forward. The APD. per door has been impacted by adding more convenience type locations, but Josh mentioned around play around places like OXO in Mexico, which on average is smaller footprint, which would be a lower kind of dollar per door. So overall, the mix effect there will have a prolonged we believe the APD. will remain fairly flattish internationally kind of moving forward.
Jeremiah Ashukian
It's I think, a clarifying on the US because actually interesting with APD.s growing strongly we're seeing that we're actually bringing on even more productive new customers and locations. I'm showing that there is a lot of whitespace opportunity in the US And it's interesting international Mexico as an example, where we are leaning in on convenience store in the US is a lot of grocery stores, mass club stores, for example, big opportunities there. So the APT will evolve over time with different types of customers. But all in, we're seeing app continuously productive doors are ones that support our margin expansion plans.
Aisling Grueninger
Great. Thank you so much for that. I'll pass it back.
Operator
Thank you again. The floor is now open for your questions. To ask a question, simply press star followed by the number one on your telephone keypad. Our next question comes from the line of Daniel Glenn Glenn though with Capital One Securities. Please go ahead.
Dan Guglielmo
Thank you for taking my questions. And just going back to the US expansion of hubs. You mentioned Minnesota, California, Florida, and I think New England and upstate New York were also opportunities. So just thinking through kind of those, are there certain areas you see as priorities right now. And are there certain markets that you need to get opened before doing like a national QSR rollout?
Jeremiah Ashukian
Well, it is a rollout with a customer like for example, MacDonald and 13,000, 14,000 restaurants in the US, we can cover about 6,000 restaurants just with our existing network.
So your question goes to the seven or 8,000, assuming you're taking McDonald's is the benchmark that we would need to cover in areas where mostly it's in those areas you described in the country where Krispy Kreme isn't today we our plans are anyway over time to open up in those in those places and reference to either on Miami, these L.A., New England, all the ones you referenced, upstate New York or they're all in our plans. And naturally those that we have already maxed out capacity or we've identified sites to the ones we're prioritizing in the short term.
But they all make sense for us. And so we're actually looking across the country and in all those locations. And as we as we build out our plans for DSD and QSR in the future.
Dan Guglielmo
Okay. Thank you. And then just as a follow-up to that kind of like a modeling question, just around the CapEx spend. So 7% to 8% of revenue guidance for 2024. I'm just thinking about the expansion, and I think you had said $3 million to $6 million for some of those hubs. Is there a cadence we should be thinking about quarter to quarter for the year? Is it going to be pretty evenly spread throughout Com or should it be back-weighted? I'm just trying to get some help there. Thank you. On the CapEx is I mean the hubs themselves are coming online, probably a little more back-weighted than the CapEx itself, though phases different. It doesn't, Jeremiah?
Jeremiah Ashukian
And yes, I mean, there's a cash flow from CapEx that will happen here because we spent or at least and decided to deploy capital last year in an effort to retire up and running earlier in the year, some from a modeling perspective, I mean, for the most part, we will follow us fairly uniform spend of CapEx throughout the year as we have in previous years. So it's a fairly consistent number. When you think about a percentage of revenue that will bounce between 7% and 8% for the quarters, it will just bounce up and down between those numbers more or less.
Dan Guglielmo
Okay. Thank you.
Operator
Our next question comes from the line of Andrew Wolf with CL King. Please go ahead.
Andrew Wolf
Thanks. Good morning. First, I wanted to ask about the first quarter sales being low in a low trend and tie that to the year because obviously you're looking for a big rebound to more like 6% to 8% to get to the 5% to 7% for the year for the for the Q2 through Q4, a little more in line with what May were. I think the Street was expecting. So could you just kind of flesh out a little bit what you're seeing in the quarter? How much you think is pure weather? Is there anything else going on? Do you have sort of non-weather impacted markets either in the US or Canada and even the other segments that sort of point to sort of some more normalized growth supporting the rebound for the rest of the year?
Josh Charlesworth
Yes, I think, Jeremiah, can I can take that? I think I'll probably start off by just saying we're actually pleased with the fact and we'll continue to have to post growth in Q1 after a record Q1 in 2023, 14 consecutive quarters of organic growth as the last time, it didn't grow in the quarter was during COVID. And as a result of some of the UK shutdown or slowdown, that organic growth in the quarter is actually close to 3% to 6% given we'll be lapping the discontinuation of BSTM., as you mentioned, like many others, we saw harsh weather in broad parts of the US in January, leading to lower revenues and a softer start to the year and which also comes up against the comp of 14.4% last year, but also a couple of one-offs to your point and one that insomnia cookies, we have a lap against extended delivery zones that will be in our base, which provided some tailwind last year. And then to a market developed we had a one one-off shift in the timing of some equipment sales in our market development franchise business, which resulted in a higher sales being recognized in 1Q last year. That said, we're excited for Valentine's Day tomorrow, which is one of our biggest sales days of the year, not to mention other key specialty done on offerings over the course of the year. We're definitely committed to disciplined growth in pursuit of the full year guide that I laid out. And we will when you think about from a cadence point of view, lap some other things as we get into Q2 that may go the other way, most notably the MCR outage that we had in the US in Q2 2023, which will help us kind of recover back in Q2.
Jeremiah Ashukian
As I say I'll add is we're looking we're looking forward to quality sustained growth through through 2024 and Q4 showed once again, the consumer just loves our doughnuts, especially for sharing gifting and special occasions and celebrations like Valentines, as Jeremy mentioned, even when priced at a premium. And we see that in all all sales channels with really quite phenomenal growth recently and in e-commerce in particular. So our consumers engaging with the brand more than ever, and that's that's the US and they are the key backdrop to understanding Krispy Kreme.
Andrew Wolf
Okay. And if I can just add another follow-up. Just related also to sales. I assume for the year you only have the 160 or so McDonald's stores in there, um, but I guess for the US and specifically, is there any less some of a of a push on sales in any way whether it's not putting up stores, you might have put hubs that you might have put up because you're deferring. And is there any impact on yours? What's in the guidance because you're kind of throttling any part of the US operations back in anticipation of either McDonald's or another QSR?
Josh Charlesworth
There's no, there's no throttling back, and it's absolutely the case that the DFD. continues to be a core driver of our growth. And indeed, as I mentioned a moment ago that the queue for additional doors around the world, including the US at a time which has traditionally been problematic for our customers, they want to put it in other seasonal items for this year. They wanted to put in our items and prioritized lifting new doors for Krispy Kreme. So So definitely, no, no throttling back at the same time, we are very focused on improving the quality of our operations, ensuring high quality sustainable growth working, as I mentioned, on making moving doughnuts and continuously better ways. So that naturally means we're very thoughtful as we grow to make sure we have the best points of access and strong hubs, making sure they're set up for future growth.
As also mentioned, you know, with many of the doughnut shop still heavily underutilized, Ray will make more than twice the market dominance they do today, most of those lines and getting ready for for growth with QSR and other new channels, is it a lift. And so we're making sure that everywhere we grow. It's in a way that ensures high quality doughnuts presented Freshley's consumer in every channel whilst maintaining productivity and efficiency. So yes, we're certainly working hard on the system, but we're not as such throttling back.
Andrew Wolf
Thank you. That's really helpful color. I'll pass it on.
Josh Charlesworth
Thanks. You bet.
Operator
I would now like to turn the call over to Josh Charlesworth for closing remarks.
Josh Charlesworth
Well, thank you, everybody. Thank you for your interest in Krispy Kreme today. And of course, thank you to all our Krispy Kreme's for their hard work in 2023 and your ongoing commitment to bring joy to our customers through Krispy Kreme.
Operator
Thank you. This concludes today's call. You may now disconnect.
