McDonald's partnership will 'unlock' revenue for Krispy Kreme
McDonald's (MCD) and Krispy Kreme (DNUT) announced on Tuesday that their national partnership will expand. Krispy Kreme began selling donuts at McDonald's locations in 2022, with a nationwide rollout slated for 2026.
Yahoo Finance Reporter Brooke DiPalma joins the Live show to explain how the partnership positions Krispy Kreme within the fast food sector.
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Editor's note: This article was written by Nicholas Jacobino
Video Transcript
BROOKE DIPALMA: By the end of 2026, Krispy Kreme is expected to provide fresh donuts to all US McDonald's locations now that is roughly 13,500 locations. And customers can order them individually or in a box of six. Now, this has been years in the making. This partnership originally kicked off back in late October 2022, with nine locations in Louisville, Kentucky and surrounding areas. Then in April of 2023, they expanded to 160 locations in Louisville and Lexington, Kentucky.
And this is what many analysts are calling an unlock for Krispy Kreme. This will deliver new revenue and profit streams. But it is a far way away. Once again, this partnership will be by the end of 2026. A nationwide rollout will happen then. And the Krispy Kreme really needs to bulk up their delivery routes, their distribution routes. Right now they can provide donuts to roughly 6,000 restaurants. That's more than 7,000 away from that 13,500. And ultimately, for McDonald's here, the breakfast competition is really heating up.
And this is an exclusive agreement with Krispy Kreme through December 31, 2026. And as others like Taco Bell Burger King Wendy's look to get into this breakfast competition, here the margins are exceptionally good. Analysts have told me in the past. And so it'll be really interesting to see how this all plays out. And once again this is an exclusive partnership between McDonald's and Krispy Kreme through 2026. And certainly a yummy one as well.
- This is major for the delivered fresh daily.
BROOKE DIPALMA: Major.
- Part of the business.
BROOKE DIPALMA: Yeah. Absolutely. And what this means is they're giving it a shot. It's not sold.
- It's huge.
BROOKE DIPALMA: But this is a big deal.
- This is major.
BROOKE DIPALMA: But what it really means is that this is giving Krispy Kreme an opportunity to expand their points of distribution. And then it'll be more convenient or more grocery stores. And former CEO Mike Tattersfield has told us many times that they want to reach 50,000 points of access for Krispy Kreme. This is giving them an opportunity and a reason to do that expansion.
- I just want to know, are they going to taste as good as they do?
BROOKE DIPALMA: They're delivered fresh daily.
- They're delivered fresh. Yes.
BROOKE DIPALMA: They come in three different options.
- Well, you can reheat it. McDonald's could easily add an option to reheat the donut. 8 seconds is all it needs. It says it on the box.
BROOKE DIPALMA: And it's while supplies last. So I just got to go try it out for ourselves.
- Got to go try it out.
BROOKE DIPALMA: Some of our own research.
- It's three main ones that they're going to be doing. It's the original glazed. It's the chocolate ice with sprinkles. And then you've got the chocolate ice cream filled donut. Yes. That's my kryptonite. All right. Thanks Brooke. Appreciate it.
