BUSINESS + ECONOMY

Krispy Kreme doughnuts are coming to McDonald’s

Mar 27, 2024, 6:00 AM | Updated: Apr 15, 2024, 1:38 pm

Doughnuts are displayed for sale at a Krispy Kreme store on February 13, in Austin, Texas. Krispy K...

Doughnuts are displayed for sale at a Krispy Kreme store on February 13, in Austin, Texas. Krispy Kreme doughnuts are coming to McDonald’s. (Brandon Bell/Getty Images via CNN Newsource)

(Brandon Bell/Getty Images via CNN Newsource)

New York (CNN) — McDonald’s customers can soon pair Krispy Kreme doughnuts with their morning McCafe, in a new food partnership that seeks to expand both brands but that could wind up weakening them instead.

Three types of Krispy Kreme doughnuts — original glazed, chocolate iced with sprinkles and chocolate iced “kreme” filled — will go on sale at McDonald’s restaurants starting later this year, the companies told CNN on Monday.

Krispy Kreme shares jumped more than 39% on Tuesday. McDonald’s shares were flat.

It’s not the first time two competitors have teamed up. For example, Wendy’s brought in Cinnabon to its breakfast lineup earlier this year. Some research suggests brand partnerships open possibilities for new customers, brand expansions and innovation. But some retail experts suggest partnerships can also be a risky move, and one that can weaken the respective brand names.

Truist analysts said the Krispy Kreme doughnut delivery model will have to figure out a way to successfully service rural McDonald’s locations more than 20 miles outside of an urban center.

McDonald’s has also faced pushback from customers as prices on its other menu items rise. Ian Borden, McDonald’s chief financial officer, said earlier this month that some lower-income Americans are opting to cook at home instead of dining at its restaurants. In February, CEO Chris Kempczinski addressed McDonald’s “affordability” problem and indicated the chain would cut prices on some menu items.

Krispy Kreme is giving away a free glazed doughnut to guests who visit a Krispy Kreme location between 5 and 9 pm on Tuesday to celebrate the partnership.

The addition of a Krispy Kreme doughnut to the McDonald’s customer’s breakfast order began as a test at 160 restaurants in Kentucky. The doughnuts will be available nationwide at participating restaurants by the end of 2026, after a phased rollout beginning later this year. Truist analysts said the long testing period reduces the risk for both parties.

The doughnut will be available to purchase individually or in a pack of six, starting at breakfast, and will continue selling until they run out.

There are far fewer Krispy Kreme locations than McDonald’s, which had almost 13,500 US locations in 2022. But customers can buy Krispy Kreme doughnut in other places, such as Walmart and other grocery stores. The partnership could increase the scope of Krispy Kreme, which said it has been scaling its supply chain to keep up with its promise to deliver fresh daily.

“By making Kreme Krispy (sic) accessible to fans nationwide through this partnership, we expect to more than double our points of access by the end of 2026,” said Krispy Kreme President and CEO Josh Charlesworth in a statement.

Krispy Kreme has been focusing its business operations on its doughnuts. The Charlotte-based company also owns Insomnia Cookies, thoughsaid in 2023 it is exploring other options such as selling the cookie brand.

The company returned to the market in 2021 through an IPO. However, its stock is still trading below its IPO price of $17.

“What does this mean for the company’s previous plans to expand locations? How will it impact an existing point of access which is located down the street from a McDonald’s?” Truist analysts said.

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Krispy Kreme doughnuts are coming to McDonald’s