Krispy Kreme sells many specialty doughnuts, including a Southern Sweets line in May. | Image courtesy of Krispy Kreme
What do Walmart, McDonald’s and Dolly Parton have in common?
They all gave Krispy Kreme’s market capitalization a boost on Thursday.
The doughnut chain’s shares rose more than 13%, continuing its strong run this year thanks to better-than-expected financial results and a continued expansion of its doughnut offerings.
Let’s start with Walmart. Krispy Kreme executives told analysts on Thursday that they are exploring expanding their relationship with the retail giant nationwide. Currently, Krispy Kreme sells its doughnuts in 25% of Walmart stores.
The company wants to expand the deal nationwide. “We are in discussions with Walmart about how we can set up doughnut production centers in more and more markets,” CEO Josh Charlesworth told analysts, according to a transcript from financial services site AlphaSense. “We can get the doughnuts into these additional Walmart stores.”
The company is also in talks with Target.
That would be a huge deal for Krispy Kreme, as the company is increasingly involved in the manufacture and distribution of doughnuts, which are sold in tens of thousands of grocery stores, convenience stores and restaurants around the world.
The “hubs” Charlesworth mentioned are his traditional stores that make doughnuts. These doughnuts are delivered daily to what are known as DFD doors or kiosks in the stores.
Walmart alone would be a huge win for Krispy Kreme, as the company accounts for about 25% of grocery sales in the United States.
Krispy Kreme is primarily focused on expanding the availability of its doughnuts to more locations across the country. The company sells doughnuts at 8,000 locations across the U.S., but wants to expand that significantly.
To do that, however, the chain needs more of these “hubs” from which to manufacture and distribute doughnuts. But it needed a deal to move that forward. And that’s where McDonald’s comes in, not to mention Insomnia Cookies.
The company and McDonald’s are currently testing the restaurant chain’s locations as hubs for doughnut sales and announced earlier this year that they would roll out the plan nationwide.
Charlesworth said the company is on track to add more than 12,000 McDonald’s locations as access points. That, and the addition of retailers like Walmart and Target, means Krispy Kreme could be available in nearly 23,000 different locations domestically by the end of 2026.
The sale of a majority stake in Insomnia Cookies last month also gives the company the financial flexibility to open these hubs.
“The partnership with McDonald’s is going very well overall and the rollout is on schedule,” Charlesworth said. He said the company expects to be in more than 1,000 of the chain’s restaurants by the end of the year, mostly in the Midwest. “We are very focused on providing quality service to McDonald’s restaurants so that people get great, fresh doughnuts every day of the same quality that they expect from Krispy Kreme and other vendors.”
For Dolly Parton, it’s a fairly run-of-the-mill revenue-generating business. The company generated more than 27 billion media impressions by capitalizing on a series of “high-profile events” such as the solar eclipse and some specialty doughnuts.
Among them is the Southern Sweets Doughnut Collection, launched in May, featuring four Southern-inspired doughnuts, including a Banana Puddin’ Pie Doughnut, a Chocolate Crème Pie Doughnut and a Peachy Keen Cobbler Doughnut. There’s also a Dolly Dazzler Doughnut with strawberry frosting, gold, pink and white glitter sprinkles and a chocolate Dolly butterfly piece.
Due in part to these specialty donuts and a newly launched loyalty program, organic sales increased 16% and digital sales increased 22%.
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