Krispy Kreme pauses doughnut rollout with McDonald’s after surprising lack of demand

Krispy Kreme on Thursday said it is pausing a planned rollout of selling doughnuts in McDonald’s locations nationwide.

The doughnut chain said it is “reassessing the deployment schedule together with McDonald’s while it works to achieve a profitable business model for all parties.”

Krispy Kreme sells doughnuts in more than 2,400 McDonald’s restaurants as of the end of March, and the chain does not expect to add more restaurants in the second quarter of 2025.

“I remain confident in the long-term national opportunity, but we need to work together with them to identify levers to improve sales, simplify operations,” Krispy Kreme CEO Josh Charlesworth said during an earnings call. “And once we’re positioned for profitable growth, we’ll expand further.”

Charlesworth said that demand dropped below expectations after the initial launch, “requiring intervention.”

The two companies announced the partnership in March 2024, and intended to sell the doughnuts at all McDonald’s locations in the US by the end of 2026. 

“Significantly, by making Krispy Kreme accessible to fans nationwide through this partnership, we expect to more than double our points of access by the end of 2026,” Charlesworth said last year as part of the announcement. “The partnership accelerates the development of our existing Delivered Fresh Daily channel, creating operating leverage through distribution density and production utilization.”

Krispy Kreme also pulled its full-year outlook due to “macroeconomic softness and the uncertainty around the McDonald’s deployment schedule.”

Fast-food restaurants have seen sluggish sales due to economic uncertainty weighing on consumers. McDonald’s US same-store sales fell 3.6% in the first quarter, the biggest drop since the COVID-19 pandemic in 2020.

The results echoed warnings from restaurant chains Domino’s Pizza, Chipotle Mexican Grill and Starbucks that Americans were spending less to dine out as inflation and a bleak economic outlook dent consumer confidence.

FOX Business’ Aislinn Murphy contributed to this report.