Krispy Kreme’s earnings plummeted in the second quarter of 2025 as it pushed ahead with turnaround plans to refranchise its international markets.
For the quarter to 29 June 2025, the doughnut giant’s total adjusted EBITDA dropped 63.3% to $20.1m (£14.9m), which it attributed primarily to the impact of “unsustainable operating costs” of its now ended McDonald’s US partnership, which aimed to offer Krispy Kreme doughnuts in McDonald’s locations.
Internationally, adjusted EBITDA declined by 15.9%, with a margin decline of 360 basis points to 13.7% as strength in Japan was offset by the ongoing turnaround in the UK. However, UK margin did improve over the period.
The doughnut brand's ongoing turnaround plan will see it refranchising international markets, including the UK and Ireland, and restructuring its joint venture with WKS Restaurant Group in the western US, where it expects to reduce its ownership stake.
The company said its efforts to refranchise certain markets will provide it with “greater financial flexibility, enabling debt paydown and focus on profitable, high-return growth”.
“We are quickly removing our costs related to the McDonald’s partnership and growing fresh delivery through profitable, high-volume doors with major customers. We expect to begin recouping profitability in the third quarter," said Krispy Kreme CEO Josh Charlesworth.
Meanwhile, net revenue dropped 13.5% to $379.8m (£282.4m) over the second quarter, which Krispy Kreme attributed to the $64.2m (£47.7m) reduction associated with the sale of a majority stake in Insomnia Cookies Holdings in the third quarter of 2024.
Krispy Kreme gave up its majority ownership of Insomnia in July 2024, retaining 34% of equity in a deal that valued the cookie brand at $350m ($260.4m), a figure which doubled under Krispy Kreme’s five-year stewardship.
Organic revenue declined by $2.9m (£2.1m) as weaker consumer demand led to a decline in doughnut shop transaction volume.
“Looking ahead, we have implemented a comprehensive turnaround plan aimed at unlocking our two biggest opportunities: profitable US expansion and capital-light international franchise growth,” said Charlesworth.
“This plan is designed to reduce leverage and deliver sustainable, profitable growth through refranchising, improving returns on capital, expanding margins, and driving sustainable, profitable US growth.”
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