In a deliciously exciting development, McDonald’s and Krispy Kreme have announced their plans to expand their partnership. These two iconic restaurant chains have been testing the appetite for doughnuts at McDonald’s locations in Kentucky. With the success of the pilot program, they are now exploring the possibility of a larger-scale launch. This collaboration aims to leverage the popularity of both brands and tap into the growing demand for indulgent treats. Let’s dive deeper into the details of this partnership and its potential impact.
The Appetizing Journey So Far
The journey of McDonald’s and Krispy Kreme partnership began over a year ago when they started testing the waters in a few McDonald’s locations in Kentucky. Their aim was to gauge customer demand and understand the operational implications of introducing doughnuts on a larger scale. The pilot program saw encouraging results, leading to a gradual expansion across approximately 160 restaurants in Louisville and Lexington, Kentucky by March.
McDonald’s strategic focus on coffee as a complementary pairing with doughnuts has played a significant role in driving customer footfall. Simultaneously, the fast-food giant has been streamlining its bakery offerings, reducing items like cinnamon rolls and blueberry muffins. Krispy Kreme, on the other hand, has been able to increase prices without negatively impacting sales, thanks to the willingness of consumers to indulge in affordable treats like freshly made doughnuts.
Exploring the Possibilities
The discussions between McDonald’s and Krispy Kreme have revolved around various aspects critical to the success of this partnership. Incoming Krispy Kreme CEO, Josh Charlesworth, highlighted the importance of delivering fresh and timely doughnuts, determining the necessary scale for expansion beyond Kentucky, and assessing the commercial viability of the collaboration. Charlesworth also emphasized the similarities in consumer behavior between fast-food restaurants and Krispy Kreme’s retail locations, stating that both loose doughnuts and pre-packed options have been well received.
Krispy Kreme’s unique “hub and spoke” model, which ensures efficient production and distribution of their treats, has been a key factor in their success. Production hubs, including stores and doughnut factories, dispatch freshly made doughnuts daily to retail locations such as grocery stores and gas stations. This model has allowed Krispy Kreme to maintain consistent quality and availability of their products.
Market Performance and Future Prospects
Despite the exciting collaboration news, Krispy Kreme’s stock experienced a dip of nearly 7% in afternoon trading as the company’s third-quarter earnings and revenue fell short of Wall Street’s estimates. However, it’s worth noting that the stock has still seen an overall increase of over 20% this year, with a market capitalization of $2.10 billion.
It’s important to mention that Krispy Kreme has also ventured into the late-night cookie market by acquiring Insomnia Cookies. However, the company announced in October that it is exploring strategic alternatives for this business, indicating a strategic focus on their core doughnut offerings.
See first source: CNBC
FAQ
1. How did the partnership between McDonald’s and Krispy Kreme begin?
- The partnership started over a year ago with a pilot program in a few McDonald’s locations in Kentucky. The goal was to test customer demand for doughnuts at McDonald’s and assess the operational aspects of introducing doughnuts on a larger scale.
2. What were the results of the pilot program in Kentucky?
- The pilot program showed encouraging results, leading to a gradual expansion to approximately 160 restaurants in Louisville and Lexington, Kentucky, by March. McDonald’s strategic focus on coffee as a complementary pairing with doughnuts played a significant role in driving customer footfall.
3. What aspects have been discussed between McDonald’s and Krispy Kreme regarding the partnership expansion?
- Discussions have revolved around delivering fresh and timely doughnuts, determining the necessary scale for expansion beyond Kentucky, and assessing the commercial viability of the collaboration. They have also considered consumer behavior similarities between fast-food restaurants and Krispy Kreme’s retail locations, including both loose doughnuts and pre-packed options.
4. What is Krispy Kreme’s “hub and spoke” model, and why is it important?
- Krispy Kreme’s “hub and spoke” model ensures efficient production and distribution of their treats. Production hubs, including stores and doughnut factories, dispatch freshly made doughnuts daily to retail locations. This model allows Krispy Kreme to maintain consistent quality and availability of their products.
5. How has Krispy Kreme’s stock performed recently?
- Krispy Kreme’s stock experienced a dip of nearly 7% in afternoon trading as the company’s third-quarter earnings and revenue fell short of Wall Street’s estimates. However, the stock has seen an overall increase of over 20% this year, with a market capitalization of $2.10 billion.
6. What other business moves has Krispy Kreme made recently?
- Krispy Kreme acquired Insomnia Cookies and ventured into the late-night cookie market. However, in October, the company announced that it is exploring strategic alternatives for this business, indicating a strategic focus on its core doughnut offerings.
Featured Image Credit: Photo by Shahbaz Ali; Unsplash – Thank you!
