Krispy Kreme narrows losses amid turnaround plan
Krispy Kreme's turnaround plan shows progress with reduced losses and ongoing refranchising efforts.
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Krispy Kreme reports a 12.8% revenue drop but has narrowed its losses significantly amid a turnaround plan. The chain refranchised locations and opened 59 new shops globally, primarily through franchising, while maintaining guidance for modest systemwide sales growth.
Why It Matters
This suggests that Krispy Kreme's refranchising efforts may impact territory availability in future expansions, affecting multi-unit operators' strategies.
Krispy Kreme has made significant strides in narrowing its financial losses as part of a comprehensive turnaround strategy initiated last year after a failed partnership with McDonald’s. The doughnut chain reported a 12.8% decline in revenue, largely attributable to its refranchising efforts and the strategic closure of underperforming locations. However, the company successfully reduced its net loss to $20.3 million in the second quarter of 2026, a substantial improvement from the previous year’s loss of $435.3 million.
During the earnings call, CEO Josh Charlesworth emphasized the progress made, stating, “The second quarter highlighted continued significant progress on our turnaround to strengthen the balance sheet, reduce leverage, and drive sustainable, profitable growth.” Krispy Kreme's systemwide sales were $497.3 million, reflecting a modest 1.1% increase in constant currency and a more notable 2.6% growth when excluding prior sales linked to its McDonald’s partnership.
Key elements of Krispy Kreme's four-part turnaround plan include refranchising, enhancing asset-light operations, cutting costs, and pursuing long-term profitability. The firm reported an impressive 43% increase in adjusted EBITDA, reaching $28.8 million, while capital expenditures saw a 70% reduction in the first half of the year. The company maintains its guidance for systemwide sales growth of 2% to 4%.
Significant developments during the quarter included the refranchising of its Japan business and the establishment of a joint venture with franchisee WKS Restaurant Group, increasing its interest to 80%. Since the beginning of the year, Krispy Kreme has opened 59 new shops globally, predominantly through franchising, and is set to expand into three new international markets: the Netherlands, Estonia, and Mauritius.
In addition, Krispy Kreme has outsourced its U.S. delivery logistics to enhance margins and expanded its fresh delivery doors by 448 in the U.S., collaborating with major retail partners like Walmart and Target. The average revenue per door per week increased by 33.2% year-over-year to nearly $700.
Overall, analysts will be monitoring how Krispy Kreme’s renewed focus on refranchising and operational efficiency plays out in the coming months as the brand seeks to sustain its upward trajectory.
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