Does Krispy Kreme fill a hole in McDonald’s menu?

Discussion
Photo: McDonald’s/Krispy Kreme
Oct 24, 2022

McDonald’s is beginning a small test of the sale for a limited time of select Krispy Kreme doughnuts at nine restaurants in Louisville and the surrounding area.

Starting Oct. 26, the locations will sell original glazed, chocolate iced with sprinkles and the raspberry-filled doughnuts. Customers can order them individually or in packs of six.

The product will be delivered fresh daily to McDonald’s and will be available all day while supplies last. Revenue sharing details weren’t disclosed.

“McDonald’s is always looking for ways to give our fans more of what they crave, and we often conduct tests to inform future menu decisions,” said McDonald’s in a statement. “This small-scale test will help us understand how offering new bakery items like Krispy Kreme could impact operations in our restaurants.”

McDonald’s added, “So go ahead, Louisville — it’s time to try a Krispy Kreme doughnut with your fav McCafé coffee order. We can’t think of a better way to start your morning… or afternoon… or evening…”

The test follows Krispy Kreme’s move in 2021 to shift its distribution strategy to a “Hub-and-Spoke” model, delivering fresh doughnuts daily to wholesale accounts (i.e., grocery, c-stores) and selling them for the same price at its stores. Previously, its wholesale focus was on a limited amount of older products at a discount.

Krispy Kreme is seeing a 300 to 400 basis point margin benefit in U.S. cities fully implementing the change. Supported by 411 production hubs globally, the company finished 2021 with 10,427 points of access, up 25 percent year-over-year, with a goal to reach 50,000 in coming years.

“We know that fresh matters,” Krispy Kreme CEO Michael Tattersfield told analysts in May. “As our customers tell us, this is the most important attribute when purchasing a sweet treat.”

For McDonald’s, potential benefits include offering a new category “without adding operational complexities” that should drive traffic, particularly for the most-profitable daytime, breakfast, according to Alicia Kelso, at National Restaurant News.

Ms. Kelso likened the collaboration to co-branding efforts such as Red Robin’s use of their kitchens to distribute Donatos pizza. She wrote, “Such a strategy increases efficiencies in a time when higher costs mandate as much.”

DISCUSSION QUESTIONS: Does the collaboration between Krispy Kreme and McDonald’s make sense for both companies? What should define success for Krispy Kreme and McDonald’s?

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23 Comments on "Does Krispy Kreme fill a hole in McDonald’s menu?"


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Gary Sankary
BrainTrust

I like this collaboration. The brands seem complimentary, and I think customers will respond positively. For Krispy Kreme, this gives them another sales channel, expanded brand presence, and positive hype. McDonald’s provides their customers with another reason to visit for breakfast and brings in a loved brand that pairs nicely with the arches. I think this will be a success.

Georganne Bender
BrainTrust

McDonald’s and Krispy Kreme in one place? I’m in. That’s the greatest partnership since Kizer & Bender.

Seriously, customers love when their favorite brands come together because it’s unexpected and it’s fun. Krispy Kreme wins by gaining more exposure; McDonald’s scores for bringing its loyal fans something new. Blueberry muffins and cinnamon rolls can only get you so far.

Dick Seesel
BrainTrust

This feels like a win for both parties, although it’s novel for McDonald’s to follow the co-branding route. Krispy Kreme will benefit from McDonald’s enormous footprint, and McDonald’s will enhance its breakfast offering to become more competitive with Dunkin’ Donuts and c-stores that sell a lot of donuts. A good example of thinking outside the box by both companies.

Michael La Kier
BrainTrust

Augmenting the Crisp Apple Pie and McFlurry with Krispy Kreme is a brilliant move for McDonald’s. Especially as the ice cream machines are always broken. Krispy Kreme fills a gap for McDonald’s, making this a smart (and sweet) move.

David Naumann
BrainTrust

The collaboration between McDonald’s and Krispy Kreme seems like a smart strategy. McDonald’s has done a great job in creating demand for its coffee and not everyone is interested in a breakfast sandwich to go with their coffee. Coffee and donuts are a great combination!

Jeff Sward
BrainTrust

I’ll applaud when McDonald’s tests protein shakes with abundant vitamins and minerals. Shakes are a natural fit at McDonald’s. Why not try a healthier version? Having said that, I won’t be holding my breath.

Richard Hernandez
BrainTrust

Jeff, I will be the first in line with you, when they do this….

Tara Kirkpatrick
BrainTrust

I like this a lot. The right partnership creates cross-selling opportunities for both brands. QSRs do an excellent job creating brand super fans, and the right partnership re-engages a fan to enjoy either/both beloved brand in a new way. Expanding menus in partnerships like this and the Red Robin/Donatos deal is also another way QSRs can make their drive-thrus more attractive than delivery from an Uber Eats/DoorDash.

David Spear
BrainTrust

Indeed this is a win-win-win for McDonald’s, Krispy Kreme and consumers. The collaboration does fill a gap in McDonald’s current menu offering and gives Krispy Kreme high value points of access that should be able to drive solid revenue streams. Consumers ought to be excited about this. I’m totally in on it!

Steve Montgomery
BrainTrust

It’s a win for both companies and McDonald’s customers. Coffee and something sweet to go with it is a combo that has been around for a very long time. The benefit for McDonald’s would not only be a larger transaction but increased coffee sales.

Bob Phibbs
BrainTrust

Just throw in the towel for having any responsibility for people being overweight and diabetic. And Krispy Kreme are found in convenience stores – cold. The brand has lost much of its allure.

Richard Hernandez
BrainTrust

Agreed — at least if you are going to do it, it should be hot just like the standalone locations.

Gene Detroyer
BrainTrust

Assuming this test is successful, I see a big win for both. Though the donuts will not be hot, they will be fresh. That is hard to say about Dunkin’. Krispy Kreme would ultimately be adding more than 13,000 locations. McDonald’s would give customers a popular offering and likely sell some coffee along the way.

Success for Krispy Kreme — more donuts. Success for McDonald’s — more traffic.

Brian Delp
BrainTrust
3 months 11 days ago

This is great. Both have strong customer followings so this will likely strengthen both. An exclusive collab flavor could take it even further over the edge.

Doug Garnett
BrainTrust

This seems like a bad idea. The Krispy Kreme brand is so distinctive on its own that it clutters and confuses the similarly strong McDonald’s brand. I’m disappointed with Mickey D’s — they are usually wiser than this.

Joel Rubinson
BrainTrust

I think the two brands offer a great fit. A complete win/win here.

Ryan Mathews
BrainTrust

Let me sound one contrarian note to the otherwise love chorus of those dancing in the street at the idea of scoring their favorite donut in still more locations. In theory, this is great news for both brands and for consumers. In reality there are caveats. Krispy Kreme makes a killer donut, but it is best when fresh out of the fryer, hence the “Hot Now” branding which served the brand so well for decades. The longer those donuts sit, the less appealing they are unless they are microwaved for 8 to 10 seconds or reheated in some other way. If you could guarantee that “Hot Now” taste every time, I’d say this is a stroke of genius. But my bet is, in a McDonald’s at peak hours, the donut is going into a bag at room temperature after sitting around for Lord knows how long. Still good? Sure if you are a fan. Great? Nope. So, like so many things the idea is divine, but the Devil is in the details.

Kenneth Leung
BrainTrust

Makes sense; McDonald’s is in the breakfast business, not the donut business. Krispy Kreme is already retailed in places like convenience stores. As long as the logistics hold up in terms of freshness, it is a nice touch and saves the family from fighting over where to stop for breakfast if someone wants donuts and others want a breakfast sandwich.

Craig Sundstrom
Guest

Short answer: yes.

The dangers — to the extent that I see any — are mostly for McDonald’s: first, people may sub a donut for one of their own items (which presumably carry a higher margin); second, they’re selling “someone else’s products” … I don’t think they’ve done that before. But I don’t see either of these as serious issues. It seems like a logical pairing.

Richard J. George, Ph.D.
BrainTrust

Everyone wins here — McDonald’s, Krispy Kreme and customers. McDonald’s, because it extends its breakfast options past the 10:30 cutoff of breakfast sandwiches. Krispy Kreme, because it gives a new non-cannibalizing distribution option. Consumers, because of extended breakfast choices.

Gwen Morrison
BrainTrust

McDonald’s has always studied menu “day-parts” and understands that there is a high percentage of their meals consumed in cars. This is an obvious play to take share from Dunkin’ and serve consumers who can’t give up their morning donut.

Suzanne331
Guest

Expanding category offerings is always a good idea, and with the name like Krispy Kreme, McDonald’s can get instant brand recognition and sales. It is a smart partnership, as Krispy Kreme gets another channel and McDonald’s gets expansion in the category.

Christopher P. Ramey
BrainTrust

Expanding the menu to fresh donuts will drive traffic as it expands their customer base. They’re including everyone in the family now. It’s a particularly good block for the McDonald’s locations that compete with Dunkin’.

They’re already working on serving them hot.

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Braintrust
"A good example of thinking outside the box by both companies."

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