What do Walmart, McDonald’s and Dolly Parton have in common?
They all gave a boost to Krispy Kreme’s market capitalization on Thursday.
The doughnut chain’s stock soared more than 13%, continuing a strong run this year, thanks to better-than-expected financial results and continued expansion of its doughnut access.
Let’s start with Walmart. Krispy Kreme executives told analysts on Thursday that it is exploring expanding its relationship with the retail giant to go national. Right now, Krispy Kreme sells its doughnuts in 25% of Walmart locations.
It wants to take that deal national. “We’re in discussions with Walmart about how hubs are available to produce doughnuts in more and more markets,” CEO Josh Charlesworth told analysts, according to a transcript on the financial services site AlphaSense. “We can get it to those additional Walmart stores.”
The company is in talks with Target, too.
That would be huge for Krispy Kreme, which increasingly operates as a maker and distributor of doughnuts that are sold in tens of thousands of grocery, convenience store and restaurant sites around the world.
The “hubs” Charlesworth mentioned are its traditional shops where it makes doughnuts. Those doughnuts are delivered daily to what the company calls DFD doors, or kiosks inside those retailers.
Walmart alone would be a massive get for Krispy Kreme, because it represents about 25% of grocery sales in the U.S.
Krispy Kreme’s major focus is to expand the availability of its doughnuts to more places around the country. The company sells doughnuts out of 8,000 points of access in the U.S., but it wants to expand that considerably.
To do that, however, the chain needs more of those “hubs” from which it can make and distribute doughnuts. But it needed a deal to help spur that along. And this is where McDonald’s comes in, not to mention Insomnia Cookies.
The company and McDonald’s have been testing the use of the restaurant chain’s locations as access points for doughnuts, and earlier this year they announced plans to take that plan nationwide.
Charlesworth said that the company is on track to add more than 12,000 McDonald’s locations as points of access. That, plus the addition of retailers like Walmart and Target, mean Krispy Kreme could be available in nearly 23,000 different locations domestically by the end of 2026.
The sale of a majority stake in Insomnia Cookies last month also gives the company the financial flexibility to be able to open those hubs.
“The McDonald’s partnership is going very well in general, and the rollout is on track,” Charlesworth said. He said the company expects to be in more than 1,000 of the chain’s restaurants by the end of the year, mostly in the Midwest. “We’re very focused on delivering high-quality service to the McDonald’s restaurants so the people get awesome, fresh doughnuts every day at the same quality level they expect in Krispy Kreme and other channels.”
As for Dolly Parton, that’s more run-of-the-mill sales-generating business. The company generated more than 27 billion media impressions by capitalizing on a series of “buzzworthy events,” such as the solar eclipse and some specialty doughnuts.
Among them, the Southern Sweets Doughnut Collection introduced in May, featuring four Southern-inspired doughnuts, such as a Banana Puddin’ Pie doughnut, Chocolate Crème Pie Doughnut and Peachy Keen Cobbler doughnut. There is also a Dolly Dazzler doughnut with strawberry icing, gold, pink and white glitter sprinkles and a chocolate Dolly butterfly piece.
Driven in part by those specialty doughnuts, and a relaunched loyalty program, organic revenue grew 16% and digital sales grew by 22%.
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