Krispy Kreme (NASDAQ:DNUT) executives said the company made “meaningful progress” on a turnaround plan during the fourth quarter and full year 2025, highlighting improved profitability, positive free cash flow, and steps to reduce leverage even as reported revenue declined due to store and delivery-door exits.
Management frames 2025 as a turnaround year
President and CEO Josh Charlesworth said the company’s plan is focused on “deleverage the balance sheet and deliver sustainable, profitable growth,” anchored by what he described as strong consumer demand for Krispy Kreme’s “iconic fresh doughnuts.” He said the company’s two biggest opportunities are profitable U.S. expansion and capital-light international franchise growth.
Refranchising and international expansion plans
On refranchising, Charlesworth pointed to a strategic agreement announced in December with Unison Capital for the company’s operations in Japan. The transaction is expected to close in March, with cash proceeds expected to be approximately $65 million. He said Krispy Kreme intends to refranchise certain other international markets and is targeting “two to three international refranchising deals in 2026,” emphasizing partner selection to “maximize value and position the company for long-term growth.”
The CEO also said Krispy Kreme plans to reduce its ownership to a minority stake in its existing Western U.S. joint venture with WKS Restaurant Group, which he said represents about 15% of U.S. revenues today. Under the plan described on the call, WKS would continue operating existing shops, the company would add company-operated West Coast shops into the joint venture, and WKS is expected to develop new shops and expand fresh delivery over the next several years.
Internationally, Charlesworth said Krispy Kreme operates more than 1,700 international shops across more than 40 countries. For 2026, the company expects more than 100 shop openings globally while continuing to expand fresh delivery doors across grocery, convenience, club wholesalers, and quick-service restaurants. He highlighted a recent first Hot Light Theater Shop visit in Madrid and called Spain an “important and emerging European market.”
U.S. footprint optimization, capacity, and logistics changes
Management repeatedly emphasized a shift toward “quality growth” in the U.S. and improved utilization of existing assets. Charlesworth said the company delivers to more than 7,000 fresh delivery doors in the U.S., but network utilization is “only approximately 25%,” allowing it to add locations without significant new capacity investment. In the Q&A, he added that partners such as Walmart and Target remain under-penetrated, with Krispy Kreme in about 30% of those locations, and Costco and Sam’s at about 20%.
The company also discussed recent door optimization actions. Charlesworth said Krispy Kreme fully exited McDonald’s by the end of the third quarter of 2025 and completed the rationalization of about 1,400 underperforming fresh delivery doors. By the end of the fourth quarter, he said the company had added more than 1,100 new higher-volume, higher-margin doors with strategic partners, and noted that fourth-quarter distribution increased by 200 doors.
On cost structure and logistics, Charlesworth said the company is simplifying operations and reducing costs through production planning, labor optimization, and streamlined hub operations, as well as improved route management and demand planning. He said 57% of the U.S. fresh delivery network was outsourced to third-party logistics providers by the end of 2025, and the company expects to complete the transition in 2026. He added that, due to cost initiatives implemented in 2025, total shop and delivery labor and SG&A expenses declined more than 10% in the second half versus the first half.
Fourth-quarter financial performance and balance sheet progress
CFO Raphael Duvivier said results in the back half of 2025 reflected “meaningful progress” on the turnaround. He reported that adjusted EBITDA in the second half of 2025 totaled $96.2 million, more than double the $44.1 million from the first half, while net revenue grew less than 2% over the same periods.
In the fourth quarter, Duvivier reported:
- Adjusted EBITDA: $55.6 million, up 21% year-over-year and up 37% quarter-over-quarter, helped by productivity initiatives.
- Net revenue: $392.4 million, down 2.9%; organic revenue down 3.9%, driven by the strategic closure of underperforming fresh delivery doors, primarily in the U.S.
- Operating cash flow: $45 million.
- Free cash flow: $27.9 million, which the CFO said improved substantially versus the third quarter and increased $34.8 million from the year-ago quarter.
Duvivier also said net leverage improved 0.6x quarter-over-quarter to 6.7x (net debt divided by trailing four quarters adjusted EBITDA). He called falling below 7x “an encouraging milestone” and said the company expects to be at or below 6x by the end of the first quarter. At year-end, he said excess liquidity was $207 million and noted the company was in compliance with bank covenants.
By segment, Duvivier said U.S. organic revenue declined 5.8% year-over-year, partly due to exiting about 1,400 doors in 2025. However, he said those doors were replaced with more than 1,100 new high-volume, higher-margin doors with higher average weekly sales. Average weekly sales per door increased to $660, up 7% quarter-over-quarter. U.S. adjusted EBITDA rose 39.1% to $32.8 million, which he attributed to cost controls, operating efficiencies, SG&A savings, and elimination of costs related to the ended McDonald’s partnership, along with $4.8 million of cybersecurity insurance recoveries. Excluding the cyber insurance benefit, he said U.S. adjusted EBITDA increased 33% quarter-over-quarter to $28 million.
In the company-owned international segment, Duvivier said organic growth was negative 0.3% as lower sales in Australia were partly offset by growth in Canada and Japan. International adjusted EBITDA increased 4.1% year-over-year to $26.8 million, and margin improved to 18.8%.
In market development (franchise-related), Duvivier said organic revenue declined 4.9% as royalty growth was more than offset by lower equipment sales. Segment adjusted EBITDA increased 2.1% to $12.1 million, and adjusted EBITDA margin rose 370 basis points to 61.5% due to mix, which he cited as supporting the company’s “capital light strategy to refranchising.”
2026 outlook: sales growth, shop openings, lower CapEx
Looking ahead, Duvivier provided full-year guidance that includes system-wide sales growth of 2% to 4% in constant currency from $1.96 billion in 2025, at least 100 shop openings globally (ending 2025 with 2,125 shops), CapEx of $50 million to $60 million, positive free cash flow, and a net leverage ratio at or below 5.5x.
Charlesworth added that the company expects 2026 CapEx to be “nearly half” of 2025, and during Q&A said the company is not currently making closures, focusing instead on optimizing production and delivery efficiency. He also said the company expects first-quarter EBITDA to grow versus the year-ago quarter.
About Krispy Kreme (NASDAQ:DNUT)
Krispy Kreme Doughnuts, Inc (NASDAQ: DNUT) is a global retailer and wholesaler renowned for its signature Original Glazed doughnut and a variety of other sweet treats. The company operates through a combination of company-owned stores, franchise outlets and strategic partnerships with supermarkets, convenience stores and other foodservice channels. In addition to its doughnut portfolio, Krispy Kreme offers freshly brewed coffee, assorted beverages and proprietary seasonal items designed to drive traffic and foster brand loyalty.
Founded in 1937 in Winston-Salem, North Carolina, by Vernon Rudolph, Krispy Kreme has grown from a single local shop to a multinational brand.
