By Will Feuer


Shares of Krispy Kreme surged after the company said it reached a deal to sell its doughnuts at McDonald's restaurants across the U.S.

The doughnut maker's stock jumped 29% to $16.09 in morning trading. Through Monday, shares were down nearly 21% from a year earlier.

McDonald's said it will start rolling out the doughnuts in the second half of this year and they will be available across the country by the end of 2026. McDonald's had already begun testing Krispy Kreme doughnuts at some locations as early as 2022.

The deal is a boon for Krispy Kreme, which has been working to expand its distribution without driving up supply-chain costs. Krispy Kreme Chief Executive Josh Charlesworth said the partnership will double the company's distribution, currently more than 14,000 access points, by the end of 2026.

Financial terms of the deal weren't disclosed.

Shares of the Charlotte, N.C.-based doughnut chain have struggled since it returned to the public markets in 2021, with the stock still below its initial public offering price. Analysts at Truist said investors are punishing the stock over demand concerns tied to weight-loss drugs such as Ozempic and Mounjaro.

Truist analysts said the chain's deal with McDonald's will increase the availability and number of occasions consumers can try a Krispy Kreme doughnut. They added that the sweets could have appeal beyond breakfast.

Krispy Kreme, which also owns the Insomnia Cookies chain, has been honing its focus on its core doughnut operations. Krispy Kreme said last year that it has hired advisers to explore options, including a potential sale, for the Insomnia Cookies chain.

The company has been working to rein in costs at the Krispy Kreme brand while expanding its distribution, including overseas. Executives have said they believe there is room to grow distribution in the U.S. through quick-service restaurants such as McDonald's.

Krispy Kreme's Charlesworth told investors last month the company had already started investing in new doughnut-making sites to prepare for a broader rollout at third-party distributors. New doughnut-making sites are critical to expanding what Krispy Kreme calls its delivered fresh daily network.

McDonald's in recent months has given its burgers a makeover and launched a new brand in moves not seen from the fast-food staple in decades. CosMc's is seen as the Chicago-based company's swipe at Starbucks' market share, centering its menu around customizable iced drinks and small bites.


Write to Will Feuer at Will.Feuer@wsj.com


(END) Dow Jones Newswires

03-26-24 1154ET