McDonald's announced Tuesday that it will soon test Krispy Kreme doughnuts at nine Louisville-based restaurants.
The pilot, beginning October 26, will included three choices—Original Glazed, Chocolate Iced with Sprinkles, and Raspberry Filled. The doughnuts will be available all day via in-store and drive-thru transactions, while supplies last. They can be bought individually or in packs of six.
"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," the two sides said in a shared release. "This small-scale test will help us understand how offering new bakery items like Krispy Kreme could impact operations in our restaurants."
For Krispy Kreme, the partnership reinforces its new hub-and-spoke model. Instead of basing growth around retail shops, the doughnut chain formed a system of production center hubs that distribute fresh doughnuts to points of access (spokes), which include grocery stores, gas stations, carts, food trucks, smaller retail stores, and now, McDonald's. The brand found that delivering fresh doughnuts leads to more customer satisfaction and allows for higher pricing. At the end of Q2, there were 6,053 points of access in the U.S. and Canada, a 8.9 percent rise compared to 2021.
The updated operations are leading to improved results. For instance, the Nashville market, converted to hub-and-spoke in late 2020, earned 24 percent local EBITDA margin in the first quarter, a 1,200-basis-point increase versus the older model. The Albuquerque, New Mexico, market's local EBITDA margin was more than 20 percent in the fourth quarter, good for a 700-basis-point jump compared to the previous model.
“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.”
Krispy Kreme doughnuts are the latest in a line of products McDonald's has tested recently in the U.S. Late last year, the burger chain launched its first pilot of the Beyond Meat-based McPlant burger. The experiment grew to roughly 600 stores by February. The pilot ended as planned, but "franchisee sentiment on the sales performance was underwhelming," Peter Saleh, analyst with BTIG, said in a note. In August, McDonald's said it would start testing the Chicken Big Mac, which was a popular hit in the U.K. It was reportedly piloted in the Miami market.