The cookie segment is as busy as ever, and Insomnia Cookies refuses to be left behind. 

Krispy Kreme, which bought the concept in 2018, said the brand has whitespace for more than 4,000 locations. Insomnia finished 2022 with 231 shops, an increase from 210 stores at the end of 2021 and 184 after 2020. When the doughnut chain acquired it, there were 135 units. 

The goal is to eventually ramp up to 100 new openings per year. In 2023, the chain will expand globally for the first time into the U.K. and Canada. 

“We truly believe Insomnia Cookies will be the next Krispy Kreme,” CEO Mike Tattersfield said during Krispy Kreme’s Q4 and full-year earnings call. 

The chain was founded in 2003 by Seth Berkowitz, who was a student at the University of Pennsylvania. The concept was named “Insomnia” because stores stay open until 3 a.m. And they’re typically based near college campuses, catering to a host of young adults pulling all-nighters. 

But it’s not the only cookie concept seeking massive growth in the coming years. 

Crumbl Cookies sits atop the category after skyrocketing to roughly 730 U.S. locations in six years. Then there’s Great American Cookies—purchased by FAT Brands in 2021—which has 370-plus locations domestically and internationally. The company is growing both organically and through acquisition; in 2022, FAT Brands purchased Nestlé Toll House Café to convert all units to Great American Cookies stores. 

There are also some emerging contenders. Fourteen-unit Chip City Cookies, based in New York City, received a $10 million investment last year from restaurateur Danny Meyer. West Coast brand Cookie Plug has 35 units open and 172 under development, and 11-unit Chip Cookies wants to open 12–15 locations in 2023. 

Insomnia’s revenue grew 24 percent in Q4, driven by double-digit same-store sales and “very high” productivity from 2022 openings. The chain’s AUV increased to $850,000, an 8 percent rise versus 2021.

Tattersfield said last year that Insomnia is experiencing successes beyond college campuses and urban markets and into select suburban locations. The belief is the chain has a strong enough pipeline to deliver unit growth in the mid-teens percentage each year moving forward. 

After opening 20-plus shops in 2022, the plan is to debut 30 to 40 this year. The payback for new stores is roughly one year or around 100 percent ROIC because of four-wall margins approaching 30 percent. 

“The recent class of new stores has been one of our best return classes ever,” Tattersfield said. ” … The capital efficiency of an Insomnia Cookies shop is fantastic.” 

The brand is also playing a significant role in boosting Krispy Kreme’s e-commerce business, which lifted 23 percent in Q4, the best performance since the pandemic started. E-commerce has been driven in part by an expanded cookie delivery radius of up to 10 miles, thanks to partnerships with third-party delivery drivers. 

“One that’s performing very well, particularly on the e-commerce side is Insomnia Cookies,” Tattersfield told investors back in November. “We’re not just adding cookie shops. We’re seeing very strong growth in the cookie shops we have today, thanks largely to continuous success in the digital e-commerce side of that business, and we can’t wait to share with you more about that as we look further ahead.”

Krispy Kreme is quite comfortable throwing out large, long-term development goals. 

The doughnut chain announced in December that it’s capable of reaching 75,000 points of access around the world. This is the reality of Krispy Kreme’s new model, which moves away from growth around retail shops and toward production center hubs that distribute fresh doughnuts every day to spokes, otherwise known as points of access. Those locales include grocery stores, gas stations, carts, food trucks, and smaller retail stores. 

Still, 75,000 is a few years into the future. The company ended 2022 with 11,837 global points of access, growth of 13.5 percent year-over-year. In 2023, the doughnut chain said it will enter five to seven new countries, including France. That would bring its total to 35-plus countries by the end of the year. Going forward, Krispy Kreme expects to debut in three to five new countries per year.

Nearly 6,300 are in the U.S. and Canada, up from 5,723 in 2022 and 4,597 in 2021. 

Krispy Kreme sold a record 1.63 billion doughnuts in 2023, and annual net revenue increased 10.5 percent to $1.53 billion. In Q4, net revenue rose 9.2 percent to $404.6 million, fueled by premium offerings, pricing actions, and higher e-commerce revenue. 

In the quarter Krispy Kreme closed six lower-performing shops, bringing the total number to 14 for 2022. Seven more are expected to shutter in 2023, mostly in the first part of the year. CFO Josh Charlesworth explained that these units are mostly low-revenue shops that don’t deliver doughnuts and have flat or negative EBITDA margins.  

It was also a record year for delivered fresh daily (DFD) doors, which are locations like convenience stores, gas stations, and grocery stores that receive fresh doughnuts. These outlets now account for 21 percent of sales, up from 17 percent in 2021.

There were 5,741 DFD doors in the U.S. and Canada at the end of the fourth quarter, a 10 percent increase year-over-year. These locations earned an average of $580 in doughnut sales per week in 2022. In Q4, for the first time, all three seasonal specialty doughnuts were sold in DFD doors, leading to record average weekly sales of $620.

Last year, Krispy Kreme began selling fresh doughnuts at McDonald’s units in Louisville, making the burger chain a new DFD door. Tattersfield wouldn’t reveal much about results, but the future seems optimistic. 

“What we’ve learned in the test is that we can actually manage the operations rigor, the logistics rigor of how do you manage a [quick-service restaurant], our customer from the time demand, the quality demand, and the execution and how it works seamlessly with our DFD route system,” Tattersfield said. “That’s what’s pretty critical—for us to get that understanding and how our brand also works with another brand as well.”

In 2023, Krispy Kreme expects net revenue of $1.65 billion to $1.68 billion, or an 8-10 percent increase above 2022. It also projects adjusted EBITDA of $205 million to $215 million or 8-13 percent growth year-over-year.