Krispy Kreme promised to launch doughnuts at McDonald’s restaurants nationwide, and the chain is putting forth a series of serious investments to hold up its end of the bargain.

The national rollout begins in the fall starting in Chicago, McDonald’s home market. Krispy Kreme expects to reach 1,000 restaurants by the end of 2024 and then add 5,000 in 2025 and 6,000 in 2026. By then, doughnuts would be in 85 percent of McDonald’s U.S. footprint. For perspective, McDonald’s had 13,484 U.S. locations at the end of Q2 and announced plans to add 900 U.S. stores by 2027.

Krispy Kreme CEO Josh Charlesworth said the company is actively modernizing its doughnut processes. A dedicated team is working closely with customers, including McDonald’s, to ensure a smooth launch. The brand is hiring and training experts in manufacturing operations, upgrading its production lines, and continuously refining manufacturing. Additionally, Krispy Kreme is optimizing its delivery logistics network with enhanced routing and fleet upgrades. This expansion effort is expected to increase the use of production hubs and improve the scope of distribution.

“We have a dedicated cross-functional team there to make sure the facilities and our people are ready. In fact, we’re also making improvements to the production lines and even doing our best to improve productivity and up our game as we go. We’re very focused on delivering a really high-quality service to the McDonald’s restaurants so that people get awesome fresh doughnuts every day at the same quality level they expect in Krispy Kreme and other channels,” Charlesworth said during Krispy Kreme’s Q2 earnings call.

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McDonald’s and Krispy Kreme announced in March that they planned to expand their partnership nationwide. The rollout follows a successful test in 160 McDonald’s locations in Louisville and Lexington, Kentucky. Three Krispy Kreme doughnuts will be offered inside locations each day—Original Glazed, Chocolate Iced with Sprinkles, and Chocolate Iced Kreme Filled. Customers can order them individually or in boxes of six all day while supplies last.

Charlesworth said the ramp-up in production won’t require a lot more labor, other than some dollars spent on marketing and hiring delivery drivers.

“Our respective marketing teams are working closely together with the McDonald’s team, so that people know Krispy Kreme is coming to McDonald’s,” Charlesworth said. “So there is investment there but the overall message is that the expansion of deliver fresh daily in the U.S. is leveraging an underutilized system. The additional densification of all that distribution means you get flow through to the bottom line.”

As of now, 151 U.S. hubs with spokes serve on average 50 points of access. Krispy Kreme expect this to increase to over 100 points of access by 2026. Using Chicago as an example, Charlesworth said the company will send doughnuts to 450 new venues with the same number of production hubs. While boosting existing resources, Krispy Kreme also plans to add 30 more hubs in the next three years in areas with limited access to doughnuts. So far, 17 of these 30 facilities are underway, including Seattle, Minneapolis, and Philadelphia.

In the U.S. segment, net revenue grew $21.9 million, or 8.2 percent, with organic revenue growth of 8.4 percent. Revenue growth was driven by innovative specialty doughnut collections, the company said. DFD door sales (grocery stores, convenience stores, restaurants, etc. where guests can get fresh doughnuts) lifted 24 percent and digital sales soared 26 percent. U.S. hubs earned $5 million on average in the trailing 12 months. That’s up from $4.7 million during the same time last year.

U.S. adjusted EBITDA increased 16.3 percent to $32.7 million, and adjusted EBITDA margin expanded 80 basis points to 11.3 percent, fueled by labor and waste optimization and productivity benefits from the hub-and-spoke model. The margin improvement was partially offset by increased promotional activity and McDonald’s start-up costs.

Charlesworth explained that while Chicago is different from earlier markets Lexington and Louisville, it was a strategic choice aligned with McDonald’s preferences. The decision was influenced by the existing capacity at Krispy Kreme’s three production hubs in Chicago, which already have the infrastructure needed to support expansion. One of these hubs even has multiple production lines, making it an ideal starting point.

“I feel really confident about starting out in Chicago,” Charlesworth said. “We have a nice presence across the Midwest in general. So you know, get going with a really positive, strong momentum from the start makes sense for both of us. So we’re excited for the teams there.”

In addition to McDonald’s, Krispy Kreme has major deals to send more doughnuts to Walmart, Target, and Kroger outlets. The brand recently expanded with Target in Phoenix and Atlanta. And there are plans to come to Los Angeles, Detroit, and several other cities as it builds out the network with McDonald’s.

However, lower-traffic locations are “still very helpful to us,” Charlesworth said.

“Because we think all the places you go on the way to a McDonald’s, Target, Walmart, Kroger, you’re going to be going past convenience stores, gas stations, making the logistics route efficient, and so we still see a role for those to play, but naturally, we’re focused on those big national partners that the McDonald’s program unlocks for us,” he said.

In Q2, Krispy Kreme’s overall net revenue grew 7.3 percent to $438.8 million and organic revenue lifted 7.8 percent to $440.2 million. Adjusted EBITDA increased 12.1 percent to $54.7 million, and adjusted EBITDA margin rose 60 basis points year-over-year.