Angry investors are bringing a class action lawsuit against Krispy Kreme after a promised deal between the donut maker and McDonald’s fell through.
The lawsuit alleges that the company made “materially false” and misleading statements about the partnership, and failed to notify investors that the venture was not profitable. This “precipitous decline” caused investors “significant losses and damages,” the suit states.
According to the suit, Krispy Kreme in October 2022 began a small-scale test to offer donuts at McDonald’s restaurants in Louisville, Kentucky, and the surrounding area.
In March 2024, Krispy Kreme and McDonald’s announced they would expand their partnership nationwide beginning in the second half of that year.
However, on May 8, shortly before markets opened, Krispy Kreme released its first quarter 2025 financial results which included that its net revenue was $375.2 million – a decline of 15.3 percent.
It also reported a net loss of $33.4 million, compared to the prior year net loss of $6.7 million.
According to the suit, the company also announced that it was “reassessing [its] deployment schedule together with McDonald’s,” and “withdrawing [its] prior full year outlook and not updating it” due in part to “uncertainty around the McDonald’s deployment schedule.”
Following the news, the price of Krispy Kreme shares tumbled by just under 25 percent to $3.26 each.
The suit, which does not yet list a primary plaintiff, claims that between the 2024 announcement and this month’s financial report Krispy Kreme failed to disclose key information about its business operations and prospects.
This included “that demand for Krispy Kreme products declined materially at McDonald’s locations after the initial marketing launch … that demand at McDonald’s locations was a driver of declining average sales per door per week … and that the partnership with McDonald’s was not profitable.”
The suit added that such issues posed “a substantial risk” to maintaining the partnership with McDonald’s, and that the company knew that it would be pausing expansion into new McDonald’s locations.
“As a result of Defendants’ wrongful acts and omissions, and the precipitous decline in the market value of the Company’s securities, Plaintiff and other Class members have suffered significant losses and damages,” the suit states.
The Independent has reached out to Krispy Kreme for comment.
