If Krispy Kreme Comes To McDonald's, We All Win

We're counting on you, Kentucky. A new collaboration between Krispy Kreme and McDonald's is, according to announcements by both brands, about to kick off in Louisville. If all goes well at test locations, the partnership could extend outward to more states—and potentially bring us that much closer to our dream of ordering an Egg McMuffin on an Original Glazed.

Beginning October 26, Krispy Kreme doughnuts will be available for purchase in select McDonald's locations in Louisville, Kentucky for a limited time, per the press releases. Customers can choose from the classic Krispy Kreme glazed doughnut, a chocolate iced doughnut with sprinkles, and a glazed raspberry jelly-filled doughnut, available all day long. The doughnuts can be ordered a la carte or by the dozen.

So, what makes Kentucky so special? Why was Louisville chosen as the location for this delicious test? McDonald's explained to The Takeout that Louisville was determined to be an ideal market for this rollout thanks to its demonstrated affinity for sweets and bakery goods.

It's not for lack of doughnuts that McDonald's is partnering with Krispy Kreme; in 2021, the chain introduced the Glazed Pull-Apart Donut, an all-day breakfast item that, while not a permanent fixture on the menu, has popped back up from time to time in the year since its release.

"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," reads the press release in part. "This small-scale test will help us understand how offering new bakery items like Krispy Kreme could impact operations in our restaurants."

It's hard to imagine a scenario in which this small-scale test doesn't yield positive results. Since these Krispy Kreme doughnuts will be delivered to McDonald's locations daily, the pastries will presumably require less in-house work for the burger chain. Additionally, because these doughnuts are readily available to purchase by the dozen, there is an increased chance of high turnover, ensuring fresher product each day.

Krispy Kreme's overall business strategy in recent years has been a "hub-and-spoke" model, as QSR Magazine explained in August 2021. What this means is that Krispy Kreme locations produce the doughnuts fresh in house and then deliver them out daily to "spoke" spots like grocery stores, gas stations, and now a few select McDonald's restaurants in Kentucky.

As of 2021 McDonald's had 13,438 locations in the U.S. alone, as reported by USA Today. By contrast, as of October 2022, Krispy Kreme has only 367 locations in the country, according to data firm ScrapeHero. However, since the doughnut chain's business model isn't focused on the sales coming directly from its "hubs," the more important numbers to look at are the doughnut sales reported at its "spokes." To measure the success of the business, Krispy Kreme looks at the combined revenue of a hub and all its spokes. Based on that measurement, the doughnut chain saw $3.6 million average sales per hub in Q2 of 2021.

If the test in Kentucky goes well, the number of spokes per hub for Krispy Kreme could massively increase—as could the revenue, of course.

Assuming the chain will be able scale up operations to meet McDonald's-level demand, Krispy Kreme is definitely making some smart business moves here. And by selling Krispy Kreme doughnuts, McDonald's would have one more arrow in its breakfast quiver, one with an established reputation and fan base (plus the doughnuts are just way better than any pastry McDonald's has ever produced.) I've always said brunch is the untapped market for the fast food chains of the world.

Imagine the possibilities of all-day Krispy Kreme at McDonald's. How about an order of McNuggets with barbecue sauce, fries, and a glazed doughnut, like an unholy fast food riff on chicken and waffles? Sorry, I'm getting ahead of myself here. After all, the test is only being conducted in Kentucky... for now. I'll let McDonald's and Krispy Kreme marinate on the sheer menu potential of what they've brought to the market.