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Krispy Kreme, Inc. is under legal scrutiny as an investor files a class-action lawsuit alleging the company misled shareholders about the success of its doughnut sales through McDonald’s outlets.
The lawsuit, filed in the U.S. District Court for the Western District of North Carolina, claims that Krispy Kreme failed to disclose declining demand and profitability issues related to its partnership with McDonald’s, leading to significant financial losses for investors.
The lawsuit alleges that Krispy Kreme and two of its top executives painted an overly optimistic view of their nationwide deal with McDonald’s. According to the investor, the company failed to disclose that doughnut sales at McDonald’s were declining and the partnership wasn’t turning a profit.
McDonald’s & Krispy Kreme Partnership History
In October 2022, Krispy Kreme began a pilot program to sell its doughnuts in select McDonald’s locations in Louisville, Kentucky. Following initial positive results, the companies announced in March 2024 plans to expand the partnership nationwide, aiming to have Krispy Kreme products in over half of U.S. McDonald’s restaurants by the end of 2024 and full nationwide availability by 2026.
By May 2025, Krispy Kreme reported a 15.3% decline in net revenue and a net loss of $33.4 million for the first quarter. The company attributed part of this downturn to underwhelming sales performance in McDonald’s locations and announced a pause in the expansion of the partnership, citing the need to reassess the deployment schedule with McDonald’s
Last week, Krispy Kreme and McDonald’s announced a pause in their nationwide doughnut partnership, citing lower-than-expected demand and profitability concerns. Krispy Kreme CEO Josh Charlesworth stated that the company is working with McDonald’s to stimulate demand and simplify operations, hoping to achieve a sustainable and profitable business model before resuming expansion.
The lawsuit alleges that Krispy Kreme and its executives made false and misleading statements by not disclosing:
- A significant decline in demand for its products at McDonald’s locations after the initial marketing launch.
- That this decline was a major factor in decreasing average sales per location.
- The partnership with McDonald’s was not profitable.(MarketWatch)
- These issues posed substantial risks to the continuation and expansion of the partnership.
As a result of these alleged omissions, the lawsuit claims that Krispy Kreme’s stock price fell nearly 25% following the May 2025 financial disclosures, causing significant losses to investors who purchased shares between February 25, 2025, and May 7, 2025.
Investors seeking to be appointed as lead plaintiffs in the class-action lawsuit have until July 15, 2025, to file their motions. The lawsuit is spearheaded by law firms including Robbins Geller Rudman & Dowd LLP and the Law Offices of Frank R. Cruz.
Krispy Kreme has not publicly commented on the lawsuit.
