McDonald's and Krispy Kreme will end doughnut partnership next month

• McDonald's and Krispy Kreme will end their doughnut partnership on July 2.
• The companies said the deal has not been as profitable as expected for the doughnut chain.
• McDonald's at one point planned to roll out Krispy Kreme doughnuts nationwide by next year.

Krispy Kreme and McDonald's are ending their partnership for good.

The chain will stop selling its doughnuts at McDonald's restaurants on July 2, the companies said in a press release Tuesday. McDonald's USA's Chief Marketing and Customer Experience Officer Alyssa Buetikofer said the collaboration was going well for the burger chain and its franchisees, but it “needed to be a profitable business model for Krispy Kreme as well.”

Their deal had placed Krispy Kreme doughnuts in 2,400 McDonalds locations. The companies paused their partnership in May after sales slowed down, and Krispy Kreme withdrew its full-year financial outlook in part due to economic “softness.” The chains are scrapping the deal after they announced plans last year to roll out Krispy Kreme doughnuts at McDonald's locations nationwide by 2026.

“Ultimately, efforts to bring our costs in line with unit demand were unsuccessful, making the partnership unsustainable for us,” Krispy Kreme CEO Josh Charlesworth said in a statement Tuesday.

Krispy Kreme said it will now focus on expansion through “high-volume retail points of distribution” and international franchise growth. The companies also said the agreement only represented a “small, non-material” part of McDonald's breakfast business.

McDonald's shares dipped slightly Tuesday, while Krispy Kreme's stock rose more than 1%.

McDonald's has seen sluggish sales as diners reduce restaurant spending, and has tried to lure consumers back with deals. In the first quarter, the chain posted its largest same-store sales decline since 2020.

Krispy Kreme shares have plunged about 73% this year. In its first quarter, the company posted a loss of about $33 million.