Overview
- Krispy Kreme has shifted to profitability-focused actions such as closing weaker locations and refranchising, with adjusted EBITDA margin improving and free cash flow turning positive last quarter.
- The company still owns and operates a large share of its stores and production network, a capital-intensive setup that contrasts with franchise-heavy peers and weighs on returns.
- Management is pursuing refranchising and outsourcing logistics, but execution missteps could leave the business stuck in a low-return-on-investment model even if revenue growth resumes.
- The company recently closed 960 underperforming points of access in a single quarter, a move that may boost margins but risks shrinking consumer reach if cuts go too far.
- Analysts warn that demand growth might be constrained by shifting consumer tastes, raising questions about the durability of the recovery.