Milling & Baking News - November 29, 2022 - 18

TUES | 11 29 202 2
Krispy Kreme seeking more
external partners for donut sales
CHARLOTTE, NC. - Executives of
Krispy Kreme, Inc. expect partnerships,
such as a recent one with McDonald's,
and international expansion to keep
increasing global points of access, which
reflect all locations where the company's
fresh donuts and cookies may be purchased.
Krispy
Kreme in October said its
donuts will be available in six-packs or
individually at nine McDonald's restaurants
in Louisville, Ky., and surrounding
areas.
" Obviously, this is a small
test to partner with a global
company, but we think this represents
the type of opportunity
that shows why we remain very
confident in our long-term goal
of achieving more than 50,000
points of access globally, " said
Michael J. Tattersfield, president
and chief executive officer, in a
Nov. 15 earnings call to discuss
third-quarter financial results.
" We believe that strong global
partners could be a great fit to
significantly grow our DFD (deliveredfresh-daily)
business. We continue to look
for new partners and channels across the
globe as we build out our hub-and-spoke
model to increase access to customers,
and we look forward to updating you on
this journey. "
Joshua Charlesworth, chief operating
officer and chief financial officer, added, " I
mean, we do have clearly excess capacity
across the US to build out the DFD door
network, whether it's Walmart, McDonald's
or others. "
A loss attributable to Krispy Kreme
was $13.1 million in the quarter, which
compared with a loss of $5.7 million in the
previous year's third quarter. A negative
impact of $5 million came from impairment
charges related to planned shop
closures, Mr. Tattersfield said. Adjusted
EBITDA slipped 7% to $38.5 million from
$41.4 million. Negative impacts came from
higher promotional activity through
18
MILLING & BAKING NEWS
labor Day (Sept. 5) and increased labor
and commodity costs.
" But since September, we've significantly
reduced our promotional activity
without any impact on revenue, which has
led to significantly improved gross profit
trends, " Mr. Tattersfield said.
Krispy Kreme raised prices for the first
time this fiscal year in the third quarter.
" I would definitely say that was
the beginning of a catch-up, " Mr.
Charlesworth said. " We certainly didn't
" As you know, our goal is to open in at
least three new countries per year going
forward, " Mr. Tattersfield said. " So far, in
2022, we've signed development deals in
seven international countries, including
announcing Jamaica this morning as well
as a recently announced joint venture
in France for 2023, which together represent
more than 5,000 points of access
or nearly 50% of our existing points of
access. "
In the United States and Canada, net
revenue in the third quarter increased
12% to $252.6 million from $225.8 million.
Adjusted EBITDA increased 10% to $21.9
million. In International, net revenue
increased 5.4% to $91.9 million from $87.3
" I mean, we do have clearly excess
capacity across the US to build
out the DFD (delivered-freshdaily)
door network, whether it's
Walmart, McDonald's or others. "
- Joshua Charlesworth,
Krispy Kreme, Inc.
anticipate the level of food inflation in
the US or the UK at the beginning of the
year as we saw, and we're pleased with the
success of those pricing initiatives. We've
then taken further pricing in October in
both the UK and the US. We do find that,
in this environment of price increases, we
can almost instantaneously increase the
pricing on retail, but obviously, we need
to work with our partners on DFD. So that
does lag a little bit behind. "
Third-quarter net revenue increased
10% to $377.5 million from $342.8 million.
Foreign currency translation had a negative
impact of 3.3% on net revenue because
of a strong US dollar. Organic revenue
increased 12%.
Global points of access in the quarter
increased 17% when compared to a
year ago. Consumers now have access
to Krispy Kreme products in more than
11,700 locations globally. International
expansion played a role.
million. Organic revenue grew 16%.
" In our international market, all of our
international countries, including those
in Market Development, had positive
organic growth in the third quarter, led
by robust performances in Mexico, Australia
and Japan, " Mr. Tattersfield said.
Adjusted EBITDA in International fell
16% to $18.3 million due to a $2.4 million
negative impact from the higher US dollar
and a challenging environment in the UK.
In Market Development, which is made
up of franchise businesses around the
world, net revenue increased 11% to $33
million from $29.7 million driven by a
33% increase in points of access. Adjusted
EBITDA increased 15% to $10.4 million.
Over the first three quarters of 2022, a
loss attributable to Krispy Kreme of $12.9
million compared with a loss of $25.8 million
in the same time of the previous year.
Net revenue increased 11% to $1.13 billion
from $1.01 billion. MBN
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Milling & Baking News - November 29, 2022

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