CHARLOTTE, NC. — Six weeks after Krispy Kreme Inc. initiated a pause on its expansion in McDonald’s restaurants, the two companies said they have jointly decided to end their partnership.

Plans call for Krispy Kreme Inc. to stop selling its donuts in McDonald’s locations effective July 2. In the June 24 announcement, the companies said the move came “after careful consideration.”

“Our two companies partnered very closely, each supporting execution, marketing and training, delivering a great consumer experience in approximately 2,400 McDonald’s restaurants,” said Josh Charlesworth, chief executive officer of Charlotte, NC-based Krispy Kreme. “Ultimately, efforts to bring our costs in line with unit demand were unsuccessful, making the partnership unsustainable for us.”

As part of its growth plan, Krispy Kreme has worked to sell its donuts in a wider range of locations, including through its “delivered fresh daily” (DFD) business, and going forward the company said it will focus on “profitable US expansion” via its two largest opportunities: high-volume retail points of distribution and “capital-light” international franchise growth.

Meanwhile, Chicago-based McDonald’s described the arrangement with Krispy Kreme as a “small, non-material part of McDonald’s breakfast business” but noted that the morning meal daypart remains a “core pillar of McDonald’s business strategy.”

“We were excited and pleased to partner with Krispy Kreme,” said Alyssa Buetikofer, chief marketing and customer experience officer for McDonald’s USA. “We had strong collaboration with Krispy Kreme, and they delivered a great, high-quality product for us. And while the partnership met our expectations for McDonald’s and owner/operators, this needed to be a profitable business model for Krispy Kreme as well.”

The Krispy Kreme-McDonald’s collaboration began in late October 2022, when the companies launched a pilot to sell three varieties of Krispy Kreme donuts at nine Louisville, Ky.-area McDonald’s restaurants. Then in February 2023, the test was expanded to 160 McDonald’s locations across Louisville, Lexington and the surrounding area. That was followed in March 2024 with the unveiling of a plan to offer Krispy Kreme donuts at McDonald’s restaurants nationwide by the end of 2026, with a phased rollout kicking off in the second half of 2024.

But cracks in the partnership surfaced earlier this year. When reporting fiscal 2024 fourth-quarter results in late February, Charlesworth said demand had dipped and was lower than expected. When local marketing faded at McDonald’s restaurants already offering Krispy Kreme donuts, the donuts weren’t as visible on the menu, and consumer awareness declined, he explained. Still, Charlesworth said at the time that Krispy Kreme was on track to sell donuts in 6,000 McDonald’s locations by the end of 2025.

The decrease in demand became the subject of a federal class-action lawsuit filed in mid-May, which came about a week after Krispy Kreme said in reporting fiscal 2025 first-quarter results that it would enter no new McDonald’s in the second quarter. The suit claimed that Krispy Kreme gave “false and/or misleading statements and/or material omissions” about the status of the partnership with McDonald’s, causing the plaintiffs and those who recently acquired Krispy Kreme stock to suffer damages. According to the lawsuit, Krispy Kreme failed to disclose that demand was decreasing and sales declining for its donuts at McDonald’s locations, that the partnership wasn’t profitable and that expansion into new McDonald’s locations would be paused, among other issues.