Krispy Kreme sells off remaining stake in beloved dessert chain
Krispy Kreme has officially cut ties with Insomnia Cookies to help pay off its debt. The donut empire announced the sale of its remaining stakes in the chain back to the company and other shareholders on Tuesday for $75 million. The funds will be used to pay off Krispy Kreme's rising debt costs , which currently sit at around $1 billion.
'We continue to take swift, decisive action to de-leverage our balance sheet and drive sustainable, profitable growth,' said Krispy Kreme CEO, Josh Charlesworth. Charlesworth confirmed the stake sale would also help Krispy Kreme focus on successful US expansion and international franchise growth.
Krispy Kreme has been experiencing financial difficulties and suffered a $33.4 million loss in net sales during the first quarter of this year. However, over 14,000 locations are running worldwide, and the chain has not announced plans for closures.
Insomnia Cookies has been rapidly expanding since it was founded in a dorm room in 2003. Currently, it has over 300 stores, with the majority located in the US. Krispy Kreme acquired a majority stake in Insomnia Cookies for $175 million back in 2018. This deal helped Insomnia Cookies continue its global expansion while tripling its revenue.
The chain also previously entered a partnership with McDonald's, and planned to roll out donuts at all US locations by 2026. More than 2,400 McDonald's restaurants were selling Krispy Kreme donuts before the businesses paused its collaboration last month.
It also discontinued its dividend paying to shareholders, which is expected to help the company save $6 million a year. Despite its struggles, the chain has not announced plans to explore the idea of private ownership.
Various chains have been searching for buyers over the last couple of years. Roark Capital equity firm finalized a $1 billion acquisition deal with Dave's Hot Chicken earlier this month. Jersey Mike's founder, Peter Cancro, became one of the world's richest people after Blackstone purchased the sandwich chain for $8 billion.
Restaurants are not the only businesses being sold off to other companies and shareholders. Big Lots was saved in December by a last minute $495 million acquisition deal with Variety Wholesalers.
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