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It's official: McDonald's and Krispy Kreme are nationwide partners.
The two chains announced yesterday that the two iconic brands would be expanding their partnership, with Krispy Kreme doughnuts available in participating McDonald's restaurants nationwide by 2026.
Both McDonald's and Krispy Kreme used the same press release to make their announcement, leading with this first line: Krispy Kreme to provide fresh doughnuts daily at McDonald's restaurants nationwide.
Let's focus on just three words:
Fresh doughnuts daily.
The reason these words are remarkable has to do with Krispy Kreme's history, the lessons it's learned over the years, and the key to the potential for this new partnership. Let's discuss, and see what business owners and leaders everywhere can learn from it. (If you find value in this lesson, you might be interested in my weekly newsletter, in which I regularly share business and emotional intelligence lessons.)
In 2006, Krispy Kreme was dying.
The company was cash flow negative, while facing billions of dollars in lawsuits with hundreds of millions of dollars in debt. Employee turnover was over 20 percent. It was under investigation by the Department of Justice for shady accounting practices, and worst of all, same-store sales were declining dramatically.
Over the next years, though, the company would embark on a major turnaround.
Krispy Kreme's most recent transformation centered around its hub-and-spoke distribution model, as described in QSR, an industry publication reporting on the quick-service restaurant industry.
"Essentially, Krispy Kreme's 'Hot Light Theater Shops' and 'Doughnut Factories' serve as centralized production facilities, or 'hubs," reports QSR. "From there, the company delivers doughnuts to its fresh shops and DFD (Delivered Fresh Daily) stores, or 'spokes' through an integrated network of corporate delivery routes. It's the unlock to bringing a fresh product systemwide."
The emphasis here is on fresh.
In the past, Krispy Kreme doughnuts were ubiquitous: You could find them in several different types of grocery stores, and even in gas stations.
But these doughnuts were sold under a different wholesale model. In terms of quality, freshness, and taste, those packaged products were much different from the doughnuts you'd get when buying directly at a Krispy Kreme store.
In contrast, with the hub and spoke model, Krispy Kreme is able to deliver its doughnuts daily to its distribution partners, which still includes grocery stores--and now, McDonald's.
The ability to "provide fresh doughnuts daily" is the reason why Krispy Kreme's model has worked so well, with organic and net revenue continuing to grow, as reported by QSR. And it's why Krispy Kreme's partnership with McDonald's has been such a smashing success.
So, what's the takeaway for business owners and leaders?
Focus on your product first. Tweak the recipe, improve the app, revise the course. Make it the absolute best quality it can be, to the point that you have fans raving and sharing their experience with others, as Krispy Kreme fans did for its doughnuts.
But as that word-of-mouth spreads, you might want to partner with someone else for distribution. Ask yourself:
Once you make a list of potential partners, start reaching out. But by all means, whoever you partner with, don't sacrifice quality.
Because as Krispy Kreme discovered, it only works well if you keep it fresh.
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