McDonald's and Krispy Kreme have confirmed they will officially end their doughnut partnership on July 2. The collaboration had placed Krispy Kreme doughnuts in more than 2,400 McDonald's restaurants across the country.

At first the rollout seemed promising. However Krispy Kreme said it became difficult to match operational costs with actual customer demand at individual locations. The companies had previously announced plans to expand nationwide by 2026 but that has now been scrapped.

Krispy Kreme CEO Josh Charlesworth said the partnership could not be sustained long term.

Slow Sales And High Costs Led To Exit

Sales momentum slowed down earlier this year and Krispy Kreme even withdrew its annual outlook citing economic softness. McDonald’s franchisees welcomed the product but Krispy Kreme did not see enough return to justify continuation.

“Ultimately efforts to bring our costs in line with unit demand were unsuccessful making the partnership unsustainable for us,” said Charlesworth.

The company said it will now focus on growing through high-traffic retail outlets and global franchising instead of fast food collaborations. McDonald’s noted that the doughnut deal was not a major part of its core business especially in the breakfast segment.

Shares of McDonald’s fell slightly following the news. On the other hand Krispy Kreme stock rose just over 1% despite being down 73% this year.

McDonald’s has also been battling weak consumer spending. It reported its largest same-store sales decline since 2020 during the first quarter.Krispy Kreme reported a $33 million loss during the same period and is working to stabilize its business in new markets.