Krispy Kreme Cuts Capital Spending 70% via Franchising

Krispy Kreme Inc. reduced its first-half capital spending by 70% through an aggressive strategy of franchising a significant portion of its store network to lower debt and revamp operations. By August 2026, franchised locations generated approximately 42% of total sales, an increase from 25% in 2025. The company intends for franchisees to account for half of all sales beginning next year.

As part of this turnaround, the donut chain is shifting international operations to franchisees. This includes the recently completed re-franchising of Japan operations, with planned expansions into Mauritius, the Netherlands, and Estonia. These moves helped reduce the company's net leverage ratio to 5.4x by the end of the second quarter.

To address a production capacity currently utilized at only 25%, the company is expanding its distribution through grocery stores and big-box retailers, including Walmart Inc. and Target Corp. Chief Executive Officer Josh Charlesworth noted the need to better utilize this capacity to boost overall profitability.