Why Krispy Kreme Stock Rallied in March

According to Standard & Poor's Global Market Intelligence ( S&P Global Market Intelligence )The data of theKrispy Kreme （Nasdaq ResonanceStock Code(DNUT)In March 2024, the stock price rose 18%. These increases came after a battle with another food service stalwart, the formidableMcDonald's (NYSE: MCD)-After a change in the game's rules of handling the name of the person.

Sweet Deals From Kentucky to the Nation

In a joint press release, Krispy Kreme and McLean announced the expansion of the small rugby program. Starting with a test at nine Louisville locations on a swing day in 2022, the program expanded to 160 locations in Kentucky last summer, and now they'll be rolling it out nationwide. Over time, the three classic Krispy Kreme donuts will be widely available at Pre-Order McDonald's, with the goal of reaching the entire store network by the end of 2026.

Nearby Krispy Kreme stores deliver freshly baked donuts every morning, from individual treats to half-dozen packs. This deal has more than doubled the number of Krispy Kreme locations throughout the delivery network.

New Challenges for Logistics Noodles

The rollout will take time, as Krispy Kreme's chain is much smaller than McDonald's network, and with 224 donut-making centers in the U.S. serving desserts to 11,900 Krispy Kreme stores and carriers every day, the company has a scalable, asset-light production model. But adding more than 13,500 McDonald's studios to the system won't happen overnight.

Krispy Kreme shares jumped 39% after the announcement, while McElite shares rose 1%. The excitement waned a bit in the following days, but for the month of March, Krispy Kreme shares were still up 18%. The doughnut store is currently unprofitable, having burned more cash than it has made in three of the last four quarters. The doughnut shop is currently unprofitable, having burned more cash than it has made in three of the last four quarters.

In the long run, McDonald's agreement could boost the company's bottom line, but the cost of expansion could be high at first. Further financial details will emerge as the two carriers agree on their intertwined operational details.

I can't help but point out that McDonald's has been experimenting with new menu ideas only to scrap them a few years later. The "Signature Secret Recipe" burger comes to mind, as well as the idea of an all-day breakfast. I hope Krispy Kreme has a Plan B ready in case McDonald's backtracks one day. In particular, this donut chain shouldn't have to spend too much money to improve its production center.

As a result, the collaboration between these two popular brands is promising, but also risky - best served with a double shot of coffee and a large pinch of salt.

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Anders Bylund does not hold any of the shares mentioned above.The Motley Fool does not hold any of the shares mentioned above.The Motley Fool has a disclosure policy.

Why Krispy Kreme Stock Saw Sweet Gains in March was originally published by The Motley Fool.