Angry investors have filed a class-action lawsuit against Krispy Kreme after a promised deal between the doughnut maker and McDonald’s fell through.
The lawsuit alleges that the company made “materially false” and misleading statements about the partnership and failed to tell investors that it was not yet profitable. The lawsuit alleges that this “precipitous decline” caused “significant losses and damages” to investors.
The lawsuit alleges that Krispy Kreme began serving doughnuts on a small-scale trial basis at McDonald’s restaurants in and around Louisville, Kentucky, in October 2022.
In March 2024, Krispy Kreme and McDonald’s announced that they would expand the partnership nationwide starting in the second half of that year.
However, on May 8, shortly before the stock market opened, Krispy Kreme announced its financial results for the first quarter of 2025, with net revenue of $375.2 million, a 15.3% decline.
The company also reported a net loss of $33.4 million, compared to a net loss of $6.7 million the previous year.
The company also announced it was “re-evaluating its deployment plans with McDonald’s” and “withdrew its previous full-year guidance and will not be updating it,” in part because of “uncertainty about McDonald’s deployment plans,” the lawsuit said.
Krispy Kreme shares fell nearly 25% to $3.26 per share following the news.
The lawsuit, which has not yet released the name of the lead plaintiff, alleges that Krispy Kreme failed to disclose key information about its business operations and prospects during its 2024 announcement and this month’s financial report.
These included “a significant decline in demand for Krispy Kreme products at McDonald’s stores following the launch of the initial marketing campaign…demand at McDonald’s stores resulted in a decline in average weekly sales per store…and the partnership with McDonald’s was not profitable.”
The lawsuit also claims that these issues posed a “significant risk” to maintaining the partnership with McDonald’s and that the company knew it would halt the expansion of new McDonald’s stores.
“Plaintiff and fellow class members have suffered substantial losses and damages as a result of defendants’ misconduct and inaction, as well as the dramatic decline in the market value of the company’s securities,” the lawsuit said.
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