Krispy Kreme (DNUT) 11 May 232023 Q1 Earnings call transcript

Hello. My name is Jean-Louis. Welcome to the Krispy Kreme Q1 2023 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. Instructions] [Operator

turn of to ahead. Investor now Ballew, pardon, conference President Vice Relations. the will -- over Rob I Please go

morning, for to earnings welcome everyone, first Good XXXX quarter Krispy call. us joining Kreme’s you today. Thank and

presentation Our are the our at available of deck investors.krispykreme.com. earnings portion accompanying Relations on and website release earnings Investor

After Joining and Chief Josh Officer. Officer; President and remarks, Chief Operating Chief the and prepared Charlesworth, this Ashukian, is morning be session. call on will Executive me Mike President Jeremiah Officer; a Tattersfield, there Global Financial question-and-answer

events, this Before contains the like we the Reform of begin, to or I’d provisions future XXXX, Harbor statements remind Private to future you pursuant financial of that and Litigation statements Act call performance. made Securities of forward-looking including Safe expectations,

a forward-looking of we actual results and uncertainties, involve that risks those statements from statements. any materially risks number contained could and these inherent in to cause investors caution Forward-looking differ

in risks XXXX. in These other XX, factors filed company’s March Form detail the and and the on XX-K are with SEC uncertainties described

made today speak to The obligation law. no any required statements or be of as revise may assumes statements, update company forward-looking today. by except only as Forward-looking

certain investors.krispykreme.com. measures measures. the GAAP at non-GAAP will between non-GAAP quarter Reconciliation earnings financial first company’s call today’s can be Additionally, and morning and available is include comparable closest in their financial measures found release this

turn now I’ll the call over that, With Mike. to

us Good and morning, today. you, joining for everyone thank

our our for first and of driven events strategy share premium results, our to growth, execution of by holidays. of celebration, robust pleased are successful organic performance offerings a and another continued We quarter marking period our accelerated omni-channel

our another in quarter Thank you. start once positive would where strong members our dedication, growth Without possible. and to team this Kremers, not today’s operate. Krispy I organic and partners efforts your call be we we achieved by country our every thanking want for

sharing been been Doughnut Since and Glazed always moments. XXXX, serving we've joyful it’s our about Original iconic

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trust customers We take special don't lightly. that of part moments. to their Our be us

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our DFD in fresh continued this delivered or see impressive business. the daily of growth We

ability Our to fresh a XX% the our in convenient allowed business ever-increasing to branded XX% us points a by make location. of and confidence us customers where our bringing to in capital our and want exit our Krispy year, fresh start-up grow efforts CPG to continue to Sweet delicious Treats decision donut to focus to access Kreme

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donated communities positively to branded treat our remaining people, committed our by first to our are quarter, We the world In banks food and inventory our sweet the donut we loving much the planet. across US. impacting of

globe held community more the worldwide. the as also giving connected acts and than to we way a fundraising really of Krispy to local that another to We children, share We both of hard joy XXX worked strong donated across Kreme. school supported in saw quarter and people elderly joy

to Turning our results.

critically marked the operate, Hershey's, marketing important for donuts first with to included media expanding coverage partnerships start to both our accelerating as the and bottom significant we'll e-commerce country's Valentine's driving as a and efforts. This increased more great as growth line. as our with moving our quarter events with omni-channel first serves marketing strong was a costs, brand Day. The the the XX.X% including forward the year the quarter Day as great campaigns efforts. of leverage strengthening partners and Kreme St. had campaign for the playbook specialty targeted our Krispy in or and revenue to US, organic highly all successful able top In efficiencies capabilities global brand franchise holidays Patrick’s well of seasonal global availability we across be many Also, partners on and that

quarter. to the during from increase year e-commerce revenue miles. to to XX% increase up of continues warm sales a the of retail radius the benefit XXX in in to Insomnia sales mix These expanded a XX point to quarter, delivery XX.X% first led for e-commerce led ago basis compared efforts in cookie and of to the of Additionally, a company

ever the height and strongest to that pandemic, you both a significant opportunity continue percent even see in this to quarter channel. of our grow was and when in retail we revenue compare in to sales e-commerce, This of

increase our markets in our on around with our strategy, in and expansion a segment, particularly access strong We to and International which equity-owned the global growth and Japan organic international franchise of also Canada world, execute strong market development in points to led continue markets.

Since history. the all company's the of highest new franchise partner openings which time of Chile, in end first the Chiles quarter, the opened a in the for one

second We quarter, countries and Switzerland, Jamaica. expect Costa to during in X the open including Rica additional

open expect further Europe locations be new countries up and America. to to sign XXXX, in three in seven year countries We track development in five South continue including to Western this on for additional and to to to open new agreements

of five now is pipeline from used our new store which shops franchise performing across X,XXX working that the unlock than the Our recent We've next the partners States hubs are further to better seen United is of additional over be markets. of expected. insomnia will openings entire over years, country, points access new really and those shops fresh and in well America

and growth, UK internationally on in expand longer year. accelerate Insomnia To XXXX we track in investing they launch and and are both rapidly that in to term remain and capabilities processes openings, the of the open later to store number Canada as this to

in cookie number to this nearly XXXX open year XXXX. last double with further to compared shops and year of the to expect come We growth

driving model. focus we the capital-light As our remains our on expansion relentless ahead, of omnichannel look

have XX,XXX see we our model, drugstores. are to our and and as now business spoke channels such We plug in ability in globally grow DSD continue excited more bonds QSR, existing grow momentum than why That's to channels, today. our from well new to access as hub as to XX,XXX to and fresh of such confidence

revenue culture. to belief economic adjusted we direction, In e-commerce growth expanding capabilities. than momentum channels across and My to work this Krispy times. right brand $X.XX Day Krispy of continue last is year, million. expand and while remain highlighted at Investor resilience including excitement the XXXX our brands and our EBITDA long-term Kreme We've and with billion driving DFP, our addition we stronger specialty excited Kreme the in our ever. that clear has to donuts and brand growing now, this incredible we also will about is challenging confident to all align great even of about the seen My expectations, $XXX and the purpose

worked they want, what have business to six our also the it Doughnut. where past exactly years transform over and fresh customers We they and Kreme diligently model give want more to operations Krispy

as incredible We world. sweet our momentum we most have street the to in become brand loved continue the journey

update over call Josh to an PSC give our the to With companies. business hand Josh? and on that, the I

last sales line. our Day all across growth at now that In made the when months, margins organic deliver world Hub last excluding we and few the strong where the daily US, helped back Thanks, the around with XX% great Investor progress in and our we've This case Spoke growth December. to operating is model the brand fresh discussed EBITDA discontinued especially us sweet treat above channels the XX% Mike.

existing particularly such access, stores, we of as e-commerce from operating grocery model leverage The of production when generate doughnut the revenue point off-premises or affected hubs. fresh local the by all is our

but customers like and zones, to as to Daily, XX% and In US, our quarter. both added in the also in and helped Fresh upgrades we the of emerging like sales customers our with over XXX Target well generate us over first well-established retail newer Albertsons. continued e-commerce web via And doors, expansion of to as Walmart Publix, delivery Delivered app

of a We XX% ago across expected went DFD from sales coming into sales the cabinets target Kroger's larger doors add display XXX now years over the adding US We're XX which up in grocery more a average to is weekly XX% nearly quarter, door. up including in two to cabinets, first have and division to also routes these X,XXX with stores doors. of premium months. a tested the DFD

growth Dallas, Metro L.A., sales the quarter. in XXX off-premises benefiting production year-over-year DC growth US our hubs New all saw York, several first Houston, which This cities, is in margin including key and

program well DFD announced which underway. Spokes, previously optimization which shop Hubs expansion the also focuses from is benefit Our without not network on poorer do U.S. performing

as basis Spokes shop being Hubs margin point have closed, improvement a without shops now a already XX year-over-year. seen all formats XXX have into result, converted different and

shops We to go XX more through expect XXXX. the this to another five through end of process

retail shop making experience itself, of We're the the equipment represent in drive-thrus, new the which to improvements our doughnut of addition including in US. around XX% sales also

locations of introduction in digital and the US. as well select our the kiosks lobbies across As

with as as These operating above faster. in flagship The customers, is model saw international which grew Hub-and-Spoke kiosks have in which already both some Fresh especially Japan, in company-owned organic growth success even markets, early the newer showing Square, first quarter, markets, and New Times including well popular also shop York. the Canada at XX% our Day franchise proven in international

growth our doughnut acquisition a we In strengthened added is have revenue deliver XXXX, end at back omnichannel-led $XX we This hotline loss a e-commerce margin. XXXX This specifically, the to and of shops, at doors. the DFD in Japan, an completed EBITDA experience acquisition. of more XXX brought expected the over than to the to original time adjusted in million for Japan compares XX% at

the Australia; US; off and end over in March. our Kentucky, includes Canada, Walgreens new in channels. Club kicked through DFD in in have test at in through which of expanded As the XX,XXX point-of-access global to in McDonald's now listings opportunity Costco of long-term QSR to XXX We an Mike [indiscernible] in UK, restaurants the take the sales explained, of goal new to DFD partners and

performance. these closely are freshness, for quality, all a from and course, new channels service, We monitoring of of

to are not other or service and locations production we ability impact additional happy hubs, seen our team's on doughnut have three McDonald's, shops adverse from we existing existing any doors at with DFD sales Regarding local these our our Kentucky. of in restaurant

over and call Jeremiah including detail more us give balance to the our update turn XXXX outlook. happily now financials, an sheet, on financial to our our I'll on

weekly omnichannel Sales We by and good of quarter. led drive strong our a working, average million, we in the confidence US and $X.X points line bottom increased are record DFD results. X% fresh both Thanks, Josh, door. first growth building to per per and had hub great access sales top morning, ability and is to both The everyone. model in

highest higher even the ever New revenue door of height and productivity saw is quarter its strong e-commerce the than pandemic.

successfully allow to In to outlined on of to actions the branded believe benefits of inflation. significant sweet more moments the our treat addition also a the business. Josh pricing will have exit Plus, we us focus fresh few offset taken even US ago, we

international our the continue strong of seeing US, franchise in and our Aside progress great similarly global plans. performances we're on expansion Canada to and segment Japan, make

Turning financials. to the

revenue, year, XX.X% seasonal saw and foreign As all of and changes fresh which Mike in with our by million. acceleration excludes the delivered currency, segments acquisitions and the donuts, growth our and daily of said, last revenue we year-over-year up grocery pricing, our in convenience XX.X% growth including $XXX strong first stores the net innovation, premium and Organic driven to e-commerce. from quarter in reporting across impact grew

the We in of UK, purchases the took pricing and several and US all the and to quarter levels frequency affordable remains it double-digit effective to further elasticity, that pricing key campaigns global the of for to continue a fact first in the thanks low strong lower income. bringing including markets, increase, see specialty our indulgence we

the inflation. grew efficiencies, cost EBITDA of a in in $XX And negative of our or once elevated dollars quarter the network compared stronger margin ago. improvements shift the offset a XX% million million adjusted and levels currency EBITDA maintain Pricing, mix the labor and and the XX.X% increase Adjusted XX.X% in to labor US first an quarter to at impact year in first Hub to optimization commodity Spoke considered. $X constant

GAAP was a gain million the quarter or $X.X the and was million the offset million for quarter branded in income treat exit $XX.X on increased of net first $X.XX, currency. net income of quarter adjusted by related in constant the partially diluted XX% sweet impacted XX.X% Adjusted of sale expense $XX.X EPS of largely by negatively to XX% an non-cash the in million $X.X increase a leaseback. first

sweet also business segment's to XX% revenue and $XXX decreased the treat. increased The organic growth revenue first from despite branded revenue was US quarter million, in XX% total up

sales increases record both a by same-store in with $X.X revenue channels double-digit E-commerce to Cookies. were in US. sales ago growth the the and revenue million driven from by million per and was Growth hub Insomnia first for $X.X strong quarter, year DFD

Spokes and Adjusted XXX our successful strong saw pricing This taken increasing cost in to EBITDA margins first benefits These in segment by margins the EPS performance elevated sales reflects improved to EBITDA in fresh $XX million, the the in XX.X% XX% in driven than quarter performance actions ingredient points. with basis absorption for Hubs increased expand donut points year-over-year the the and without US growth inflation from we XX business, US double-digit factors growth. with labor in offset Spokes. Hubs the more nine last months, DFD off-premise and our cost basis

in UK. adjusted declined total offset goods and X.X% in of million. revenues million softness and EBITDA quarter DSD Organic as for increased of $XX.X logistics continued the was growth well the revenue $XX.X was while by UK organic International the to cost cost as growth in sold in Australia

the a three environment However, reduce we to markets. efforts streamline costs, all continued in continue and and are basis to seeing pricing strengthening regular we'll in UK, in making are review on waste, the retail we

around franchise and In world Japanese volume the and XX%. channel, markets of well pack accelerates the made expand UK, Canadian new visibility also grocery sizes grocery we're in placement growth organic as equity-owned looking businesses partners to up working at the our is and secondary product, development, including saw channels. which to range Market as and

if first even XX% very margins compared development shift Total Adjusted exchange growth a on not $XX headwinds. in quarter equity impact would million, with increased foreign strong XXX higher adjusted to increased have mix prior quarter due been X% XX.X% impact $X.X EBITDA exchange the year Japan the increased first revenue from negative the basis and acquisitions. headwinds foreign and to revenue to EBITDA in a and points million Canada. million the from for organic to $XX.X and XX% to Market a despite franchise in

XXX up a basis EBITDA The growth of year from points adjusted margins in over Japan nearly ago. led XX%, to

our oversubscribed and refinancing A extending of facilities, quarter, we Loan Term same at XXXX. completed first the maturities our revolver March of a through the terms well During

net Last reduce quarter, reduction made not financing adjusted what more We $XX reliance interest first in reducing that hit an million. by we do impact a I vendor expensive our become reduce to mentioned costs the vehicle financing to on as expense. EBITDA would efforts and quarter, these has progress begin levels over programs on those increased to

tailwind to between were EBITDA XXXX. net X.Xx to We be on to and and our income, we in adjusted net and remain be expect Xx long-term track a this

This to We revenue, million are in between and to XX% XX% to X% and net growth $X.XX in includes also in reaffirming EBITDA X% adjusted our organic $XXX XXXX of adjusted to $X.XX guidance. revenue $XXX million EPS.

and We of to XX XX continue $XXX X.X% new million to including shops at opening insomnia of capital expenditures built million cookie $XXX revenue, in hubs least expect to company or roughly roughly XX XXXX.

guidance million to growth EBITDA. from the is modest revenue $X for year, impact continues headwinds X% negative to rates XXXX and on roughly Our foreign adjusted exchange which include hit approximately

for the fourth XXXX. While million the in rate million end balance the December to middle be negative year-over-year we'll peaked in XXXX US traced are brands second impact quarter range our at half year, exchange we of exiting and Despite see the we in EBITDA the revenue start dollar in $XX or our confident guidance trending roughly full of the as year the the ranges. in foreign $XX the current remain for to XXXX, from is towards from of lower to benefits dollar seeing higher and revenue for adjusted currently early

or high and confidence Investor we in the our XXXX continue provided momentum even outlook that a in exceed have business, I Day. to our good can degree have We long-term at of that meet we

open the to can call Q&A we up Operator, now, please.

now for session. the your first begin [Operator question-and-answer We moment question. One Instructions] will Instructions] [Operator

go comes of from Please the Ivankoe Your first ahead. question John JPMorgan. line of

the Mike, of like company, of there's you. obviously, logistics doughnuts implications Thank and like lot I thinking that. a Hi. quote in a

actually probably planning something in honing you're intelligence US possibility I own I for and in really have of your to product to profitability DFD about you evaluating of case business they each McDonald's other the don't your or is once US drop a account. the that per is in best demand Talk some going things. and specifically each order of more maybe was that particularly of couple kind on that capability I of on a scale, and mean, risk you back accounts. is day of a which a related each means in door. of it profitability account. mean think that. forward reduce the comment that's the goes the guess model, word I as the maybe So your kind a predictable

you are doing? morning. how Good John, Hey

morning. Good

piece start the McDonald's today. will with I

I then as the demand do, sometimes It's about in markets, So it's done piece basically today actually individually and consumer-centric we're do you think the the time think pretty we've interesting. other works you for route system actually drop doing can unique planning do do the first or they still we a that this. something each the it's it's right? another drop that really them team where we But and not where can drop well. drop to logistic McDonald's that as own our do center

pass that -- own So anytime add options company. And a see planning of thinking on something if that logistics that in look the continue look terms viable we in opportunity customers. we to trying on is into we as were that sophistication to see they like to how from demand you'd of Josh, to opportunity that? different get for Anything the where channels we're at exists. I'll it you about

John. Hi, Sure.

over DFD last across the mentioned McDonald's the the in of you opportunity. price point I doughnuts we've at doughnuts the profitability that gone and very including couple is channels, the all close account think as obviously our source, applies shop years at significantly per selling and these that has profitability same same in improved DFD

Mike, McDonald's the those you pre-pack much in the in the in doubling adding of of with store, the can proportion and sort context by out the earlier trucks more example. upfront logistics the test -- the significant then the because selling sophistication Kentucky loose completely there, or make the of impact an and counter. in behind existing of profitability company doughnut get and it's becoming trucks, doughnuts I which think, operator delivery high adding whether quickly just well as routes hubs, adding of referenced and a the production And we're From how is for take, McDonald's yes, why the adding more production, remarks, and scenes us changes of as example, of -- obviously both

grow, complexity adding seeing of new to points a of and both, target, we're premium cabinets, with lot continues introduces DFD DFD now all up pretty different access And all Walmart our profitability customers. but manage, partners. the for that that certainly bigger units, consistent these to to that adding these those pre-pack with doughnut us across more and right game stepping seeing merchandising we're

be How all a is that as McDonald's, US, might XXX delivery product, Sunday of example a the with I get has That data of kind seven in week to kind which the can of week, that they XXX to to available sold service quick whenever another that? of they they continue can have stores seven chain think or customers mean to they it you business days not order. I because the is I think There's doing hard. functionally does want be of want maybe gets products have what a stores perishable to to a doughnut Friday, it. to

bit we a experience is bigger can. little more insight on just you're basically give whatever something test. call, extent this going, comfortable XXX market a of if bit is us rollout Just a than a give It's like that to little stores market us how

I I operating going. pleased how Sure. Well, from mean, of earlier, we're view really point as mentioned an it's

too early getting of around about too results mentioned, many specific Krispy in, experience really it, very McDonald's double production restaurants. six those hubs to up has stepped the overnight, it's with to specifically Kreme of sort game. though, share to the sort weeks their We're I so production only our As our

our restaurants often of the morning customers, to hours, with, other able which need that very I hours early opening do even that complementary the finding operating to other actually the drops times able at we're we often to during day. McDonald's mean what operate, example, grocery hours during for that day, we're do the

say, been very So -- that's We're is McDonald's partner a daily, daily you we've far clear this fantastic working in so fresh been it a as well. actually, doing proposition. and understanding and

see channel it's that I or That's and how some other business these in earlier. expanding, mentioned fresh our we QSR channels daily whether of delivered newer

see that the didn't fresh for So a why it, a we've an number opportunity and say somebody off-premise I more That's as across them may as more one locations we it, might folks It's this, convenient they makes because these daily business. come convenient reason providing it doughnuts not certainly think buy heard them before, like how they to see have built obviously, all amazing it. in lot us a convenient those Krispy Kreme not it when you for

add different in well. you're need they and only using things. as all at a one it pack the It's QSR, when thing, right? mind those I'll What What John, are states type looking keep of for?

needs McDonald's in what our daily. system, So base. right, look any then we you states is customer to deliver fresh for what do And do This at. what would we or routing need I adjust always my will QSR other

Thank you.

comes Bill Truist Please go question next line Your from of with Chappell ahead. Securities. the

Good Thanks. morning.

morning. Good

sold the could with the I you with it like other want many or fresh outright, the competition? just stuff to type at that could product I the and One, forward, go things ones. brand could the business focus are A just that. have really what kind just fresh. licensed discontinuation the you to have you all don't Sweet too thought old mean understand, quick Is trying -- would and Treats products, it in done keeping it's Was just extend a you line. kept multi-day versus the store, was Just to that. couple guess, look as on it much there opportunities have you be of, -- of on name you attributed

So Bill, again. Mike it's

Krispy to particular, allocate resources, have, that just But our look Insomnia. fresh the do we and significantly the the not pretty logistic can us that brand where in growing to including experience just in markets business the sure that in we want how With where and is in Kreme point do capital, we're amount how international a to simple But does the we for did can amount should where the be. terms was market call category. US that for want to on we we of allocate that translate fresh. energy growth learn it want in continue make is at DFD again What in focusing make to of but sure we at this this improve absolutely is development, time, even we we our

to of customer bakery mix, because And of think a club. to targets about lot us new then test Got you it. process, but it a in-store. a a any don't different the store more, think target. Can of expansion, why I of even look kind of thought was and the second, different different donuts door you have obviously, a I offer or from grocery maybe opportunities you on talked a test the a understand said lot feel I just give a little It's

how understand, trying works opportunity the and And that? Thanks. behind that just what's to so

able got that to a the lot that in our our few we've merchandising Yeah, talk great they've few that But list a how to targets with we we've five test target. In present we've running pre-packaged a Dallas in big been in And units loose about interesting been we been prepackaged units. It's sure. cabinet got -- XX -- These premium and a us other about is both grocery ways. Dallas, offer we other. talk ago different to, also with is what's brand can doughnuts the around And seen and months now locations them typically range those. in asking doing have really alongside originally players. that to each

door course, market higher us, they to to pre-packed as of sales We've the for well. And, Chicago are interested in and per that. donuts they're talked really expanding about much also them

Kreme something Krispy for is really early offering, they're and us, that obviously looking why it's what's it's days. promise. is show But has real a So ways premium that differentiated promising with to

you. Thank

next of comes ahead. the go of C.L. Your Wolf King. line from Andrew Please question

Hi, profit versus in international like price velocities contrast performance referenced markets or in that at unpack either to It the some good -- like cost international different doors. are increases just ways. contrasting Could same in the morning. the major units. down, I least it markets. same-store ask directly want to obviously, seems just US markets. talking in being the at contrast different sales UK trying you obviously, you accelerating the to of now much the about you and And, by in frame these it international or of the are of that, terms I'm some

it so the UK outlook well? Australia -- quarter the in And in why what's and is maybe as why outlook the the and

off, mid-single double-digit delivered talking think. about, mean, over the Andrew, to asked I you Canada, by all and I digits. with markets, UK international XX%, performance sales, international mentioned, highest Australia little to then growth kick low from hand bit over the about a Jeremiah talk I'll them, the and being markets profit, the all more about as Japan

adding growth. US, the there quarter. listed the driver Canada in like, points drivers seeing, the markets, we international We've the of doors, mean, of we're that channels. across as Costco I DFD one new UK the big got I including the big a also in also and growth very discussed up around described the DFD during we of mean, world, is pricing, obviously, access, markets new driver of of look a across

backdrop talked which on some mean, lot the challenges with have the U.K., of I a economic we there. the of overall, about

or Valentine's careful are supermarket can for a out a of are seem little seeing celebrations. other excited business people the see sort the come We retail in double-digit basket U.K. with DFD, in Doughnut -- shop to But shoppers to their We still event be growth. to it's in more size.

not DFD. it's So as much growing in

you which want U.S. DFD there's, sales to So exciting. the seeing also its to ups say, terms go, got get talk weekly Doors but strong those I in little would more? with good still but of And to do a profit way some about closing it's ground that is and a performance, international growth, few the generally, to downs, levels, DFD Doors its we're of now specifically, Jeremiah, is growth a up in performance.

Yeah. at expect the the U.S., I'll Yeah. macro level start accretive medium in margins international some are they to still quite the generate profitable. is, our seeing do International challenges we And where think for And question, you today, we're markets. despite look slightly term, longer Andrew. if equity the are of a XX-plus to Thanks to I over margins

The this be moment, are What more they're through kind around very of challenged continue at very and margin from perspective. is teams the would agile a the efficiencies say I most going driving to pricing international focused that's challenge the on front.

quarter, the in Australia already pricing QX. digit and first to plan have high-single take Mexico taken in the So with mid-to-high in single-digit U.K. price the

on Australia, the international working is experiencing in is that cost still longer of we add models waste inflation, level there And term, of continue team a and decent some the again, in by in expect addition seeing it only overall, accretive fine-tuning we're in The of we're as DFD market. kind current Doors. But margins to growing pains, our the to launches kind planning of into fixing. demands higher

Okay.

So Doors price seems increase since you're productivity. is than versus up that issue. or is -- in profitability. realization so, cost to increasing it's takeaway takeaway? it's more my an that, markets pricing, as being the inflation price profitability regarding the will follow-up, is in that about catching of the kind profitability not adding, summary it more right DFD these velocity as How And a down sort of more really like, sounds the we a be rapid total Is think

up the I behind is a say we're And probably markets. fairly in on that. I pricing we're now would bit and Andrew international nuance think that's catching for accurate.

So back we do the expect improvement in so. half

Thank Sara Senatore of Your you. question ahead. America. [Operator of comes Instructions] from Bank of Please the go next line

any Doors Door, any one Doors will? difference in you. Doors? guess. same same you just seeing our of you in on U.S., Is clarifications, or strictly kinds add Doors on Question a of per couple Thank of or sales, is existing the sort mentioned Door the mix if growth you as of that that the is, I reflection DFD sales are A you

I That's Medals cannibalization have -- insights as test. of the seeing do point, you a can know target. you're from give you that that on I lot. mentioned any grocery obviously kind that any a just comes with stores testing And you question you're up not

in comfort can to of that as people density, you of number the the Doors? you Anything anything the or sort DFD about types I get can share densify doors in Thanks. cases, -- absence, terms of differences the different customer, use with terms about capita help the end of think how cannibalization guess, of per continue you

few there. questions Hi, around DFD Sara, a

positive, I the for very trends on including doors. -- DFD, sales think I'll the on existing with start weekly

Some But part Spring for or some price doing doughnuts, it's premium the deliver us specialty in or performance of more doughnuts have St. record Valentines is weeks Biscoff pricing. really also when Patrick's specialty helping Easter that range. big and is of well a Day, the just Minis we momentum,

couple day a is And like them even on on up, good for throughout two seeing Day, what's we're in St. we're sales that a and the a Valentine's good or really of weeks. Patrick's performance lead weeks putting Day

that us helping with existing on the that doors. So is performance lot a

finding doors, good. as new the Interestingly, we're least at are they

but we performance right so incrementality very, In fact, new cannibalization, certainly, that's have see the because the clear. think now. Partly, we right US. channels, customers, the new not And new very better in doors and as it expanding of many don't see is now sales with only we're we

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you. Thank

Harbour next of go Morgan comes line question Your of from ahead. Please the Brian Stanley.

Insomniahaskind a ordering, there specifically, on the that to I'm that's guys. morning, dig comments bit. of delivery e-commerce promote Certainly, for of But Good by Kreme done could about first, more just you Maybe more just kind for or driven into grown helped sure quickly. example? you. you brand recently, is online how thank little as Yes, been Krispy your have

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have We do around on people are much the some with dark But worked basic it event the to helped areas. looking always We preorder, more to adding lot we've when the that's on ensuring continuously sounds people shops indeed days, a e-commerce on really been donuts also us improving there, that of obvious. the add these that the to have to been delivery that. very things system We've big We've celebratory advance. to lot part want are donor. happy. focus simple to They donor. St. want brand Patrick's as delivers Day more that focused a Valentine their be sometimes operating finding And that we're growth those and well it's because as donor and guarantee ordering at people occasion most of in much

intuitive next make we'll to and look program. loyalty we year, loyalty, more as relaunch on to loyalty in an do, the to and early be see U.S. that looking really do the We ahead, it opportunity

now by loyalty e-commerce opportunity really drive to have but million more them the XX We we relaunching over in loyalty the growth members the U.S. see with program.

to in we'll great XX% along it's in U.S. to that DFD. yes, continue So quarter last more been growth than in really see e-commerce the and the with on the focus

Could prior you at provided And the labor kind your is just the in any input then versus cost have for comments? you've of term. contracted. how just all if of inflation And the cost changed U.S. in inflation if near plans you kind that also update on then Okay. it's on of comments more in much and and that, past, us pricing

can I for question. that, take the Brian, thanks Yes, and

sugar, second front with in to a essentially in well commodity outlook like the with think about start we starting think the also look inflation as probably talked we softening inflation the average commodities pictures. double-digit the half and the Higher in have call into low key For of the would last XXXX half. in to about We're for as out obviously little as year. increase year, oils locked I edible on were is I

market in and to Australia planned we Insomnia. be continue in for pricing, the including unfolds QX, to have I the also Mexico, mentioned, and the double-digit also have U.K., markets around taken low respect we'll in question as pricing price the as as additional several but pricing, year-to-date mentioned, took already, agile With I U.S.

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So

taking pricing little on been We've pricing. the a on thing one more DFD. clarify to Just

again, our the customer Jeremiah it's low DFD, to to reference but similar it the make all was doing our retail. of sees one frequently, single-digit doughnuts in pricing as -- channels, did we more across low the on we're strategic was on just that on We point So to double-digit goals. when sure price look taking

you. Thank

next of Your Evercore. Palmer the comes of question David line ahead. from Please go

Thanks.

Just follow-ups a McDonald's of questions couple on the stuff. or

those in of you with the in of the $XXX would numbers Given per what like Kreme per be doubling Krispy McDonald's market hubs day sales of of might sales, the imply sales X% gave that something the that about how McDonald's. which of I wonder Any thoughts course, of that. off? incrementality given be the and the not, view that way putting of into those would sales? this will McDonald's they if Is And all on

within hubs get definitely for the the big that the And on us early without We cover we Kentucky that six those a performance to Kentucky. co-op saw in It's also actually three my of have an focused into hubs and a measures opportunity in obviously, the just comments too whole hub have production area spokes weeks. across them.

on way up continue experts So the that's McDonald's. and needed. what with what's really doing the the them of measures. right this, there to ramp to production partner right support we'll And way targets, right the in saw on the are opportunity impact the are what on them we They're the

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what Thanks. partnership, many How if I went steps is that Krispy Kreme’s McDonald's fulfillment maybe this it of think they this, if a reach that is hubs next successful, the happen it And this stands? about of within of guess, national. sense to any -- your today next? If as what would related good

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and you the future said happens because question, XX,XXX you the step if points been and Investor what at recall Mike this if referenced. back about number there have general not of that about capacity, have these and customer thinking -- been your DFD -- we but all growth, of US. Day, question about thought was just we in McDonald's, we Regarding access types, opportunity XX,XXX part we that That's of more that

about been looking so to fulfill our at we've And ability that.

we have today, of give proximity you at access and X,XXX system. Once our you production existing around service. can start channels. of about We beyond adding or their to indeed to and in channels that points getting the DFD locations, start both that new with customers We take our look to all we think add different that, XX%

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hubs we production that in lot doors. be could of support we'll a able invest future So, to

the the math, of DFD that those sort the you there. talking we to that XX additional to customers hubs XX we're at mentioned opportunity start all XX,XXX DFD to all about about for get Day you still get way Investor to do when So, certainly

the awesome those world expert there. great delivering important McDonald's We're an is the the in we'll on focused around we day. doughnuts, Most thinking US, fulfilling That's how with on. go with we're opportunity just broadly what So, growth on from the test and fresh and around more XX,XXX XX,XXX to know every be doughnuts.

Thank you.

of the Please Your Tower Jon of go next question comes from line ahead. Citigroup.

I believe Maybe don't is that Great. following question. McDonald's with up test exclusive. just to the

around with about your So, QSR before wait at US talk the Would QSR trial McDonald's end until market? of the or can test other the operators? period you looking thinking you potentially

of of brands about probably opportunity think their there some the beyond how And to would plenty treats the some in where broadly thinking outside add be are to markets then more sweet international kind we these QSR should US, that of lineup. looking

Yes.

again. Mike it's So,

beyond other to to And We plenty we grows learning's partnering it it really to with McDonald's we're learn look go thought QSR on with stands the mean spaces when We're but as we lot McDonald's a a from does other the happen what partners. explore McDonald's to other world, going learning each the and space. at, deliver are We're both are -- today. you're a with when in if going McDonald's focus test, going what look and to we and there, start of to about out where So then partnership ready you partner as like you continue QSR that partners there's you space. learning can to we're hey, going right as see that is outside to the there's of now.

little a bit. it. gears Switching Got

the events. special today business, in of you think, earlier remarks terms of business that Mike, In I XX% comes mentioned the the about from

it or are Day. windows, are getting of box? kind of to Is today, or you I'm events, How expanding holiday doing -- at what forward? you consumers of outside just what and you just and to lift hubs going window points the access that in curious even existing drive these try existing Day So special are to Patrick's sales Valentine's doing event non-special try that per

we dozen are a a about of referenced it XX%, lot as XX% referenced times. that a So gifted right, we are actually when Right? the product

that's to and the when experience business getting door, e-commerce, right? and that when customers is through an want can a the in DFD continue really see shop that's to consumers want it's still state. an see few you connect as They that's in that right, the how the So places can of Those of right? you've and Disc golf, the they from brand where that right? into So gets great. the brand English not Valentine's the biggest Day, brought premiumization choosing -- just premiumize Patrick's energy. real people and the St. the can they On not that it, We're Krispy and bring see engaged you access, just that create as to special opportunity the with are you get our Kreme DFD that the people bring they the happening the can So the engage be is where also But growing a around is DFD donut in you total lot brand occasions, when donuts because the of they people's such actually about clearly getting world opportunity. with big and number the be how to just to start donuts top growth ideation, can it we matters. really in a that, seen

you. Officer, further questions call the Executive Thank at President are Chief turn time. There over ahead. no remarks. closing go this and will Tattersfield, for to Mike Please I

make appreciate you. So this all and around this for really thank quarter. the you appreciate happen that everybody day. listening to world every And the Krispy that. Kreme's quarter I Thank our you story See single next

concludes call. conference This today's

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