McDonald's and Krispy Kreme Partnership Aim to Solve Traffic Problems

Are Doughnuts the Answer to McDonald's Traffic Problems?

The fast-food chain plans to bring Krispy Kreme doughnuts to all of its locations by 2026. McDonald's (NYSE: MCD) has a problem that it thinks fresh-baked doughnuts might help solve. The burger giant just announced an expanded partnership that will bring Krispy Kreme's sweet treats into all of its U.S. locations by late 2026.

Getting people to the Golden Arches

The traffic issues were the main complaint that Wall Street had with McDonald's fourth-quarter update in February. The chain's comparable-store sales rose 9% for the full year, yet it ended 2023 with some of its weakest growth numbers. Comps were up just 4% in the core U.S. market in Q4, down from 8% in the prior quarter. Softer customer traffic was the main culprit.

Adding a treat with an established fan base

That's where doughnuts come in. McDonald's frequently gets traffic spikes when it introduces new menu items. Demand was high for Krispy Kreme products at the 160 locations in Kentucky where it tested the partnership. And customers in these locations most likely ordered other products to go along with their doughnuts.

Investors should watch the chain's traffic metric for signs that the partnership is delivering. In the meantime, look for McDonald's to remain active in launching new menu items and promotions. In addition to steady improvements in customer service, these initiatives help convince more fast-food fans to visit its restaurants.