Krispy Kreme didn’t want to keep any stake in Insomnia Cookies, after all.
The doughnut chain on Tuesday said that it has sold its remaining stake in Insomnia Cookies to the cookie chain for $75 million. Krispy Kreme said it will use the funds from the sale to pay down debt.
The move comes less than a year after Krispy Kreme sold a majority stake in the cookie brand to a pair of private-equity firms, Verlinvest and Mistral Equity Partners. Krispy Kreme kept a 34% stake, and at the time the deal was valued at $350 million.
“We continue to take swift, decisive action to de-leverage our balance sheet and drive sustainable, profitable growth,” Krispy Kreme CEO Josh Charlesworth said in a statement. He called it “an important step” as the company focuses on “profitable U.S. expansion and capital-light international franchise growth.”
The move comes just weeks after Krispy Kreme surprisingly acknowledged that it would delay the rollout of its partnership with McDonald’s, acknowledging that sales of its doughnuts at the fast-food giant’s restaurants were slower than expected.
Insomnia Cookies has grown consistently over the years. System sales grew more than 11% last year, thanks mostly to growth in unit count. The chain started off growing near college campuses selling cookies that could be delivered late at night.
Krispy Kreme put Insomnia on the market in 2023, opting to focus on its core concept.
Yet that core concept has had challenges since the initial sales. Sales have struggled early this year. Profit margins in the first quarter declined 770 basis points while EBITDA, or earnings before interest, taxes, depreciation and amortization, declined 63%.
The company earlier this year proposed four new members to its board of directors, pending shareholder approval. Those proposed new members include former Burger King executive and known cost-cutter Bernardo Hees.
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