Benzinga | Sep 30, 2021 08:02AM EDT

Krispy Kreme, Inc. To Invest In Accelerating Growth In Canada

Krispy Kreme, Inc. (NASDAQ:DNUT) ("Krispy Kreme" or the "Company") today announced that it has signed a definitive agreement to take majority control of franchisee and operator Krispy K Canada. Operating partners Christopher Lindsay and Kelcey Hamaker will remain as co-CEOs of the entity after the transaction is completed and will continue to manage the day-to-day operations of Krispy K Canada shops. The Company's investment reflects its confidence in the strength of Krispy K Canada's business, the opportunity to expand its omnichannel strategy in the region and the current Canadian leadership team.

This agreement marks another major milestone in Krispy Kreme's strategic transformation, driven in large part by increased control over its operations. Following this transaction, Krispy Kreme will control 75% of sales across its global network.

Krispy Kreme's omnichannel strategy allows it to reach more consumers by creating points of access across multiple channels, including its shops, e-commerce, delivery, and retail. This strategy is supported by a capital-efficient hub and spoke manufacturing and distribution model, which enables Krispy Kreme to deliver fresh doughnuts daily to points of access through an integrated network of delivery routes.

"We are extremely excited to partner with Chris and Kelcey to help them deliver on their vision and expand our reach in Canada, tapping into their local experience to accelerate our growth," said Mike Tattersfield, CEO of Krispy Kreme. "Through our global transformation, we have laid the groundwork to capitalize on the runway for growth in Canada by deploying our omnichannel strategy."

With just 11 points of access across the country today, Canada represents a significant opportunity for expansion. By comparison, the United Kingdom and Australia -- markets with similar dynamics to Canada -- each currently have over 1,000 points of access. The Company has seen strong growth in these markets, driven by the efficient execution of the hub and spoke model. The investment in Canada also builds on the Company's international growth momentum and expansion into new markets around the world.

"Working with Krispy Kreme for so many years, we know that the Company shares our belief in the potential for growth here in Canada," said Christopher Lindsay and Kelcey Hamaker, co-CEOs of Krispy K Canada. "Our strong recent performance is a testament to that potential, and our ability to deliver a great Krispy Kreme experience across different formats has been a key driver of this success. We are thrilled to continue to work alongside our partners at Krispy Kreme to deliver on our vision of providing more people the most awesome doughnut experience on earth."

The terms of the transaction were not disclosed. Upon closing, Krispy K Canada's revenue, which is currently reflected in Krispy Kreme's market development segment, will consolidate into Krispy Kreme's U.S. and Canada reporting segment. The transaction is expected to close in Q4 of 2021.