Earnings call transcript Q2 2023

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Operator

Thank you for standing by. My name is Maria and I will be your conference operator today. At this time, I would like to welcome everyone to the Krispy Kreme Second Quarter 2023 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speaker remarks there will be a question-and-answer session. you. Thank Instructions] [Operator

to Vice the Communications. President ahead. please like Ms. Ms. over Eloise go Hale, of just would call turn to Hale, I Global Corporate

Eloise Hale

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

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

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

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

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

and in These March other are filed in XXXX the the SEC make time-to-time SEC. detail Form company’s with other factors XX-K and from risks in XX, that on the we with and uncertainties filing described

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

XXXX closest quarter will investors.krispykreme.com. GAAP second measures at non-GAAP today’s between found today. release financial their the Both certain measures X-K include filed company’s and comparable available Additionally, non-GAAP can call measures. and A financial are reconciliation in Form be earnings

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

Michael Tattersfield

growth the our fourth strategy. Omni-channel today. us for strength digit report of and consecutive organic to thank our double morning, Good everyone pleased joining you, quarter evidencing of revenue I’m

continued international delivered bolstered daily hub-and-spoke or as capabilities Our by expanding Omni-channel, leaned our we DFD expansion focus second our quarter well fresh heavily into strategy. our performance on was as as model our

our and expectations. strategy focused with EBITDA line in delivered Our X% growth X% net revenue

want premium of Every Krispy timing our Krispy aim on while to to we through strategic and lives levels selective We pricing high remain that product extend quarter. execution driving team another of I is thoughtful joy our sales also the Kreme. enhance fantastic day concentrated to demand. thanks and for consumer members, touch Kremers, of

efforts continued brand be possible. would your and dedication Without purpose, this our and to not

Our that doughnuts continue access be the access brand availability we countries in continue is points of and to further our understand to loved our operate Ultimately, opportunity. all to and across biggest aim driving our doughnuts. everyday, is expanding of our we

channels system. our different our roles goal customers channels long points Omni satisfying XX,XXX term us will reach through that different learned play in our have of access. globally channel We These of supplemental help

U.S. year-over-year This saw points globally the quarter, of were momentum we access XX% and grew in the we with pleased our particularly nearly

to of at goal points to access annual Our continue global we XX,XXX XX% confident now of XX% in and to be our ability stand our growth. achieve

fresh market in way helped led our quarter existing infrastructure. via U.S. access our increasing hub-and-spoke improvement maximizing on focus Our continued of business another as our doughnut drive largest the

new our expand base. existing QSR, of confidence gives DFD the to strategy in momentum continued Our expansion our our customer channels club driven and plan into on building by us while drug like

been is market U.S. our belief current Josh a enhanced the talk has McDonald’s just thus the test in will but about learning channel globally. not has our example, opportunity with significant For experience and growth which further fantastic far that a QSR

Japan and Market see International In Canada. performance tremendous to and our continue we Development segments in

and in Chile, our and year, XXXX. international goal seven further channels of as openings made we've countries three on in We Jamaica, on I'm progress equity points to to some starting performing DFD The customers. with well. all about access, in our markets the significant potential Costa five unlocks see global pricing in model growth international new markets balanced. opening remain stability also to meet Omni-channel follow We with excited our Rica inflation new become of are our and to and as core more in our this remain new strategy track expansion countries

In addition, get well year, efforts half our in of starting including UK. and XXXX expansion are XX through Canada bakeries in Fresh this XX Insomnia pipeline the of the back our At shops. XXXX, signed partners our franchise ramping is and new up existing Shops we already hubs new to development the over international Cookies, to

continues mature in XXXX focused In to Philadelphia evolve within innovation, business, are we additional market more Insomnia gain into bakeries. by Innovation Cookies to a addressable over in plans share underpinned Center the QX. growth addition, on of meaningful our global including opening exciting

we As continue our to our we moments share and joy globally, finding of colleagues to continue with grow guests.

the just celebrated wasn't the importance country which Original It we X guests. countries have event signature time social from Day, a the Global was participating by actual impressions of customer media doughnut getting billion also Glazed visit our and a started It in presence us. took over Day we our doughnuts to because QX, every sales to National but generated In has we're cementing strongest further truly access only and as XXXX. of Doughnut history move dozen they that will doughnut gifting become single us. to which for day we in every Kreme’s Doughnut one just day, This about Krispy about largest

revenue from quarter, the have seen start As continued we second momentum third quarter. organic our we

last and existing that into to year, XXXX momentum, we continue ability outlook continues remain and and priorities highlighted to at our light excitement new and in drive and offer revenue $X.XX targets including of up Day My all long model Investor our we brand million. achieve $XXX enthusiasm has Our EBITDA term and this to billion strategic for of access as growing to to confident our adjusted unchanged XXXX grow. this remain to points With Omni-channel our capital we channels. expansion lean grow

execute the becoming team, have We to growth and world. on strategy to opportunities for the many journey treat brand our sweet most the loved the culture, the brand on the in

over With hand Josh. to that, I'll the Josh? call

Josh Charlesworth

Mike. Thanks,

U.S. robust our deliver delivering growth strong the growth around double large specialty thanks doughnut part fresh sales to to across channels, Blast, continues system Omni-channel organic quarter. the the performances digit saw sales of including in Mom, We with in Faves proved world all again. our all in U.S. for which business Cookie doughnuts in our once Minis the Fan and popular quarter Our

model, DFD second make we same than new second accessible XXXX All globally, more including the have the in year. now remain quarter. XX% our we Fresh fresh doors we doors. the hot with six points that XXX XXX on access more XXX of track to the shops, the of across we and added over in XX% in by points XX% to operating weekly DFD points Kreme DFD production another this In in quarter, convenient more in, country. the grow This U.S. Krispy light year-over-year U.S., the XXXX consumers. added Kreme now we And expansion is led heart to of access Selling Doughnuts locations of new during theater more hub-and-spoke through sales by the hubs making unique average our Krispy up doors access carries which at Kroger with XX that and in quarter, means Shops

doughnuts Shop Fresh the with convenient year. grocery doors, to is the the to also Fresh expected secondary Amazon XX% earlier high traffic Krispy consumer fresh stores. our display U.S. cabinets underway sales within announced make the this to of just DFD is balance a to A premium up small for incremental and initiative which which Kreme these been access door. for already capital grocery number pilot cabinets to located strategy of a stores our year-to-date, like XX have added Chicago add add in format with two This continue now we our in We locations a of grocery similar to first with opening exemplifies more Amazon month. new

production took minimal of this were all XXX requiring U.S. existing growth, investment. in during we from the XXX conversions the the all of incremental number These hubs-without-spokes, of hubs-with-spokes support quarter. To to

Our to quarter basis KPI over U.S. Krispy X% trailing driving per same sales up Kreme’s a twelve hub year ago. compared XXX margins up $X.X was million year-over-year points the to month Fresh

our have like are U.S. London. some highest margin growth this seeing pricing can U.S. demonstrating Sydney, like are which Cities of Shop increases internationally announced this margins in in for is both and deliver XX% by to productivity program, sales adding previously driven results optimization setting like of With Charlotte, benefits our focused the improvement now performing hubs-with-spokes several and network that significant Miami on the seen we hubs-without-spokes. have and years plus of cities inflation, we poorer now which and the the all DC, just seen places Toronto door year

in in running the previously a are six Kentucky McDonald's, shared, we is we've QSR in test channel now month. its with As also DFD which

As are their restaurants a on branded they over sell customers daily, Kreme. to McDonald's which we reminder, fresh Krispy with doughnuts as XXX servicing delivered

region consumers access our have from in network these still Kentucky. we sales Kreme experience that and existing that that successfully of these us the Although QSR in the can value test is to the the sales ongoing channel and of incremental Krispy results shop in DFD shown existing points serve are hub doughnut

the set confident leverage to in assessment opportunity the of of can bigger a channels taken hubs deep doughnut and than our a customers, hubs we seeing add and existing to across to DFD and as capabilities XX,XXX we network to, we long multiple U.S. the accelerate we expansion selectively all quickly should are of in Overall, of the term are expansion U.S. Given dive points have access support capacity goal our that opportunities do we production the we need even new

to over last in business, Before our at to Pricing Dozen a initiatives the Specialty range actions celebrate since Jeremiah, and the to UK there including Kreme starting our price seeing environment I card to which local the channel our has growth optimization customer We've growth celebrations performance. to architecture, inclusion EBITDA macro cost into and UK, are back also of on want improve turn slower of in loyalty we're targeted above Royal double the DFD the digit programs, seen contributed expansion brought retail the control margin in coronation the sales changes I pack in including the progress which the doughnuts King's call spring. in Krispy club XX%. also taken quarter. highlight

the Jeremiah. now call to over turn I'll

Jeremiah Ashukian

Thanks, Josh, everyone. good morning, and

inflation costs elevated expect versus Josh of and seeing our demand hedging soften. year back to start we some unfavorable historical half impacts mentioned, healthy levels, As remain and remains ease this in the while of

from with all excludes which last revenue, year in X% the up As Mike acceleration quarter, foreign specialty said, the we changes doughnuts of grew growth saw pricing, in of segments million. by year-over-year of impact growth our the and and Organic e-commerce. premium DFD driven $XXX reporting XX.X%, revenue net across second currency, to an acquisitions in

we continue low elasticity quarter. this during to levels see We pricing, of took to which again due

a million result, or increase product X.X% XX constant year-over-year. to a of This and X.X% distribution to in cost quarter the $XX as percent basis adjusted second revenue points As EBITDA of in currency. growth contributed an of declined

million EBITDA decreased of benefits $X.X margin income compared $X.X branded quarter from second quarter GAAP to non-cash driven evolution net performance Adjusted one efficiencies to XX.X% pricing sweet was and adjusted by net treats. U.S. to by the as to XX.X% were expense accruals. ago second largely was of $X.X. levels offset in related honest Adjusted for of the and year-over-year in a network income exit quarter year $XX.X driven diluted by the EPS the million XX.X% the inflation phasing and in million our our was hub-and-spoke based in

total was revenue increased a Turning ability impacted party to first POS e-commerce despite results, revenue second segment provider the XX.X%. our and million execute organic driven disruption quarter by DFD in the during was expansion from to the our the segment This to part U.S. of pricing, X.X% $XXX promotional that business the quarter and third growth activity.

saw Cookies, the quarters. opened trailing new bakeries In which addition, over XX four strong revenue Insomnia in growth we

actions U.S. outweighed year-over-year impacted months, of taken XX Adjusted doughnut our disruption optimization benefits third margin impacted segment nine $XX.X network EBITDA as successful expansion in POS been our points to a in with manage pricing realized same party from the the pricing labor provider outage our despite caused taken the to was actions soften delivered revenue performance reflects the have resolved. by costs also U.S. up to the efficiency benefits strong program. basis last since hubs-with-spokes in from Insomnia Impacts from early U.S. as XX.X%, input This that the the million, Cookies the and quarter This driven it margins elevated expansion ability by from XX% for benefits efficiently. QX. the was business. our shop over margin Fresh the

revenue adjusted and growth total of X.X% all International DFD more with EBITDA EBITDA which access driven for taking quarter revenue million X.X% increased markets points quarter and as rationalizing are of Adjusted doors from organic and productive to quarter doors was the the at as pricing access in adding of as up growth million of effect second our the points a in positive $XX.X $XX.X profitable significantly in X% XX.X% to by pricing was flat margins. new, was margins prior having on well XXXX.

over our to the actions he of spoke We UK to margins Josh remainder detailed as year. about contribute the expect the business positively

revenues our the partially increased $XX offset headwinds. million, from a year. in the accelerate strength roughly impact openings, headwinds exchange Total margins $XXX,XXX equity in new markets, foreign prior organic world XXX strong Canada the franchisee EBITDA performance and in to Japan, driven development XX.X% compared the Costco of partnership despite Adjusted by second market to Japanese Market development increased by adjusted Canadian increased million is which growth around basis acquisitions. points negative franchisee businesses XX%. and EBITDA X.X% $XX.X and to our in a to foreign quarter to Market in exchange and XX.X% owned from made-up the quarter second XX.X impact our

this Canadian segment. Japan be led markets, our to outsized in very and with to continue performance performance We has which pleased the in

recall our terms what balance to enabling become normalize quarter reduce has sheet, began to that also our on more Turning maturities we a vendor efforts and our extending to future debt, growth. last successfully And provide XXXX, financing. we financing reduce expensive refinanced reliance to the way to

not a net from vendor expense. adjusted reminder, hits EBITDA, expense As financing interest

a have quarter year-to-date, to on tailwind and which make that and lower net second adjusted EBITDA to reduction continue by progress longer our on reduced will We programs to in reliance these the have million $XX over due income term rates.

increased X.X the our to quarter, times under we close saw leverage to times. year expect in While the four we

leverage this in times cash the efforts strength XXXX. execute to flow excluding to closer fundamentals. two also times plans would excluding underlying two and to leverage close been we $XX.X million financing shift vendor X.X and continue much have drive Our these strong Free was times net of a on half business to the by to leverage at reflecting

we return addition, focused on remain our deploying In target capital to laser the opportunities. highest

reduce $XXX mentioned in expect Cookie includes least and bakeries we revenue as company As at our we XXXX to revenue to at roughly fall the a and opening CapEx Investor $XXX Day, of of X.X% XXXX. XXXX and This between Insomnia in end X% to around by the of hubs XX percentage or built of million the XXXX. XX new XX million expect

This adjusted $XXX adjusted continuing We of are middle net guidance EBITDA our $X.XX to XX% in reaffirming $XXX and million of ranges. million revenue X% to the X% to XX% in and organic trend in end and higher growth $X.XX EPS. includes adjusted revenue. revenue to XXXX and EBITDA of to between our also toward of

expense annualized Our from basis on little $X Based XXXX in each index on includes for outside U.S. the half rates million EBITDA guidance is pre-corporate exchange current dollar an exchange foreign adjusted a the a our adjusted is X% on modest roughly year. impact move of tailwinds over U.S. the rates, as EBITDA

our enter quarter with underlying confidence momentum us are the as of business, XXXX. results strength of We further second that proved pleased our the we our giving half second in

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

Operator

question you We for questions follow re-enter and then Thank one [Operator limit yourself additional Instructions] any you have. please to queue that up, may the ask one that you.

just will roster. compile a We pause for moment to the Q&A

Please question line of Your America. Senatore, the comes first ahead. Sara from of Bank go

Sara Senatore

Great. Can you me? hear

Michael Tattersfield

we can, We can.

Sara Senatore

good. for I Okay, a minute. little A a and Thank clarification a question. choppy then you. a guess question,

seen any talked occasion? loyalty know some the I any success trying you in inform there low the the programs. sort frequency if the an meant, re-launching terms disruption, maybe mentioned you loyalty And the that UK have about year. might nature just revenue kind or POS programs UK relatively card that disruption of about given the was of in U.S. can you've Kreme just question thinking you’ve Krispy you loyalty what do it? estimate to in programs of your how I Thanks. the can Krispy of what understand or then adding impact you in on Is of of have about you're Kreme the had been next in lessons terms from away the the take have quantify In might that of EBITDA, and

Jeremiah Ashukian

a that perceivable caused the saw delivered impact strong key actually Thanks, ability which basis ecommerce off which disruptions visibility activity start the of I'll our Sarah. the to areas. manifest despite itself to LTOs, improved delays at the lack saying and XX.X%, customer two said, and It's manage really had real-time actually in revenue. to a the great did impacted was promotional revenue labor. which decline on XXX question. scores. It's still One satisfaction by here. is That in business in our across execute then and And we information see not margins, an ability interruption, Jeremiah up run two, points

now. I of midst we’re I insurance would think say what right recovery is the in

that behind given quantify that So I just but issues numbers resolved to note important been of it's kind these have now to and us. put don't want out there and

Sara Senatore

Thanks.

Josh Charlesworth

This Josh. is hi, Yes, Sara.

-- interaction of loyalty yes, important us where e-commerce the loyalty, given brand Kreme Krispy and the particularly the brand. mean of we I have to level at with On is the the importance

the year-over-year, That's of million XX.X members world. XX% XX.X million the an increase including have in loyalty U.S. We around

even loyalty looking this year. later we're improve program further the right, to You're

intuitive Looking year track to make later easier that it customers for be and in more the and we'll to this U.S. testing

a I have the a was starting part actually of your U.S. which too to do In the loyalty What done have that of we their referencing become we program. U.S., customer in call haven't question own in to the part and that want UK, the a we that. programs loyalty something programs, grocery much That's of do in was loyalty being stores to more

account to We speaking that. we customers can our our, key about are do how

not much available availability, that the fresh in play and of it's line think are in role. with broad availability more the DFD a we have UK store grocery but certainly One challenges in will every the doughnuts our the is down we U.S. something with

Sara Senatore

and Yes, frequency I how higher sounds Great. was partnership, and changes going understood partners. to the if loyalty about a broadly, wondering format. they're you own it's occasion I with it but think own you like just partners loyalty different I that if comes then think the maybe these it guess your your people those complementary

Josh Charlesworth

mean capability as channel, the as it Yes, definitely, way brand loyalty most it well. mind. extensively Kreme customers lot communicating I DFD through visibility doughnut and top with shop to know, that getting the that, use more Krispy through manage of their we and this with a programs directly retail more UK we of that becomes gives our supermarkets The of involved starts by certainly of add a sales

Sara Senatore

Got it. so much. Thank you

Jeremiah Ashukian

Operator, I next good for think question, we're the please.

Operator

JP ahead. Please Joe go Mr. Yes. Morgan. Evansville,

John Ivankoe

So, are How you? Hi, you. thank

Michael Tattersfield

Hi, John.

Jeremiah Ashukian

Very well.

John Ivankoe

remarks, and guess assets do model In expanding your overall -- maybe DFD I existing really prepared and at was accounts looking some So, putting even thought just many XX,XXX. of Hi. in of hub to DFD it I evaluate some more could hubs trying how you in beyond footprint, accounts terms there's your Hi. through your, mean in the

have into stores that, kind exactly you and in Kentucky. those almost so I mean in the McDonald's of XXX or dovetailed also remarks in So, that

So, even to expansion together? now mean, and I regional intention your comments national guess other a or tie into was you prepare capacity to for just at an looking of your kind words, in two there those potentially I are McDonald's? footprint

Michael Tattersfield

drive-throughs about -- Mike, from that that actually can opportunity John, but they the does they're consumer’s looking and among test Yes, get either using need the the With channel love it convenience compound QSR how that. work. that And unlock knowledge is single the it, the that can gifting or to the is just right? in so us what really again it's allowed what we've that going you deep the to has state learned we do really just unlocks with QSR we see it's a chain that

channel what in is, and then started on And from to opportunity So that. that what's work. footprint within how really channel really we've push look could as the the that existing our at

Jeremiah Ashukian

McDonald's great a regarding And I itself, mean them. business and working John, really enjoying Yes. it's we're with

things us, just to remember the door for and DFD like behaves of it a profit though sales is One margins. similar

the but effect. fresh we're sell selection this I and selling no of, anywhere as sort of fact, there's doughnuts In doughnuts, a they're limited we mentioned cannibalization of sort else same daily

So about quality from thinking over learned than we've to maintaining whilst us deliver distances standards. the service I how we're had example, longer mean for to before for do our we've and learning from that. hubs

them So the proving and being I They're ago, obviously confident hearing serve test doors, how to test. moment point, as it's it's said but we're forward We a valuable from look your McDonald's think up you they could to we to add is collaborative know, more them. a super really going.

It's that and and with level DFD to other Regarding have, do grocery, the it looking QSR expansion, with channels clear it's other more how behooves we around start opportunities. point more and growth ahead more in making club you're the indeed recently spokes DFD to this hubs in doors. service convenience rate of us broader more whether and we or

need greater We planning start for to expansion. ahead

was get sort than our of we like, processing and even that hours, can windows hubs layouts, delivery existing more making and to a packing the from thought So realized and even from we've doughnut taken changes learning of operating lot we by McDonald's before. possible the

franchise the directly in that that could about near So own, we get well. just we have but hubs XXX XX U.S. serve we existing with production the part about have think DFD we we XXXX as that We to also be doors Remember, today. a owned of could DFD hubs. hubs XX,XXX doors

So, a opportunity all great us. then that for that represents

the on to working on even another new And really let's calculate selectively of to for top XX,XXX plan I how XXXX say to if we that I how and then still years to DFD add think mean XX% XX,XXX with XX% kind itself as come we're so to a we wanted investing increase that all demand, start how meet production we in And that. hubs production that's requires to over mentioned hubs. meet to learning because only of the this we’re make in automation more to production to demand. hubs purpose built with lines

hub an it's thinking rather about future and optimizing network the network the to of So be thinking exciting than the hub-and-spoke and of time ahead about past. worrying a

John Ivankoe

statement and doubling on -- some -- is going you that assets convenience as chains into at kind that maybe format you to existing markets the reminded that both you the this That point a -- delivery on at nice a those sales actually [indiscernible] mean and looking actually smaller accidental there return nearly very What's way the can look is are and I delivery hubs comment years. hubs-without-spokes. hubs-with-spokes, a a been but at turn the hubs-without-spokes, think interesting -- start exist. pun. Yes, number -- without But of Might doors if very currently turn served redevelop the was those? think over will? -- there me I on about It be That's or year-over-year and just of the going spokes around Is an I'm want to is actually I from interesting obviously or the to and XX QSR number’s should do past what obviously the add period perspective. down those maybe hubs fade at some you on just layer doubling thinking good. light, of doesn't spokes? of to again hubs one current a

Michael Tattersfield

originally was designed network I mean for of our not this kind hub opportunity.

So and know been -- to do for we've lot model. is adapt doughnuts learning to what we make how how do future it but a of the so

to hubs, And these as spokes, we new these the back existing. say okay, start doing what's do you legacy Of with our want before go invest course you here?X in so that, continuously them to hubs say what hubs opportunity we and we without but can

the for spokes December you XX described of Day, And without program the describe, so actually we hubs spokes become as our since the in in and XXXX, way we've in without then Investor you hubs-with-spokes. converted know to closed hubs just we've XX

economics from in of mind work. could think and work, to we're procedures didn't and ones work, going that make level think get DFD, necessarily we were these the economics bear didn't work, can with And are we the more we but can work, sales premise we make per the the layouts more the operating door learning off sales we

a and shop that in stores experience in rollout still doughnut in great and our just to the DFD it some of support these customers still light but local play going locations hot are particularly Southeast. there the local the retail communities. They're the role where the point Now, warrants comes to not business, for families a

without time hubs long to likely of because legacy come spokes profitable. that us for will So -- with they be are

of Now see of maybe back the the the back for location one along hub thinking hub. our logistics we've adapting more areas, this can areas at of kind learning house, All even addressed what's even of while right than the we're more with the at model. nonprofit new about the line that ones. house, Larger the and you

technology and well. part and learning and for opportunity to You want of main so all on as adapting and that out don't automation main of back it if you're we're driving the course the be night a trucks

we made legacy going those is of we're to excited don't the support to Omni-channel absolutely growth evolving, there and that can all mean and do what the this it's the we've about now I So changes to support -- hub forward, know.

Jeremiah Ashukian

great can priority that? John customers. We to saying, those we've build more out you it, could build to and continue the opportunity think customers. got customers you were if they Our is say, about out just existing to figure do hey, need how I also

balance. going So that's always we that, and do Because we that's right? in to be to to How also outstanding be well. serve all do our the want as priorities of customers we one

Michael Tattersfield

customers but and [indiscernible] the Walmarts [indiscernible] got Yes, you McDonald’s fantastic already. Krogers

John Ivankoe

understood UPS I really driver if can, I separate in news. Yes, topic obviously the the strikes

for that talk that forward? delivery be the you can going outside or thinking on are staffing of about you know context, specifically attract You your what and doing you context that in execution, should to guys side kind of how about retain we

Jeremiah Ashukian

our to when to again been to the we're systems, I'm staffing that going to the It our us sure routes. we can attract. to right, the manage four -- shops, have model door. and in able uniqueness not right? customer the unique front for done right model, we that. through incentive compete make of challenge in a about It's The that. the the have a it It's our right, it's easy approaches difference drivers in five a be they drivers that it's the then is with interact works of can to day, for they're part So how certain drivers you're to coming by and in --

at We'll continue space to seen look So expand. the challenge but as continue to see we to the attracted that. and alternatives continue where to that's haven't on we be other we

Josh Charlesworth

ahead But as model. local deliver are the planning Yes, like as are parameters. long DFD these our that going most impacting we of of heart I significantly models fresh thinking this us with growth and But things they not importantly again mean that's alternative as we delivered to evaluate not today. level -- doughnuts, we're expand it's on quality,

and all we our they're as locations get existing to Krispy a Kreme, for it out job remain well doing part of So, they're great these core but as they're new to partners. those flexible, doughnuts will now our

Michael Tattersfield

next Thanks, could John. have Operator, we the question, please?

Operator

Our from question next Citi. from Jon comes Please go Tower ahead.

Jon Tower

that the thoughts had Thanks question. you that to to the pricing I are the get we're not take I a you're the you're quick if back elasticity But in less year. of little zero of quickly just certainly Great. planned for pricing. hearing the half of service half want from Jeremiah taking taking discussed as seeing back quick know there's year pricing, that the some on your operators for pricing. other earlier,

So different you're thoughts thinking different and about the channels later curious get and XXXX to how across the brand? pricing on XXXX markets your into for

Michael Tattersfield

see markets bit at just that -- probably Fresh we a Jeremiah value they at because doughnuts a in It towards they're the new of will want merchant pricing is We continue that from we more people also to mix, just the detail. Mexico. really migrate have us brand to as pricing the as the pricing dozens’ not a indulgent that product allows business because well and -- to a migrate they and getting a our because start premiumization treat better get and always the I'll try either partnerships as the we're customers Spongebobs premeditation all look really price. new little dozen products in into in in Yes, of have. but in then secondary the strategic business, to piece a affordable be M&M's really the we be do We've or is, serve. strategy the a lot whether sticking we as DFD happens What seen want

us. It's in works fairly our as really as frequency way capitalizes back we've with it model it really because as well of and giving been a gifting well. on consistent on that's honed So dozens

Jeremiah Ashukian

The portfolio way mean evolving our lever Yes, as we Mike list and will broader pack a us play the the it through then it's the a around architecture offerings, lever role in than as for in portfolio question. think Thank and doughnut it's Jon, me, always we're just also of the premiumisation for our growth of question price just you referenced pricing about for strategies. way the much promotional think our we drive the of price price kind is I discounting and way increases. thinking great a about and growth efficiency

we so more holistically. And about tend to it think

portfolio standpoint. might year line the attractive our as your to take pricing price in with is a and said ensuring globally price consumers really That providing quarter our every continue offering going we're an realization strategy around we'll in a in of price evaluate under to inflation half we to forward. pressure point to increases come drive from So back to there's bit of levers other we're the kind our list of while

we'll play So continue to out. see that

Jon Tower

we this thinking another like got reading seems it. inflation, a softening about obviously the morning, Got it's bit. just quite And

twenty all that and the core is saying at we've than in you there interpretation this looking CPI are pricing later So lower past months. seeing certainly guys easing been therefore four right, as that's into year twelve, XXXX, what

Jeremiah Ashukian

of inflation year, double lot the rest kind single locked of year the or more for low we've mid for less locked to think a key for I with in average the on labor's us at the of commodities inflation. in digit digit Yeah, the high

attractive some prices As are points. we is would looking opportunistically XXXX, to what and say in look we're still seeing at lock we're price elevated I to year But we commodity prices in and deflation seeing and can't year, double hedge. the actually like on next expect inflation things we is we rough five remain high sugar, digits highs cartons, a do which around which forward

we continue flexible to with we'll about even think to into be way So pricing the XXXX. need

Jeremiah Ashukian

Got it. for the questions. taking Thanks

Operator

Our next Sandler. of the Please Brian Piper from Mr. ahead. question from Mullan line go comes

Brian Mullan

Thank you.

question a early a on be perhaps just pace is Insomnia you update a as in U.S. just that, give seeing the describe brand in doing environment this Any Are thoughts thoughts business in to way? any related on how open next Just would continues would to us competitive now, business growth great. the category? And this the the you some can of right on you year. for then the in faster the clip in how change

Michael Tattersfield

mature about to in as our in brand months. a it's -- become the And now shops twelve business. about last a more the XX know they're starting brand we ramping of up is talked You

is that target on XX that. Our unlocking shops to or and get cookie from basis to XX growing and yearly a

see So of we've of that. opportunity line sight seen that and

well, in to from time a in -- Center a limited whether Innovation will Philadelphia invest consumer opening be looking is the what or be the offerings will we anything should in drive business started continue to which compete right? as continue business. college in capitalize have marketplace, into -- aspect right? try that a we in we we we a It's from that brand night our what really it's So to really of or the helped dozens that grow for a and business up that We how cookie and the from terms of late unique perspective

a So college cities ourselves Day just think we the and TAM town the get business to think in suburbs to really of we a starts the what and able XXXX start again is to anymore. to a as we that into our the to the We're not be identified set can and as see break target the business a in And snacking opportunity. it's where competitive bakeries. we've from even in Investor gifting

Brian Mullan

even you you. And be on you idea just mind? question DFD be the well. just comment might spending Any it the as elaborate that time would could anyway then spoke you lies this to where would be that QSR have the you outside might also in prepared might a great. the priority list? business, you places it any thank that Mike hubs, but just how thoughts there on maybe channel opportunity, Okay, remarks the already where would think Are the markets work I logical in U.S. already in or have much

Michael Tattersfield

in the markets Right. more world. XX we're Again, around than

case using ones and would a that the it now around the we big Those and we it works in priority run be the because right world. really natural Our the is the prove U.S. once channel as United getting honing on States. DFD have test system QSR in

logic So system work it's in in. about where the we customers going that. right, on the the that a will be how focus have route we'll work markets U.S. where along the that then multiple managing could All disciplined do be be DFD from the to same very different would we're Brian. And route their channels in But to if it thanks continues, you're

Operator

come of from ahead. David question Mr. go Evercore Palmer next will Our ISI. from the line Please

David Palmer

Thanks, U.S. sales the What year-over-year growth good in was hub per morning. the quarter?

Michael Tattersfield

hubs-with-spokes per was the So million hub, X% the was up sales year-over-year. which $X.X

David Palmer

the Great. that what That's quarter. up but an I I saw on LTM was. thought it basis, that's for

Michael Tattersfield

figure Yeah, it's a if it's recall, month so, twelve an figure. annualized you

is quarter a it the same then figure. compare annualized to ago, which again year an So we

would So it's last not and the but $X.X time be versus year a months sales a it's sort X% the annual same over the of million quarter-by-quarter, twelve ago.

David Palmer

reconcile weekly DFD to in things. door trying sales I'm per Is in sales and growth the XX% Okay. U.S.?

Michael Tattersfield

Yes.

David Palmer

expansion XX% was And U.S. doors there of in number a it looks the the in like DFD

XX% doors sales hub? DFD So what in that means growth a that per there's about

Michael Tattersfield

quarter. of calculate growth of wanted Yes, to the in what's sales terms DFD itself, about overall XX% -- it's the in you if

looking math for. your were that's So you far if too off isn't what

David Palmer

had And a hubs? Yes. number the got of -- in then about you you X% reduction

Michael Tattersfield

the…? of terms In

David Palmer

quarter, of hubs U.S. the quarter? year-over-year Number in in the

Michael Tattersfield

Because XXX. without because The it year -- -- and so the I think spokes you're XXX a had if hubs was ago of thinking Yes, yes. yes. we

David Palmer

in equals DFD to that think the think -- over growth So just hub, more or is nine because XX% right sales you growth do take -- DFD -- sales so in that it U.S. over of your and -- essentially that about pure DFD add your in XX U.S. sales And do over if you how the just XX% that is you we had as a do the sales into maybe kind per that seven call per there wondering contributor -- in hub that sales growth how XX% I'm added per think the they per is you hub much per hub, hub?

Michael Tattersfield

Yes. can forgive complicated I for and Omni-channel model definitely know this us be that.

that also hubs-without-spokes. reductions are and sales think of I retail hub there's is one in the challenges there the

of we business. pricing doesn't organic two per access what like growth is that the can with growth growth, that the So say the But sales of of you biggest that of and describe out drivers the overall the expansion that. hub or the play quite points indeed math

and that X% DFD see. biggest that most the indeed forward likely think, I big per of hub a we'll sales of the that so And driver growth the is going indeed driver

particularly some we because measure hubs-without-spokes to And well. the now first we the of work spokes have for, make we average didn't it's add as necessarily that an go learned historically can them as that we hubs,

the depresses which two have sales hub. or actually as only per one well, them of routes Some

this we doing picking to So network. flow and we we're deliver all going you're just access used through of is KPI we what of And said it's add the on bottom one ones growth points up to that line. hub high the our say evolving do, this about to system are to to that that

on I'm to So all it detail through go love that offline with. happy take I'd you the the but main away to that's headline and walk math,

Operator

the comes line Harbour, go of from Mr. question Please Morgan Our next ahead. Brian Stanley.

Brian Harbour

the one more just it segment you that's talk resilient probably Yes, to certainly thank international little from in about Could you I growth? seen there do markets, we've slower some think other and morning. bit recently a results those drive although needed think been growing is Good of that's companies you. I still What faster the just think really been because varies.

Josh Charlesworth

the of continues planet. The success The business, said campaigns access And we're it around in Omni-channel our applicable play successful mean expansion is model the world DFD markets Mike everywhere. average growth points example, are plus high strong our that mentioned, Mike doughnut Mexico international to earlier, brand seeing, the than specialty as these of and and across last and out more UK everywhere. Company is owned seeing I XX% e-commerce on the Jeremiah single Australia digit grew flat. the actually Japan in grew Canada franchise quarter XX% quarter. was mentioned for the We're of

think wide sales interestingly last question. was specifically digit offset DFD an supermarket strong consistent UK UK for visits. that's I in in growth double and We see is decline see industry as really quarter, your actually retail it a largely we of reduced what the So sort by question trend did with but

great though conditions. doing adapting Teams job a are those to they're

and Sara's Packs with value and loyalty they’ve things the like earlier, actions indeed proposition addition card the with more do we're that broaden in bring macro the already question taken minis As that I introducing moment changing to consumer choice a ago, to X up came environment. mentioned to to

forward So the we like strong specific from I need world, you around applicability to ups and business, confident model we're the our case, portfolio of around headline manage. going the the you across it's with have the time-to-time that question is the any see to mean world. performance do to the resilient of and do downs In but UK

Brian Harbour

and like -- quarter much Could thanks. half? Okay, but the you price much had you in the second going on roughly comment U.S. guess do think total how the is how to the you think comment, second have I in how you're in

Jeremiah Ashukian

increase that quarter to. continue mentioned if the Yes, another markets And Brian, we pricing took I low We we basis. As look and across take to question, -- we the with leads thanks in that can single all we’ll price I our question. mentioned digit John's before on at pricing us the need took specifically to for in the U.S. I annualized mid inflation teens as an and reflect and

Brian Harbour

Thank you.

Operator

[Operator next Instructions] Mr. Our go question Please ahead. comes from Securities. Chappell, Truist Bill

Bill Chappell

Yes, Good Thanks. was. I morning.

Michael Tattersfield

morning. Good

Bill Chappell

sales? impact to there U.S. on assume the of disruption it is quantify in and just way was the Wondering, I quarter the vendor a

Jeremiah Ashukian

result time for Yes, And we're really Sara I similar give a quarter. against bit six an the given look pain To that that. of say idea of like about our four would a an labor information outage can would in activities EBITDA what but want to an What this, weren't that an to promotional did and to the kind a to don't it out I a was real question, I think impact from in in have the modeling efficiently. able and U.S. the of way U.S. over just take apologies on repeating, have weeks midst timely so impact you the insurance think it the as impact claim roughly get asked LTOs in of revenue of run is managed did it I perspective inability But quantify. would as I we see specifically and

Josh Charlesworth

XXX business Yeah. basis and fresh And the organic still than delivered growth margin on we so more increase. of points

yes, able an gives now. we're you but it of So to not it right quantify what could idea been, have

Bill Chappell

you're of have guidance a Yeah. just quarter, at talking if us being despite what that doesn't quarters it? the assume through And issue and year been thought the that's the that so is run carrying last at as look could the process full you're fairway guess I happen end your to that, high range about two now I rate next

Jeremiah Ashukian

guidance thinking trends That's as current view. persist from of do mid exactly how end of a we point land our about well. high we're we’ll Should to at the range anticipate

that spot Bill. So on,

Michael Tattersfield

it's e-commerce the as the July. impact and Yes. -- -- a trend particularly of seen we're specialty we that We've lot consumer I happened. doughnuts. they convenience I in talked into the love continue seeing mean about this of these strong the mean U.S. where DFD, as

special our to range, And filled mini saw M&M's the by sales. and treat about they've growth talk popular, digital lot again, you momentum the premium very M&M's demographic base quite represents that seeing the which brand a driven got even QSR of healthy we really confidence loving, sweet year doughnut XX consumer is If included now on that's with XX old of a spending price interestingly a heavy of part these now. in we're I why the our XX% natives, even think brand doughnut

Bill Chappell

promotions And there. pricing kind the just a address Europe? going more that and just give mid about digit number Is stuff up or a consumer a we net promotions on you also talked particularly about, then like that to because especially Europe net of that of the and follow with some in multipacks and back Got of that forward. pricing, it. Is kind you also single talked

Jeremiah Ashukian

was than that expecting we and kind have. mean things a to digit much from changing list impact pricing if of give strategies the perspective, I with price We're in think quarter of that to single about profit realization price the No, changes the U.S. in see more the price like in it's just a kind of more Yeah, back pricing you'll of of we architecture a kind pack specifically. relative not discounting

Bill Chappell

Got it. Thank you.

Operator

from of line question next Mr. King. from Andrew comes Wolf ahead. CL go the Our Please

Andrew Wolf

on Thank as a over follow geographic well just segments. the have you. I pricing up

in evident price for more commentary the of pretty sort and release. you've pricing sales power It the in market U.S. Could to the international of given pricing segments market the and your you why realization now rolling there’s what development right seems the putting out. the flavor strategy they're U.S., terms different, versus Just in and EBITDA versus price development the it power. just of be us on pricing seems way just a us and U.S. about the substantially comparing growth growth the to amount the in certainly for and give increases seems the that's international

Jeremiah Ashukian

can it's -- consumer question. of Josh the pricing Maybe across different a can then actually We've kind the tackle I tackle kind markets of and see. we great that

double We markets of have the digit, seen single range. aggressive the kind high digit pricing of across all quarter low our in and second

Cut So actually you to and in getting feel have I still taken any feedback our have like we've good price UK. far been know offering kind Josh, the markets so price that's increases our value in markets to while if to that of very ability the the consumers navigate comments. we about don't

Josh Charlesworth

about talked I specialty frequency I really the I this variety environment a the Dozen right, bit context get like of business say still the business, there, around only retail and even of the when excite engaging mentioned mean double fact programs the earlier. Royal also Well, in the the the strategy the low when our world that a and one the an digit specialty execution affordable it's increases. but I’ll after in that so. macro we organic one saw doughnut treat in interesting on customer world moderately we've things growth around is been M&M's doughnut that It in price call we but reflects deploying the By UK success

OG an $X.XX the costs U.S. doughnut in I mean still

in we like strategy. we see whether another the as mentioned are the that So, that that to work have to we're across about you're driver levels world important selling. of what’s more or And market extraordinary versus and make was one talking sure in implementation most success. brand about to just is And -- Canada. convenience we're access the pricing the It's innovative not products of Japan sometimes taken and the and the people and don't seeing excited

Japan, really got with execution light doing Costco Canada. Club and alive really we're hot the that's well business We've brought in in great

reasons, able on commodity we overall, environment programs performance. when pricing different general your given notoriety our So variation don't are the and it's are must bring But driver to the pricing slightly innovation power that see pass we in inflationary of worth the as a in the but meaningful when it, point we overall to when U.S. brand, the exciting, we group.

see we the And we’re that selling. our appreciate so, in what value customers

Michael Tattersfield

global Yes, piece. add the only sharing the gifting other the I'd is a and is thing

do it How then Day, match still then do How when are you whether a different same. So do our occasion, brand, Day How people sweet how by and that's it's for right? gifting It whether whatever partners. make up, premiumize? driven So How is So, really How make using do happening a great right? Mother's do just discipline you Father's in the markets is was of build that's just the and which dozens? and we is about around families, sure the great that? that cetera it shared it? compliment affordable, the you frequency treat? that et the you it's the do by do world, mindset we gift our it's

Andrew Wolf

-- donuts competing you're or far sounds various baked mean sort last that be statistics competitive to go say, like or into and this And given Okay. of at question from bit use something against is, it goods world away look and up. I trying the like things. set the and follow a like open hey, Which answer, two is of your pretty I just seems off. an CPI was of Divas clearly one QSR your is to the also home, or to

you you you've for from -- of time-to-time, mentioned of could competitive said for sort the -- you bringing this -- how I just guys that but indulgence look to of you occasion kind are as how of this So do kind market? the set the at mean infrequent just

Michael Tattersfield

competitive at the So sweet we treat. a set broad again, look as do

example, donut actually at premiumization most in energy they're We on that desire. because really -- and be and partners focus your the partner the with business. category, Our either or events unique if the dozens and So a bring do with like M&M's where which you single look that is capitalize can can with. you premiumization we focus treat on our with craving the We gifting occasions, really bring world, the do opportunity, unlock that We and brand -- energy right? sweet on is for mindset we direction then recent is is loved Halloween specifically the to holidays just really either you right? we don't our happens serve, or

broken out, treat that So to M&M's when you So might that you say, to be little these have mini an people do half I come sweet try in right? maximize have the want they're that, We be in We space. to and doughnut our just to trying space, treat. end how M&M's want opportunity? about still it affordable decision. want making -- will be And there is sweet people when that indulgence up

Andrew Wolf

you. Thank

Michael Tattersfield

thank right, All you.

Operator

closing Tattersfield Mr. for Please remarks. turn over now will to ahead. the I go call Mike

Michael Tattersfield

Krispy talk And that Kremers for I a reflection the and bit an folks on keep be incredible and being want of our job. sure and make want call. little to everybody thank family Appreciate that Always do. also to doing to Kreme have thoughts folks and Kreme impacted support of there their type Krispy our might on been minds Thank you. see in might Maui their any be and what able of Krispy

Operator

call. and Ladies all today's concludes you that Thank joining. for gentlemen,

disconnect. now may You

Krispy Kreme (DNUT) 10 Aug 232023 Q2 Earnings call transcript