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What changed in Krispy Kreme, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Krispy Kreme, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+424 added−417 removedSource: 10-K (2025-02-27) vs 10-K (2023-03-02)

Top changes in Krispy Kreme, Inc.'s 2024 10-K

424 paragraphs added · 417 removed · 211 edited across 6 sections

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

110 edited+143 added−104 removed0 unchanged
Biggest changeRisks arising from our international operations include, but are not limited to: • Recessionary or expansive trends in international markets; • Ongoing government regulatory reform, including relating to public health, food safety, tariffs and tax, sustainability, and responses to climate change, which result in regulatory uncertainty as well as potential significant increases in compliance costs; • Food safety related matters, including compliance with food safety regulations and ability to ensure product quality and safety; • Import or other business licensing requirements; • Limitations on the repatriation of funds and foreign currency exchange restrictions due to current or new U.S. and international regulations; • Difficulty in staffing, developing, and managing foreign operations and supply chain logistics, including ensuring the consistency of our product quality and service; • Disputes with our franchisees, or failures by our franchisees to operate successfully, to develop or finance new shops or build them on suitable sites or open them on schedule; • Local laws that make it more expensive and complex to negotiate with, retain, or terminate employees; • Competition with entrenched competitors as we expand our international operations; and • Increase in anti-American sentiment and the identification of the brand as an American brand.
Biggest changeThese risks include, but are not limited to: • Exposure to recessionary or growth trends in global markets, impacting consumer spending and market stability; • Ongoing reforms in areas like public health, food safety, tariffs, taxation, sustainability, and climate change response leading to regulatory uncertainties and potential spikes in compliance costs; • Challenges in adhering to international food safety regulations and maintaining high standards of product quality and safety; • Navigating varying import and business licensing requirements across countries; • Constraints in fund repatriation and foreign currency exchange, influenced by U.S. and international laws; • Difficulties in managing and staffing international operations, supply chain logistics, and ensuring consistent product quality and service; • Risks associated with franchisee disputes, operational failures, development delays, or site selection issues; • Complexities and costs arising from local labor laws in hiring, retaining, or terminating staff; • Facing strong competition in new markets with established local players; • Political unrest, disputes or war, or labor unrest impacting countries in which we or our franchisees operate; and • Potential increase in anti-American sentiment affecting brand image, as Krispy Kreme is widely recognized as an American brand.
Our annual effective income tax rate can change materially as a result of changes in our geographic mix of U.S. and foreign earnings and other factors, including changes in tax laws and changes made by regulatory authorities. We are subject to federal, state, and local income taxes in the U.S. and in foreign jurisdictions.
Our annual effective income tax rate can change materially as a result of changes in our geographic mix of U.S. and foreign earnings and other factors, including changes in tax laws and changes made by regulatory authorities. We are subject to federal, state, and local income taxes both in the U.S. and in foreign jurisdictions.
The full realization of our deferred tax assets may be affected by a number of factors, including future earnings and the feasibility of ongoing planning strategies. We have deferred tax assets including federal, state, and foreign net operating loss carryforwards, accruals not yet deductible for tax purposes, tax credits, and other items.
The full realization of our deferred tax assets may be affected by a number of factors, including future earnings and the feasibility of ongoing planning strategies. We hold deferred tax assets, encompassing federal, state, and foreign net operating loss carryforwards, accruals not yet deductible for tax purposes, tax credits, and other items.
Our business may be adversely affected by litigation, regulation and publicity concerning food quality, health, and other issues, which can negatively affect public policy and consumer preferences toward our products.
Our business may be adversely affected by litigation, regulation and publicity concerning food quality, health, and other issues, which could negatively affect public policy and consumer preferences toward our products.
Risks Related to an Investment in Us Certain provisions of Delaware Law, the Investors’ Rights Agreement, our certificate of incorporation, and our bylaws could hinder, delay, or prevent a change in control of us, which could adversely affect the price of our common stock.
Risks Related to Ownership of our Common Stock Certain provisions of Delaware Law, our certificate of incorporation, and our bylaws and the Investor Rights Agreement could hinder, delay, or prevent a change in control of us, which could adversely affect the price of our common stock.
Our reliance on a single vendor for distribution of materials and supplies in the U.S. and a portion of Canada poses risks to our and our franchisees’ ability to make doughnuts if the vendor fails to provide these materials and supplies per the agreement.
Our reliance on a single vendor for nearly all distribution of materials and supplies in the U.S. and Canada poses risks to our and our franchisees’ ability to make doughnuts if the vendor fails to provide these materials and supplies in accordance with our agreement.
Risks Related to Our Supply Chain We are the exclusive or primary supplier of doughnut mixes and key ingredients to shops worldwide and any problems supplying these ingredients, could negatively affect our and our franchisees’ ability to make doughnuts.
Risks Related to Our Supply Chain • We are the exclusive or primary supplier of key ingredients to shops worldwide and any problems supplying these ingredients could negatively affect our and our franchisees’ ability to make doughnuts. 13 Table of Contents • We are the only manufacturer of our doughnut-making equipment.
Our ability to develop new franchised shops and to enforce contractual rights against franchisees may be adversely affected by these laws and regulations, which could cause our franchise revenues to decline. As a franchisor, we are subject to regulation by the Federal Trade Commission (the “FTC”) and by domestic and foreign laws regulating the offer and sale of franchises.
Our ability to develop new franchised shops and to enforce contractual rights against franchisees may be adversely affected by these laws and regulations, which could cause our franchise revenues to decline. As a franchisor, we operate within the regulatory framework established by the Federal Trade Commission and domestic and foreign laws governing the offer and sale of franchises.
We have established valuation allowances to reduce the deferred tax assets related to U.S. federal tax credits as well as foreign and state and local net operating loss carryforwards to an amount that is more likely than not to be realized.
We have established valuation allowances, reducing the deferred tax assets primarily associated with U.S. federal tax credits, as well as foreign and state and local net operating loss carryforwards, to an amount deemed more likely than not to be realized.
Krispy Kreme is one of the most beloved and well-known sweet treat brands in the world. Our success depends on our and our franchisees’ ability to maintain our brand image, extend our products to new markets and channels, expand our brand image with new product offerings, and deliver consistently high-quality, delicious products to our consumers.
We believe Krispy Kreme is one of the most beloved and well-known sweet treat brands in the world. Our continued success hinges on our and our franchisees’ ability to uphold our brand image, penetrate new markets and distribution channels, innovate with new product offerings, and consistently deliver high-quality, delectable products to our consumers.
Any material failure, inadequacy, or interruption of that technology could adversely affect our ability to effectively operate our business and result in financial or other loss. We and our franchisees rely on computer systems and information technology to conduct our business. Our ability to effectively manage our business depends significantly on the reliability and capacity of these systems.
Any material failure, inadequacy, or interruption of that technology has and may in the future adversely affect our ability to effectively operate our business and result in financial or other loss. Our business and that of our franchisees significantly depend on computer systems and information technology.
Additional risks or uncertainties not currently known to us, or that we currently deem immaterial, may also have a material adverse effect on our business, financial condition, prospects, results of operations, or cash flows. We cannot assure you that any of the events discussed in the risk factors below will not occur.
Additional risks or uncertainties not currently known to us, or that we currently deem immaterial, may also have a material adverse effect on our business, financial condition, prospects, results of operations, cash flows, or stock price.
If we are unable to generate sufficient future taxable income in the U.S. and/or certain foreign jurisdictions, or if there is a significant change in the time period within which the underlying temporary differences become taxable or deductible, we could be required to increase our valuation allowances against our deferred tax assets.
However, if we encounter challenges in generating sufficient future taxable income in the U.S. and/or certain foreign jurisdictions, or if there is a significant alteration in the timeframe within which the underlying temporary differences become taxable or deductible, we may be compelled to augment our valuation allowances against our deferred tax assets.
If any of the following risks or uncertainties occur, our business, financial condition, prospects, results of operations, and cash flows could be materially and adversely affected . The risks discussed below are not the only risks we face.
Item 1A. Risk Factors Investing in our securities involves a variety of risks and uncertainties including those discussed below. If any of the following risks or uncertainties materialize, our business, financial condition, prospects, results of operations, cash flows, and stock price could be materially and adversely affected. The risks discussed below are not the only risks we face.
Risks Related to Crises, Catastrophic Events, and Business Continuity Public health outbreaks, epidemics, or pandemics, including the global COVID-19 outbreak, have disrupted and may continue to disrupt, our business, and could materially affect our business, financial condition, and results of operations.
Risks Related to Crises, Catastrophic Events, and Business Continuity Public health outbreaks, epidemics, or pandemics have disrupted and may in the future disrupt, our business, and could have a material adverse effect on our business, financial condition, and results of operations.
Economic and social trends beyond our control, such as labor shortages, may make it difficult to recruit and retain talented Krispy Kremers, including our senior management and other key personnel.
However, certain economic and social trends beyond our control, such as labor shortages, may pose challenges in recruiting and retaining talented Krispy Kremers, including our senior management and other key personnel.
Adverse changes in commodity prices could adversely affect our profitability. Risks Related to Regulation and Litigation We may be subject to litigation that could adversely affect us by increasing our expenses, diverting management attention, or subjecting us to significant monetary damages and other remedies.
The fluctuating landscape of labor availability and costs could adversely affect our business, financial condition, and results of operations. Risks Related to Regulation and Litigation We may be subject to litigation that could adversely affect us by increasing our expenses, diverting management attention, or subjecting us to significant monetary damages and other remedies.
Risks Related to Environmental, Social, and Governance Matters We may be affected by matters related to environmental, social, and governance trends and events, including governmental regulation and supply chain disruptions, that may adversely impact our business.
Such an adjustment could lead to an increase in our effective tax rate. We may be affected by matters related to environmental, social, and governance (“Responsibility”) trends and events, including governmental regulation and supply chain disruptions, that may adversely affect our business and reputation.
If the ownership of our common stock continues to be highly concentrated, it may prevent shareholders from influencing significant corporate decisions and may result in conflicts of interest. JAB beneficially owned approximately 45% of our common stock through its affiliate as of January 1, 2023.
If the ownership of our common stock continues to be highly concentrated, it may prevent shareholders from influencing significant corporate decisions and may result in conflicts of interest. As of December 29, 2024, JAB held approximately 44% of our common stock through its affiliate, conferring upon it significant influence over crucial matters requiring shareholder approval.
In addition, this concentration of share ownership may adversely affect the trading price of our common stock because investors may perceive disadvantages in owning shares in a company with significant shareholders. The market price of our common stock could be negatively affected by sales of substantial amounts of our common stock in the public markets.
Furthermore, this concentration of share ownership might be viewed negatively by investors, potentially affecting the trading price of our common stock, as some may perceive drawbacks in owning shares in a company heavily influenced by a few significant shareholders. 29 Table of Contents The market price of our common stock could be negatively affected by sales of substantial amounts of our common stock in the public markets.
Various federal and state labor laws govern our relationships with our employees and affect operating costs. These laws include employee classifications as exempt or non-exempt, minimum wage requirements, unemployment tax rates, workers’ compensation rates, overtime, family leave, safety standards, payroll taxes, citizenship requirements, and other wage and benefit requirements for employees classified as non-exempt.
These laws encompass aspects such as employee classifications as exempt or non-exempt, minimum wage stipulations, unemployment tax rates, workers’ compensation rates, overtime regulations, family leave policies, safety standards, payroll taxes, citizenship requirements, and other wage and benefit prerequisites for employees classified as non-exempt.
As a result, the market price of our common stock could decline or shareholders might not receive a premium over the then-current market price of our common stock upon a change in control.
As a result, there is a possibility that the market price of our common stock could decline, or shareholders may not receive a premium above the prevailing market price in the event of a change in control.
The loss of or a significant reduction in sales to one of our large retail customers, or significant financial difficulties in their businesses, could adversely affect our business, financial condition, and results of operations. Our reputation and brand image are essential to our business success.
Consequently, a loss or significant decrease in sales to one of these key retail customers, or if they encounter substantial financial issues, could adversely affect our business, financial condition, and results of operations. 18 Table of Contents Our reputation and brand image are essential to our business success.
Risks Related to Our Global Expansion and Growth A key portion of our growth strategy depends on opening new Krispy Kreme shops and Points of Access both domestically and internationally. A core part of our business strategy is expansion of our Global Points of Access, through the addition of shops, DFD doors, and Ecommerce in existing and new geographies.
Risks Related to Our Global Expansion and Growth A key portion of our growth strategy depends on opening new Krispy Kreme shops and Points of Access both domestically and internationally. Our strategic focus includes expanding our Global Points of Access, encompassing the establishment of new shops, DFD Doors, and digital platforms, both in our current markets and new regions.
These anti-takeover provisions could substantially impede the ability of public shareholders to benefit from a change in control or change our management and Board of Directors and, as a result, may adversely affect the market price of our common stock and your ability to realize any potential change of control premium.
Ultimately, these anti-takeover provisions could significantly hinder public shareholders’ ability to realize benefits from a change in control or alterations in our management and Board of Directors, potentially impacting the market price of our common stock and the opportunity to secure any potential change of control premium.
Our ability to utilize the deferred tax assets depends in part upon our ability to generate future taxable income within each respective jurisdiction during the periods in which these temporary differences reverse or our ability to carryback any losses created by the deduction of these temporary differences.
The realization of these deferred tax assets hinges on our ability to generate future taxable income within each respective jurisdiction during the periods when these temporary differences reverse, or on our capability to carry back any losses resulting from the deduction of these temporary differences.
While JAB remains subject to applicable U.S. securities laws regarding the trading of our securities while in possession of material non-public information, it will nonetheless have a better view as to our business and financial condition than you for so long as its information rights continue under the Investors’ Rights Agreement.
Although JAB must adhere to relevant U.S. securities laws governing the trading of our securities while in possession of material non-public information, it will still have a more comprehensive understanding of our business and financial condition than individual shareholders for as long as its information rights persist under the Investor Rights Agreement.
As a result, if we experience any outsized material impacts from a failure of our systems, our business, results of operations, and financial condition could be materially and adversely effected. Breaches or failures of our information technology systems or other cybersecurity or data security-related incidents may have an adverse impact on our business, financial condition, and results of operations.
Therefore, significant impacts from system failures have and may in the future materially and adversely affect our business, financial condition, and results of operations. Breaches or failures of our information technology systems or other cybersecurity or data security-related incidents have and may in the future have an adverse effect on our business, financial condition, and results of operations.
We could also incur significant liabilities if such a lawsuit or claim results in a decision against us or because of litigation costs, regardless of the result. We are subject to franchise laws and regulations that govern our status as a franchisor and regulate some aspects of our franchise relationships.
Furthermore, in the event that any such lawsuits or claims result in unfavorable judgments or due to litigation costs, regardless of the final outcome, we may face significant liabilities. We are subject to franchise laws and regulations that govern our status as a franchisor and regulate some aspects of our franchise relationships.
Changes in weather could result in construction delays, interruptions to the availability of utilities, and shortages or interruptions in the supply of food items and other supplies, which could increase our costs.
Moreover, fluctuations in weather patterns can lead to construction delays, disruptions in the availability of utilities, and potential shortages or interruptions in the supply of food items and other essential supplies.
Any interruption in the delivery of glaze flavoring would adversely affect our ability to produce and deliver our signature products, including our hot Original Glazed doughnut, to our consumers on a timely and competitive basis and could adversely affect our operating results.
Any disruption in the supply chain of glaze flavoring could have adverse consequences on our ability to produce and deliver our signature products, including the hot Original Glazed doughnut, to our consumers in a timely and competitive manner. Such interruptions could also impact our operational performance.
Because one of our competitive strengths is the taste and quality of our doughnuts and other indulgence products, adverse publicity or regulations relating to food quality or other similar concerns affect us more than it would food service businesses that compete primarily on other factors.
Given that one of our core competitive advantages lies in the taste and quality of our doughnuts and indulgent products, adverse publicity or regulations related to food quality or similar concerns have a more pronounced impact on our business compared to food service businesses that primarily compete on other factors.
We have entered into the Investors’ Rights Agreement with JAB that provides them rights to certain Company information, which JAB must treat as confidential, including management’s monthly financial review reports, the consolidated financial results for each fiscal quarter, and other information as JAB may reasonably request from time to time.
Under the Investor Rights Agreement with JAB, they have specific rights to access certain Company information, which JAB is obligated to treat as confidential. This information includes management’s monthly financial review reports, consolidated financial results for each fiscal quarter, and other information reasonably requested by JAB.
Due to legal or regulatory changes, such as suspensions on the use of deferred tax assets and tax credits by certain jurisdictions, possibly with retroactive effect, our existing deferred tax assets and tax credits could expire or otherwise be unavailable to offset future income tax liabilities.
Our existing deferred tax assets and tax credits could potentially expire or become unavailable to offset future income tax liabilities due to legal or regulatory changes.
In addition, if any of our relationships with our raw material suppliers terminate unexpectedly, even where we have multiple suppliers for the same ingredient, we may not be able to obtain adequate quantities of the same high-quality ingredients at competitive prices.
Furthermore, unexpected termination of our relationships with raw material suppliers, even when multiple suppliers exist for the same ingredient, may hinder our ability to secure adequate quantities of high-quality ingredients at competitive prices.
Our future effective tax rates and the value of our deferred tax assets could be adversely affected by changes in tax laws, the consequences of which have not yet been fully determined. In addition, we are subject to the examination of our income tax returns by the Internal Revenue Service (“IRS”) and other tax authorities.
The impact of potential changes in tax laws on our future effective tax rate and the value of our deferred tax assets is uncertain. Additionally, our income tax returns are subject to examination by the Internal Revenue Service and other tax authorities.
As a Delaware corporation, we are subject to provisions of Delaware law, including Section 203 of the Delaware General Corporation Law, as amended (the “DGCL”), which prevents some shareholders holding more than 15% of our outstanding common stock (“interested shareholder”) from engaging in certain business combinations without approval from the holders of at least two-thirds of our outstanding common stock not held by the interested shareholder.
Section 203 of the DGCL restricts certain shareholders owning over 15% of our outstanding common stock (referred to as "interested shareholders") from engaging in specific business combinations without approval from at least two-thirds of our outstanding common stock not held by the interested shareholder.
Health epidemics or pandemics can adversely affect consumer spending and confidence levels and supply availability and costs in the markets in which we and our franchisees operate, all of which can affect our business, financial condition, and results of operations.
Health epidemics or pandemics can have detrimental effects on consumer spending, confidence levels, supply chain availability, and associated costs within the markets where we and our franchisees operate. These factors can collectively influence our business, financial standing, and operational results.
These provisions may make it difficult and expensive for a third party to pursue a tender offer, change in control, or takeover attempt that is opposed by JAB, our management, or our Board of Directors.
These measures collectively serve as deterrents, potentially making it costly and challenging for a third party to initiate a tender offer, execute a change in control, or attempt a takeover that faces opposition from JAB, our management, or our Board of Directors.
We may need to refinance all or a portion of our indebtedness on or before maturity. There is no assurance that we will be able to refinance any of our indebtedness on favorable terms, or at all.
There is no guarantee that we will be able to secure refinancing on favorable terms or at all.
They enable us to ensure that we provide a consistent product to our consumers, whether it is in our Hot Light Theater Shops or one of our DFD access points. Our future success also depends upon the continued contributions of senior management and other key personnel and the ability to retain and motivate them.
Our ability to maintain the highest product quality, whether in our Hot Light Theater Shops or at one of our DFD access points, heavily relies on our Krispy Kremers. Furthermore, our continued success hinges on the ongoing contributions of our senior management and key personnel, and our ability to retain and motivate them.
Our failure to obtain or maintain approvals to offer franchises would cause us to lose future franchise revenues and revenues generated through our Market Development segment. In addition, domestic or foreign laws that regulate substantive aspects of our relationships with franchisees may limit our ability to terminate or otherwise resolve conflicts with our franchisees.
Any failure to obtain or maintain approvals for offering franchises could result in the loss of potential franchise revenues and revenues generated through our Market Development segment. Furthermore, both domestic and foreign laws oversee the procedural aspects of offering franchises and also regulate substantive aspects of our relationships with franchisees.
In addition, for those of our employees paid at rates set above, but related to, the applicable minimum wage, further increases in the minimum wage could increase our labor costs, which may also be increased by inflationary pressures and any shortages in the labor market.
Additionally, for employees whose compensation is set above but tied to the applicable minimum wage, further increases in the minimum wage could result in higher labor expenses. These cost increases may also be influenced by inflationary pressures and potential labor market shortages.
We may communicate these commitments, targets, and goals through public disclosures. Our ability to meet such commitments, targets, and goals is subject to risks and uncertainties, many of which are outside of our control.
Our ability to meet these commitments and navigate the associated risks is subject to various external factors and uncertainties, many of which are beyond our control.
Although we utilize forward purchase contracts and futures contracts and/or options on such contracts to mitigate the risks related to commodity price fluctuations, such contracts do not fully mitigate commodity price risk, particularly over the longer term. In addition, the portion of our anticipated future commodity requirements that is subject to such contracts varies from time to time.
We employ forward purchase contracts, futures contracts, and options on such contracts to mitigate the risks associated with commodity price fluctuations, however these contracts may not fully protect us against commodity price risk, particularly over extended timeframes. Additionally, the portion of our anticipated future commodity requirements covered by such contracts can vary over time.
Our ability to pay dividends may also be restricted by the terms of our existing debt agreements, or any future debt or preferred equity securities. Our dividend policy entails certain risks and limitations, particularly with respect to our liquidity.
Furthermore, our capacity to pay dividends may be constrained by the terms outlined in our existing debt agreements or any future debt or preferred equity securities we may undertake. It is important to recognize that our dividend policy carries inherent risks and constraints, particularly regarding our available liquidity.
Risks Related to Food Safety and Consumer Preferences Our business may be adversely affected by food safety issues, including food-borne illnesses, tampering, or contamination. We are a food service business and may experience food safety issues, including the possibility of food-borne illnesses, tampering, adulteration, or contamination.
Summary Risk Factors Risks Related to Food Safety and Consumer Preferences • Our business may be adversely affected by food safety issues, including food-borne illnesses, tampering, contamination, or cross-contamination. • Changes in consumer preferences and demographic trends, including in response to unfavorable economic conditions, could negatively impact our business.
While we seek to maintain, extend, and expand our brand image and reputation through marketing investments, including advertising and consumer promotions, most of our marketing initiatives rely heavily on social media. We increasingly rely on social media and online dissemination of advertising campaigns.
While we are committed to nurturing and enhancing our brand image and reputation through marketing investments, including traditional advertising and consumer promotions, we place a significant emphasis on social media for most of our marketing activities.
The concentration of voting power could deprive you of an opportunity to receive a premium for your shares of common stock as part of the sale of us and ultimately might affect the market price of our common stock.
The concentration of voting power could also impact shareholders by limiting the opportunity to receive a premium for their common stock shares in the event of a sale of the Company, which, in turn, may affect the market price of our common stock.
Past and potential future strategic transactions may not create the intended value for us and may harm our reputation and materially, adversely affect our business, financial condition, and results of operations. Our franchisees may affect our operating results and reputation.
Our past and future strategic transactions may not yield the anticipated benefits, and could negatively impact our reputation and have a material adverse effect on our business, financial condition, and results of operations. Our franchisees may affect our operating results and reputation.
Our DFD business channels depend on key customers and are subject to risks if such key customers reduce their purchases or terminate their relationships with us. Sales to retail customers through our DFD channels represent a substantial portion of our revenue. The infrastructure necessary to support this business line requires significant fixed and semi-fixed costs.
Such scenarios could lead to a marked decline in Krispy Kreme-branded sales, adversely affecting our revenue and profitability. Our DFD business channels depend on key customers and are subject to risks if such key customers reduce their purchases or terminate their relationships with us.
We have several large retail customers around the world. However, no single retail customer accounted for more than 10% of our total revenue in the fiscal years ended January 1, 2023, January 2, 2022, or January 3, 2021.
In our global operations, we serve a number of large retail customers, yet no single customer contributed to more than 10% of our total revenue in the fiscal years ending December 29, 2024, December 31, 2023, or January 1, 2023.
In such an event, we would be forced to rely on third-party manufacturers or shift production to another manufacturing facility, and we could face significant delays in manufacturing and increased costs, which would jeopardize our ability to supply equipment to new shops or new parts for the maintenance of existing equipment in established shops on a timely basis. 21 Table of Contents We have limited suppliers for many of the product components and services that we rely on and any interruption in supply could impair our ability to make and deliver our signature products, adversely affecting our business, financial condition, and results of operations.
We have limited vendors for many of the product components and services that we rely on, and we have a single vendor for our glaze flavoring. Any interruption in supply could impair our ability to make and deliver our signature products, adversely affecting our business, financial condition, and results of operations.
If we are not effective, or are not perceived to be effective, in achieving our ESG strategy or mitigating ESG-related risks to our business, we could be subject to market, operational, reputational, and execution costs or risks.
If we are not successful or are perceived as ineffective in achieving our stated goals, or if stakeholders are dissatisfied with our Responsibility strategy or actions we take in response to Responsibility-related matters, we could be exposed to market, operational, or reputational challenges and costs.
If our business does not generate sufficient cash flow from operations or if future debt or equity financings are not available to us on acceptable terms in amounts sufficient to pay our indebtedness or to fund other liquidity needs, our financial condition and results of operations may be adversely affected.
Should our business fail to generate sufficient cash flow from operations or if we encounter difficulty securing future debt or equity financing on acceptable terms and in sufficient amounts to meet our debt obligations or address other liquidity requirements, our financial health and operational results may suffer.
Our three most significant ingredients are flour, shortening, and sugar. We also purchase a substantial amount of gasoline to fuel our fleet of delivery vehicles for our DFD business and significant amounts of packaging materials to make, among other things, our iconic boxes for our dozens and half-dozens.
Among our essential ingredients, three stand out in significance: flour, shortening, and sugar. Furthermore, we procure a significant quantity of gasoline for our delivery vehicle fleet serving our DFD business, as well as significant amounts of packaging materials, including our boxes for dozens, half-dozens, and three-packs of doughnuts.
These risks are especially pronounced given our reliance on our social media presence to promote our brand and maintain consumer loyalty and engagement. Our reputation is based in part on consumers’ subjective opinions.
This risk is particularly acute given our reliance on social media to bolster our brand and maintain consumer loyalty and engagement. Our reputation is also shaped by consumers’ subjective perceptions.
As we continue to expand our global footprint the above risks may be exacerbated as we encounter supply shortages, logistical hurdles, and other costs associated with operating and supplying a global network of shops. We are the only manufacturer of substantially all our doughnut-making equipment.
As we continue our global expansion, these risks may intensify, leading to supply shortages, logistical challenges, and increased operational costs associated with managing and supplying a global network of Krispy Kreme shops. We are the only manufacturer of our doughnut-making equipment. Any problems producing this equipment could negatively affect our shops’ ability to make doughnuts.
Certain provisions of Delaware Law, our certificate of incorporation, and our bylaws will contain provisions that could make it more difficult for a third party to acquire us without the consent of our Board of Directors or JAB Holdings B.V. (“JAB”), as the largest beneficial owner of our common stock.
Several provisions within Delaware Law, our certificate of incorporation, and our bylaws are designed to create obstacles for third-party acquisition attempts without the consent of our Board of Directors or JAB Holdings B.V. ("JAB"), our largest beneficial shareholder. 28 Table of Contents As a Delaware corporation, we are subject to Delaware General Corporation Law (“DGCL”).
We believe that our trademarks and other intellectual property rights are important to our success and our competitive position. We rely on a combination of legal protections provided by trademark registrations, contracts, copyrights, patents, and common law rights, such as unfair competition, passing off and trade secret laws to protect our intellectual property from potential infringement.
To safeguard these assets, we rely on legal protections offered by trademark registrations, contracts, confidentiality agreements, copyrights, patents, and common law rights, such as protections against unfair competition, passing off, and trade secret violations.
Additionally, the cost of a replacement distribution channel may also affect the financial performance of these shops. Severe disruption to BakeMark could result in a material and adverse impact on our business and our consolidated financial position, results of operations, and cash flows. Our profitability is sensitive to changes in the cost of raw materials and other commodities.
A severe disruption to our BakeMark distribution partnership has the potential to result in a significant and adverse effect on our overall business, consolidated financial position, results of operations, and cash flows.
If we are unable to recruit, retain and motivate Krispy Kremers sufficiently to support the projected growth and initiatives of our business, there could be materially adverse effects on our operations. Changes in the availability or cost of labor could adversely affect our business. Our business could be adversely impacted by increases in labor costs, including wages and benefits.
If we encounter difficulties in recruiting, retaining, and motivating Krispy Kremers to support our projected growth and strategic initiatives, it could have a material adverse effect on our overall operations. Changes in the availability or cost of labor could adversely affect our business, financial condition, and results of operations.
We entered into an exclusive distribution agreement with BakeMark, which, among other things, grants BakeMark exclusive rights to distribute ingredients, packaging, and supplies to Company-owned and franchise shops in parts of the U.S. and Canada. If BakeMark experiences economic or operational challenges, this could cause disruptions to our supply chain in the U.S. and Canada.
We have established an exclusive distribution partnership with BakeMark USA LLC (“BakeMark”), which grants the exclusive rights to BakeMark to distribute ingredients, packaging, and supplies to both Company-owned and franchise shops in all regions of the U.S. other than New York City, and Canada.
As a food service business, we may be adversely affected by litigation, regulation, and complaints from consumers or government authorities resulting from food quality, illness, injury or other health concerns or operating issues stemming from one shop or a limited number of shops, including shops operated by our franchisees, or as we introduce new products or increase distribution channels, such as our DFD business channels.
As a food service business, we face potential adverse impacts stemming from litigation, regulatory actions, and consumer or government complaints related to food quality, illness, injuries, health concerns, or operational issues. These concerns may arise from individual shops or a limited number of shops, including those operated by our franchisees.
As a result of these rights and the representatives of JAB who serve on our Board of Directors, JAB has greater access to our management and earlier access to our financial results than our other investors.
Given these rights and JAB’s representation on our Board of Directors, JAB enjoys privileged access to our management and early insights into our financial results compared to our other investors.
We are the exclusive supplier of doughnut mixes for many domestic and international Krispy Kreme shops and the exclusive supplier of doughnut mix concentrate, which is blended with other ingredients to produce doughnut mixes at both domestic and international production facilities, for all Krispy Kreme shops globally.
We serve as the exclusive supplier of doughnut mixes to numerous domestic and international Krispy Kreme shops. In support of international markets, we produce a concentrate that is mixed with commodity ingredients in local markets to get to a finished doughnut mix. We serve as the exclusive supplier of such mix concentrate.
In addition, class action lawsuits have been filed and may continue to be filed against various food service businesses (including quick service restaurants) alleging, among other things, that food service businesses have failed to disclose the health risks associated with high-fat foods and that certain food service business marketing practices have encouraged obesity.
These lawsuits may allege, among other things, the failure to disclose health risks associated with high-fat foods and marketing practices that encourage obesity.
If we are unable to source alternative logistical providers, our costs may significantly increase and, if we are unable to pass increased distribution costs on to our consumers in the form of higher prices for our products, our business, financial condition, and results of operations could be adversely affected.
If we are unable to pass on these increased costs to our consumers through higher product prices, it could adversely affect our business, financial health, and operational results.
We seek to protect our trade secrets and other know-how, in part, by entering into non-disclosure and confidentiality agreements with parties who have access to them, such as our employees, corporate collaborators, outside contractors, consultants, advisors, and other third parties.
We enter into non-disclosure and confidentiality agreements with employees, corporate collaborators, contractors, consultants, advisors, suppliers, and other individuals and entities who may have access to this confidential information.
Changes in the mix of earnings (or losses) between jurisdictions and assumptions used in the calculation of income taxes, among other factors, could have a significant effect on our overall effective income tax rate. Additionally, changes in tax laws and changes made by regulatory authorities could have a significant effect on our overall effective income tax rate.
Losses incurred in one jurisdiction may not be used to offset profits in other jurisdictions, potentially resulting in an increase in our overall tax rate. Changes in the distribution of earnings (or losses) among different jurisdictions and the assumptions employed in calculating income taxes, among other factors, can exert a significant influence on our overall effective income tax rate.
Our effective tax rate would increase if we were required to increase our valuation allowances against our deferred tax assets. Risks Related to Our Intellectual Property Our failure or inability to obtain, maintain, protect, and enforce our trademarks or other intellectual property could adversely affect our business and the value of our brands.
Risks Related to Our Intellectual Property Our failure or inability to obtain, maintain, protect, and enforce our trademarks or other intellectual property could adversely affect our business and the value of our brand. We possess common-law trademark rights in the U.S. as well as numerous trademark and service mark registrations both domestically and internationally.
While we have enacted protections to manage large scale public health risks, we may nonetheless be affected by future outbreaks in our shops and other facilities, resulting in a significant percentage of our workforce or the workforce of our business partners being unable to work. In addition, our business is affected by consumer preferences and perceptions.
Such outbreaks may result in a substantial portion of our workforce or the workforce of our business partners being unable to work. Furthermore, our business is influenced by shifting consumer preferences and perceptions.
We intend to pay cash dividends on our common stock on a quarterly basis, subject to the discretion of our Board of Directors and our compliance with applicable law, and depending on our results of operations, capital requirements, financial condition, business prospects, contractual restrictions, restrictions imposed by applicable laws, and other factors that our Board of Directors deems relevant.
The decision to declare dividends will be influenced by a range of factors, including our financial performance, capital needs, business prospects, legal requirements, contractual obligations, restrictions imposed by applicable laws, and other relevant considerations, all of which will be evaluated by our Board of Directors in accordance with applicable law.
Although we believe we have made appropriate provisions for taxes in the jurisdictions in which we operate, changes in the tax laws or challenges from tax authorities under existing tax laws could adversely affect our business, financial condition and results of operations. 23 Table of Contents Our overall effective income tax rate is equal to our total tax expense as a percentage of total earnings before tax.
While we have taken measures to provision for taxes in the jurisdictions where we operate, changes in tax laws or interpretations thereof or challenges from tax authorities based on existing tax laws could have an adverse effect on our business, financial condition, and results of operations.
Social and digital media increase the speed and extent that information or misinformation and opinions can be shared. Negative posts or comments about us, our brands, or our products on social or digital media could seriously damage our brands and reputation.
Our growing dependency on social media and digital platforms for advertising means that the speed and reach at which information, as well as misinformation and opinions, are spread is amplified. Negative feedback or commentary about us, our brands, or our products on social or digital media could severely harm our brand reputation.
The risk of contracting viruses has and could continue to cause employees or guests to avoid gathering in public places, which has had, and could further have, adverse effects on ours and our franchisees’ guest traffic and the ability to adequately staff shop locations.
Concerns regarding virus transmission have prompted employees and guests to avoid congregating in public places, leading to adverse effects on guest traffic at our locations and the ability to adequately staff our shops. The COVID-19 pandemic has triggered changes in consumer behaviors, some of which have endured and may continue to evolve even though the pandemic has subsided.
If we or our franchisees or licensees are unable to protect our consumer and employee data and other regulated, protected, or personally identifiable information, we or our franchisees could be exposed to data loss, litigation, regulatory fines, and other liability, and our reputation could be significantly harmed.
Additionally, our efforts to remedy these issues may not be successful, and we might face challenges in implementing, maintaining, and upgrading effective safeguards. 16 Table of Contents If we, our franchisees, or our third-party service providers are unable to protect our consumer and employee data and other regulated, protected, or personally identifiable information, we or our franchisees could be exposed to data loss, litigation, regulatory fines, and other liability, which could harm our reputation and have a material adverse effect on our business, financial condition and results of operations.
Also, JAB may seek to cause us to take courses of action that, in its judgment, could enhance its investment in us, but which might involve risks to our other shareholders or adversely affect us or our other shareholders.
JAB might also seek to push us in directions that it deems beneficial for its own investment but could carry risks for other shareholders or negatively impact our Company and its stakeholders.
Additionally, food safety issues could expose us to litigation, governmental investigation, recalls, penalties or fines. Any report or publicity linking us, our franchisees, or the food service industry to food safety issues could adversely affect our reputation as well as our revenues and profits. Changes in consumer preferences and demographic trends could negatively impact our business.
Any association of our brand, our franchisees, or the broader food service industry with food safety issues could harm our reputation, leading to a decline in revenue and profitability. Changes in consumer preferences and demographic trends, including in response to unfavorable economic conditions, could negatively impact our business.
We could be forced to expend significant financial and operational resources in protecting against or responding to a security breach, including investigating and remediating any information security vulnerabilities, defending against and resolving legal and regulatory claims, and complying with notification obligations, all of which could divert resources and the attention of our management and key personnel away from our business operations and adversely affect our business, financial condition, and results of operations.
Addressing a security breach requires substantial financial and operational resources, including remediation of security vulnerabilities, legal defense, and compliance with notification obligations. Such efforts divert management attention and resources away from our business activities, adversely affecting our business operations, financial condition, and results.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThis vendor warehouses, consolidates, and provides direct shipments to our retail partners’ supply networks. We believe our existing facilities, both owned and leased, are in good condition and suitable for the conduct of our business. 28 Table of Contents
Biggest changeWe also lease space in various locations globally for regional, district, and other administrative offices, training facilities, and storage. We believe our existing facilities, both owned and leased, are in good condition and suitable for the conduct of our business.
Properties The material properties used by Krispy Kreme, Inc. in connection with its manufacturing, warehousing, distribution, and corporate administrative operations, serving all segments, are as follows: Location Approximate Size in Square Feet Purpose Type Winston-Salem, NC 107,000 Mix Production Plant and Distribution Owned Winston-Salem, NC 101,710 Equipment Manufacturing Facility Owned Charlotte, NC 31,776 Corporate Administrative Leased In the U.S., we operate four Doughnut Factories located in Indianapolis, Indiana, Monroe, Ohio, New York, New York, and Fort Lauderdale, Florida.
Properties The material properties used by the Company in connection with its manufacturing, warehousing, distribution, and corporate administrative operations, serving all segments, are as follows: Location Approximate Size in Square Feet Purpose Type Winston-Salem, NC 107,000 Mix Production Plant and Distribution Leased Winston-Salem, NC 101,710 Equipment Manufacturing Facility Owned Charlotte, NC 31,776 Corporate Administrative Leased In the U.S., we operate six Doughnut Factories located in Indianapolis, Indiana; Monroe, Ohio; New York, New York; Elk Grove, Illinois; Concord, North Carolina; and Fort Lauderdale, Florida.
Internationally, for our equity markets, we operate 14 Doughnut Factories. Each Doughnut Factory manufactures daily to provide finished products to shops and to support our DFD routes. The majority of our Doughnut Factories are leased. Additionally, as of January 1, 2023, Krispy Kreme, Inc. had 1,021 Company-owned shops globally, a majority of which are leased.
Internationally, for our equity markets, we operate 14 Doughnut Factories. Each Doughnut Factory manufactures daily to provide finished products to shops and to support our DFD routes. The majority of our Doughnut Factories are leased. Additionally, as of December 29, 2024, the Company had 875 Company-owned shops globally, a majority of which are leased.
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We also lease space in various locations globally for regional, district, and other administrative offices, training facilities, and storage. Specific to the Branded Sweet Treat Line, we utilize two manufacturing, warehousing and distribution facilities, serving the U.S. and Canada segment. We utilize our leased Concord, North Carolina production facility for manufacturing.
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In addition, at the end of fiscal 2022, we began to transition manufacturing capacity of Branded Sweet Treat Line products to our mix plant in Winston-Salem, North Carolina (after exiting the co-manufacturer production facility located in Burlington, Iowa). After manufacturing, packaging, and palletizing our Branded Sweet Treat Line products, we transport the products to a third-party warehousing and distribution vendor.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeSee Note 14 , Commitments and Contingencies, to the audited Consolidated Financial Statements in Item 8 of Part II of this Annual Report on Form 10-K for information regarding certain legal proceedings in which we are involved.
Biggest changeSee Note 15 , Commitments and Contingencies, to the audited Consolidated Financial Statements in Item 8 of Part II of this Annual Report on Form 10-K for information regarding certain legal proceedings in which we are involved. Item 4. Mine Safety Disclosures Not applicable. 32 Table of Contents PART II
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Shareholder Derivative Suit On December 3, 2021, a shareholder of the Company brought a shareholder class and derivative action complaint against the members of the Company’s Board of Directors, the Company, JAB Holdings, and certain entities related to JAB Holdings (JAB Holdings and the related entities collectively, the “JAB Entities”).
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The plaintiff alleged that the members of the Company’s Board breached their fiduciary duty by allowing the JAB Entities to conduct a creeping takeover of the Company and that the JAB Entities aided and abetted those breaches.
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On October 31, 2022, the Company paid $0.2 million as its share of the full resolution of this matter, for which the related payment has been reflected in the accompanying Consolidated Financial Statements. Item 4. Mine Safety Disclosures Not applicable. 29 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changePerformance Graph The following graph depicts the total return to shareholders from the IPO on July 1, 2021 through our fiscal year end date of January 1, 2023, relative to the performance of the Russell 2000 Index, the NASDAQ Composite Index and the Standard & Poor’s Consumer Discretionary Sector.
Biggest changeAs of December 29, 2024, all outstanding shares remained available for repurchase under current authorizations . 33 Table of Contents Performance Graph The following graph depicts the total return to shareholders from the initial public offering (“IPO”) on July 1, 2021 through our fiscal year-end date of December 29, 2024, relative to the performance of the Russell 2000 Index, the NASDAQ Composite Index, and the Standard & Poor’s Consumer Discretionary Sector.
Any declaration and payment of future dividends to holders of our common stock will be at the sole discretion of our Board of Directors and will depend on many factors, including economic conditions, our financial condition and operating results, our available cash and current and anticipated cash needs, capital requirements, contractual, legal, tax and regulatory restrictions, including restrictive covenants contained in certain of our subsidiaries’ credit facilities, and such other factors as our Board of Directors may deem relevant.
Any declaration and payment of future dividends to holders of our common stock will be at the sole discretion of our Board of Directors and will depend on many factors, including economic conditions, our financial condition and operating results, our available cash and current and anticipated cash needs, capital requirements, contractual, legal, tax and regulatory restrictions, including restrictive covenants contained in certain of our credit facilities, and such other factors as our Board of Directors may deem relevant.
All indices shown in the graph have been reset to a base of 100 as of July 1, 2021 and 30 Table of Contents assume an investment of $100 on that date and the reinvestment of dividends paid since that date. The stock price performance shown in the graph is not necessarily indicative of future price performance.
All indices shown in the graph have been reset to a base of 100 as of July 1, 2021 and assume an investment of $100 on that date and the reinvestment of dividends paid since that date. The stock price performance shown in the graph is not necessarily indicative of future price performance.
Holders The approximate number of shareholders of record of our common stock as of February 17, 2023 was 217. This does not include persons whose stock is in nominee or “street name” accounts through brokers.
Holders The approximate number of shareholders of record of our common stock as of February 14, 2025, was 253. This does not include persons whose stock is in nominee or “street name” accounts through brokers.
July 1, 2021 January 2, 2022 January 1, 2023 Krispy Kreme, Inc. $ 100.00 $ 111.29 $ 60.71 Russell 2000 100.00 96.39 75.61 NASDAQ Composite 100.00 107.73 72.07 S&P Consumer Discretionary 100.00 112.01 69.92 Item 6. [Reserved] 31 Table of Contents
July 1, 2021 January 2, 2022 January 1, 2023 December 31, 2023 December 29, 2024 Krispy Kreme, Inc. $ 100.00 $ 111.29 $ 60.71 $ 88.76 $ 57.53 Russell 2000 100.00 96.39 75.61 87.02 96.36 NASDAQ Composite 100.00 107.73 72.07 103.37 135.80 S&P Consumer Discretionary 100.00 112.01 69.92 98.61 130.68 Item 6. [Reserved] 34 Table of Contents
The timing, manner, price, and amount of repurchases will be determined at our discretion, and the share repurchase program may be suspended, terminated or modified at any time for any reason. As of January 1, 2023, all outstanding shares remained available for repurchase under current authorizations .
The timing, manner, price, and amount of repurchases will be determined at our discretion, and the share repurchase program may be suspended, terminated or modified at any time for any reason.
Dividend Policy For the fiscal quarters ending April 3, 2022, July 3, 2022, October 2, 2022, and January 1, 2023, we paid quarterly cash dividends on our common stock of $0.035 per share, which were paid in May 2022, August 2022, November 2022, and February 2023, respectively. We expect to pay a dividend after the close of each quarter.
Dividend Policy For the fiscal quarters ended March 31, 2024, June 30, 2024, September 29, 2024, and December 29, 2024, we paid quarterly cash dividends on our common stock of $0.035 per share, which were paid in May 2024, August 2024, November 2024, and February 2025, respectively. We expect to pay a dividend after the close of each quarter.
Removed
See “Risk Factors — Risks Relating to an Investment in Us – We may be unable to pay dividends on our common stock.” Under Delaware law, dividends may be payable only out of surplus, which is calculated as our net assets less our liabilities and our capital, or, if we have no surplus, out of our net profits for the fiscal year in which the dividend is declared and/or the preceding fiscal year.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeWe conduct our business through the following three reported segments: • U.S. and Canada : Includes all our Company-owned operations in the U.S. and Canada, including our Krispy Kreme and Insomnia Cookies-branded shops, DFD and our Branded Sweet Treat Line; • International : Includes all our Krispy Kreme Company-owned operations in the U.K., Ireland, Australia, New Zealand and Mexico; and • Market Development : Includes franchise operations across the globe, as well as the Company-owned operations in Japan.
Biggest changeWe conduct our business through the following three reported segments: • U.S.: Includes all Krispy Kreme Company-owned operations in the U.S., and Insomnia Cookies Bakeries globally through the date of deconsolidation (refer to Note 2 , Acquisitions and Divestitures, to the audited Consolidated Financial Statements included in Item 8 of Part II of this Annual Report on Form 10-K for more information); • International: Includes all Krispy Kreme Company-owned operations in the U.K., Ireland, Australia, New Zealand, Mexico, Canada, and Japan; and • Market Development: Includes franchise operations across the globe.
The calculation of the key business metrics discussed below may differ from other similarly titled metrics used by other companies, securities analysts, or investors. Throughout this Annual Report on Form 10-K, we utilize “Global Points of Access” as a key performance indicator. Global Points of Access reflect all locations at which fresh doughnuts or cookies can be purchased.
The calculation of the key business metrics discussed below may differ from other similarly titled metrics used by other companies, securities analysts, or investors. Throughout this Annual Report on Form 10-K, we utilize “Global Points of Access” as a key performance indicator. Global Points of Access reflect all locations at which fresh doughnuts can be purchased.
We continue to believe the fair value of each of our reporting units is significantly in excess of its carrying value, and absent a sustained multi-year global decline in our business in key markets such as the U.S. and Canada, we do not anticipate incurring significant goodwill impairment in the next 12 months.
We continue to believe the fair value of each of our reporting units is significantly in excess of its carrying value, and absent a sustained multi-year global decline in our business in key markets such as the U.S., we do not anticipate incurring significant goodwill impairment in the next 12 months.
Organic Revenue Growth Organic revenue growth measures our revenue growth trends excluding the impact of acquisitions and foreign currency, and we believe it is useful for investors to understand the expansion of our global footprint through internal efforts.
Organic Revenue Growth Organic revenue growth measures our revenue growth trends excluding the impact of acquisitions, divestitures, and foreign currency, and we believe it is useful for investors to understand the expansion of our global footprint through internal efforts.
Sales Per Hub In order to measure the effectiveness of our Hub and Spoke model, we use “Sales per Hub” on a trailing four-quarter basis, which includes all revenue generated from a Hub and its associated Spokes. Sales per Hub equals Fresh Revenues from Hubs with Spokes, divided by the average number of Hubs with Spokes during the period.
Sales Per Hub In order to measure the effectiveness of our Hub and Spoke model, we use “Sales per Hub” on a trailing four-quarter basis, which includes all revenue generated from a Hub and its associated Spokes. Sales per Hub equals Fresh Revenues from Hubs with Spokes, divided by the average number of Hubs with Spokes for the period.
The Average Hub with Spokes for a period is calculated as the average of the number of Hubs with Spokes at the end of the five most recent quarters.
The average number of Hubs with Spokes for a period is calculated as the average of the number of Hubs with Spokes at the end of the five most recent quarters.
However, deferred tax assets could be reduced in the near term if our estimates of taxable income are significantly reduced or tax strategies are no longer viable. Goodwill and Indefinite Lived Intangible Assets For each reporting unit, the Company assesses goodwill for impairment annually at the beginning of the fourth fiscal quarter or more frequently when impairment indicators are present.
However, deferred tax assets could be reduced in the near term if our estimates of taxable income are significantly reduced or tax strategies are no longer viable. Goodwill and Indefinite Lived Intangible Assets For each reporting unit, we assess goodwill for impairment annually at the beginning of the fourth fiscal quarter or more frequently when impairment indicators are present.
We may adjust these reserves when our judgment changes as a result of the evaluation of new information not previously available and will be reflected in the period in which the new information is 46 Table of Contents available.
We may adjust these reserves when our judgment changes as a result of the evaluation of new information not previously available and will be reflected in the period in which the new information is available.
Our requirement for working capital is not significant because our consumers pay us in cash or on debit or credit cards at the time of the sale and we are able to sell many of our inventory items before payment is due to the vendor of such items.
Our requirement for working capital is not significant because our consumers pay us in cash or on debit or credit cards at the time of the sale and we are able to sell many of our inventory items before payment is due to the vendors for the various inputs to such items.
If the carrying value of the reporting unit exceeds its fair value, the Company recognizes an impairment charge for the difference up to the carrying value of the allocated goodwill. The fair value is estimated using a combination of a discounted cash flow approach and a market approach.
If the carrying value of the reporting unit exceeds its fair value, we recognize an impairment charge for the difference up to the carrying value of the allocated goodwill. The fair value is estimated using a combination of a discounted cash flow approach and a market approach.
The Total Net Leverage Ratio under the 2019 Facility is defined as the ratio of (a) Total Indebtedness (as defined in the 2019 Facility, which includes all debt and finance lease obligations) minus unrestricted cash and cash equivalents to (b) a defined calculation of Adjusted EBITDA (“2019 Facility Adjusted EBITDA”) for the most recently ended Test Period (as defined in the 2019 Facility).
The leverage ratio under the 2023 Facility is defined as the ratio of (a) Total Indebtedness (as defined in the 2023 Facility, which includes all debt and finance lease obligations) minus unrestricted cash and cash equivalents to (b) a defined calculation of Adjusted EBITDA (2023 Facility Adjusted EBITDA) for the most recently ended Test Period.
We establish reserves for uncertain tax positions for material, known tax exposures in accordance with ASC 740, Income Taxes relating to deductions, transactions and other matters involving some uncertainty as to the measurement and recognition of the item.
We establish reserves for uncertain tax positions for material, known tax exposures in accordance with Accounting Standards Codification (“ASC”) 740, Income Taxes relating to deductions, transactions and other matters involving some uncertainty as to the measurement and recognition of the item.
We define “organic revenue growth” as the growth in revenues, excluding (i) acquired shops owned by us for less than 12 months following their acquisition, (ii) the impact of foreign currency exchange rate changes, (iii) shop closures related to restructuring programs such as the shop portfolio optimization program initiated for Krispy Kreme U.S. and Canada during fiscal 2022, and (iv) the impact of revenues generated during the 53 rd week for those fiscal years that have a 53 rd week based on our fiscal calendar defined in the “Overview” section.
We define “organic revenue growth” as the growth in revenues, excluding (i) acquired shops owned by us for less than 12 months following their acquisition, (ii) the impact of foreign currency exchange rate changes, (iii) the impact of shop closures related to restructuring programs such as the shop portfolio optimization program initiated for Krispy Kreme U.S. during fiscal 2022, (iv) the impact of the Branded Sweat Treats business exit, (v) the impact of the divestiture of Insomnia Cookies, and (vi) revenues generated during the 53 rd week for those fiscal years that have a 53 rd week based on our fiscal calendar defined in the “Overview” section.
(4) Fiscal 2022 consists mainly of equipment disposals, equipment relocation and installation, consulting and advisory fees, and other costs associated with our shift of Branded Sweet Treat Line manufacturing capability from Burlington, Iowa to Winston-Salem, North Carolina.
Fiscal 2022 consists mainly of equipment disposals, equipment relocation and installation, consulting and advisory fees, and other costs associated with the shift of Branded Sweet Treats manufacturing capability from Burlington, Iowa to Winston-Salem, North Carolina.
As we further extend the Hub and Spoke model into existing and new markets around the world, we expect to see this measure continue to grow. 39 Table of Contents Results of Operations The following comparisons are historical results and are not indicative of future results which could differ materially from the historical financial information presented.
As we further extend the Hub and Spoke model into existing and new markets around the world, we expect to see our Sales per Hub grow. 44 Table of Contents Results of Operations The following comparisons are historical results and are not indicative of future results which could differ materially from the historical financial information presented.
Discussions of fiscal 2020 items and year-to-year comparisons of fiscal 2021 and fiscal 2020 are not included in this Annual Report on Form 10-K and can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended January 2, 2022.
Discussions of fiscal 2022 items and year-to-year comparisons of fiscal 2023 and fiscal 2022 are not included in this Annual Report on Form 10-K and can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2023.
This section of the Annual Report on Form 10-K generally discusses fiscal 2022 and fiscal 2021 items and year-to-year comparisons of fiscal 2022 to fiscal 2021.
This section of the Annual Report on Form 10-K generally discusses fiscal 2024 and fiscal 2023 items and year-to-year comparisons of fiscal 2024 to fiscal 2023.
Adjusted EBITDA and Adjusted Net Income We define “Adjusted EBITDA” as earnings before interest expense, net (including interest payable to related parties), income tax expense/(benefit), and depreciation and amortization, with further adjustments for share-based compensation, certain strategic initiatives, acquisition and integration expenses, and other certain non-recurring, infrequent or non-core income and expense items.
Adjusted EBITDA, Adjusted EBIT, Adjusted Net Income, Diluted, and Adjusted EPS We define “Adjusted EBITDA” as earnings before interest expense, net, income tax expense, and depreciation and amortization, with further adjustments for share-based compensation, certain strategic initiatives, acquisition and integration expenses, and certain other non-recurring, infrequent or non-core income and expense items.
If we are unable to meet the 2019 Facility financial or other covenants in future periods, it may negatively impact our liquidity by limiting our ability to draw on the revolving credit facility, could result in the lenders accelerating the maturity of such indebtedness and foreclosing upon the collateral pledged thereunder, and could require the replacement of the 2019 Facility with new sources of financing which there is no guaranty we could secure.
If we are unable to meet the 2023 Facility financial or other covenants in future periods, it could limit our ability to draw on the revolving credit facility, could result in the lenders accelerating the maturity of such indebtedness and foreclosing upon the collateral pledged thereunder, and could require the replacement of the 2023 Facility with new sources of financing, which we may be unable to secure on favorable terms or at all, any of which could negatively impact our liquidity.
For the fiscal years 2022, 2021 and 2020, there were no goodwill impairment charges.
For the fiscal years 2024, 2023, and 2022, there were no goodwill impairment charges.
We define Global Points of Access to include all Hot Light Theater Shops, Fresh Shops, Carts and Food Trucks, DFD Doors, Cookie Shops, and other defined points at both Company-owned and franchise locations as of the end of the respective reporting period.
We define Global Points of Access to include all Hot Light Theater Shops, Fresh Shops, Carts and Food Trucks, DFD Doors, Cookie Bakeries (through the date of the Insomnia Cookies divestiture), and other points at which fresh doughnuts can be purchased, at both Company-owned and franchise locations as of the end of the respective reporting period.
Our purpose of touching and enhancing lives through the joy that is Krispy Kreme guides how we operate every day and is reflected in the love we have for our people, our communities, and the planet. We operate and report financial information on a 52 or 53-week fiscal year ending on the Sunday closest to December 31.
Our purpose of touching and enhancing lives through the joy that is Krispy Kreme guides how we operate every day. We operate and report financial information on a 52 or 53-week fiscal year ending on the Sunday closest to December 31. Fiscal year 2024 reflects our results of operations for the 52-week period ended December 29, 2024.
Income Taxes Our provision for income taxes, deferred tax assets and liabilities including valuation allowance requires the use of estimates based on our management’s interpretation and application of complex tax laws and accounting guidance. We are primarily subject to income taxes in the U.S.
Income Taxes Our provision for income taxes, deferred tax assets and liabilities including valuation allowances requires the use of estimates based on our management’s interpretation and application of complex tax laws and accounting guidance.
We define “Adjusted Net Income” as net loss adjusted for interest expense – related party, share-based compensation, certain strategic initiatives, acquisition and integration expenses, amortization of acquisition-related intangibles, the tax impact of adjustments and other certain non-recurring, infrequent or non-core income and expense items.
We define “Adjusted Net Income, Diluted” as net income/(loss) attributable to common shareholders, adjusted for interest expense, share-based compensation, certain strategic initiatives, acquisition and integration expenses, amortization of acquisition-related intangibles, the tax impact of adjustments, and certain other non-recurring, infrequent or non-core income and expense items. “Adjusted EPS” is Adjusted Net Income, Diluted converted to a per share amount.
In order to facilitate a clear understanding of our consolidated historical operating results, you should examine our non-GAAP financial 36 Table of Contents measures in conjunction with our historical Consolidated Financial Statements and notes thereto included in this Annual Report on Form 10-K.
In order to facilitate a clear understanding of our consolidated historical operating results, we urge you to review our non-GAAP financial measures in conjunction with our historical audited Consolidated Financial Statements and notes thereto included in this Annual Report on Form 10-K and not to rely on any single financial measure.
Key Performance Indicators and Non-GAAP Measures We monitor the key business metrics and non-GAAP metrics set forth below to help us evaluate our business and growth trends, establish budgets, measure the effectiveness of our sales and marketing efforts, and assess operational efficiencies.
We continue to own 34.7% of Insomnia Cookies and account for our investment using the equity method. 37 Table of Contents Key Performance Indicators and Non-GAAP Measures We monitor the key business metrics and non-GAAP metrics set forth below to help us evaluate our business and growth trends, establish budgets, measure the effectiveness of our sales and marketing efforts, and assess operational efficiencies.
Fiscal year 2022 reflects our results of operations for the 52-week period ended January 1, 2023. Fiscal year 2021 reflects our results of operations for the 52-week period ended January 2, 2022.
Fiscal year 2023 reflects our results of operations for the 52-week period ended December 31, 2023.
Many Hubs in the U.S. and Canada segment are being converted to add Spokes while certain legacy Hubs will never have the ability or need to add Spokes.
Specific to the U.S. segment, certain legacy Hubs have not historically had Spokes. Many Hubs in the U.S. segment are being converted to add Spokes while certain legacy Hubs do not currently have the ability or need to add Spokes.
Fresh Revenues include product sales generated from our Doughnut Shop business (including Ecommerce and delivery), as well as DFD sales, but excluding sales from our legacy wholesale business and our Branded Sweet Treat Line. It also excludes all Insomnia Cookies revenues as the measure is focused on the Krispy Kreme business.
Fresh Revenues include product sales generated from our Doughnut Shop business (including digital channels), as well as DFD sales, but excluding all Insomnia Cookies revenues as the measure is focused on the Krispy Kreme business.
Our actual results could vary because of, and our future capital requirements will depend on, many factors, including our growth rate, the timing and extent of spending to acquire franchises, the growth of our presence in new markets and the expansion of our omni-channel model in existing markets.
Our assessment of the period of time through which our financial resources will be adequate to support our operations could vary because of, and our future capital requirements will depend on, many factors, including our growth rate, the timing and extent of spending on business acquisitions, the growth of our presence in new markets, and the expansion of our omni-channel model in existing markets.
The primary driver of the increased Points of Access during the year was the continued expansion of our low capital DFD network in alignment with our transformation strategy, as we added 1,273 DFD Doors globally, including 537 DFD Doors to the U.S. and Canada segment, 544 to the International segment, and 192 to the Market Development segment.
The primary driver of the increased Global Points of Access during the year was the continued expansion of our DFD network in alignment with our transformation strategy, as we added 3,508, or 29.4%, new DFD Doors globally, including 2,836 DFD Doors to the U.S. segment, 606 to the International segment, and 66 to the Market Development segment.
Adjusted EBITDA and Adjust Net Income have certain limitations, including adjustments for income and expense items that are required by GAAP. In evaluating these non-GAAP measures, you should be aware that in the future we will incur expenses that are the same as or similar to some of the adjustments in this presentation, such as share-based compensation.
In evaluating these non-GAAP measures, you should be aware that in the future we will incur expenses that are the same as or similar to some of the adjustments in this presentation, such as share-based compensation. Our presentation of these non-GAAP measures should not be construed to imply that our future results will be unaffected by any such adjustments.
We believe that our existing cash and cash equivalents and debt facilities will be sufficient to fund our operating and capital needs for at least the next twelve months.
We had cash and cash equivalents of $29.0 million and $38.2 million as of December 29, 2024 and December 31, 2023, respectively. We believe that our existing cash and cash equivalents and available borrowing capacity under our debt facilities will be sufficient to fund our operating and capital needs for at least the next twelve months.
If we are unable to raise additional capital when desired, or if we cannot expand our operations or otherwise capitalize on our business opportunities because we lack sufficient capital, our business, results of operations and financial condition would be adversely affected.
If we are unable to raise additional capital when desired, or if we cannot expand our operations or otherwise capitalize on our business opportunities because we lack sufficient capital, our business, results of operations, and financial condition would be adversely affected. 49 Table of Contents Cash Flows We generate significant cash from operations and have substantial credit availability and capacity to fund operating and discretionary spending such as capital expenditures and debt repayments.
As of January 1, 2023, we had the following future obligations: • An aggregate principal amount of $748.8 million outstanding under the 2019 Facility; • Non-cancellable future minimum operating lease payments totaling $680.8 million; • Non-cancellable future minimum finance lease payments totaling $47.1 million; and • Purchase commitments under ingredient and other forward purchase contracts of $118.5 million.
As of December 29, 2024, we had the following future obligations: • An aggregate principal amount of $819.5 million outstanding under the 2023 Facility; • An aggregate principal amount of $5.0 million outstanding under short-term, uncommitted lines of credit • Non-cancellable future minimum operating lease payments totaling $664.3 million; • Non-cancellable future minimum finance lease payments totaling $97.0 million; and • Purchase commitments under ingredient and other forward purchase contracts of $98.9 million.
As of January 1, 2023 and January 2, 2022, the Company had approximately $17.7 million and $14.7 million, respectively, reserved for such programs. Inclusive of the receivables from the stop-loss insurance policies, the Company’s limited liability balance was $8.4 million and $7.5 million as of January 1, 2023 and January 2, 2022, respectively.
As of December 29, 2024 and December 31, 2023, we had approximately $34.8 million and $21.0 million, respectively, reserved for such programs. Inclusive of the receivables from the stop-loss insurance policies, the Company’s limited liability balance was $18.7 million and $10.8 million as of December 29, 2024 and December 31, 2023, respectively.
(5) Consists of acquisition and integration-related costs in connection with the Company’s business and franchise acquisitions, including legal, due diligence, consulting and advisory fees incurred in connection with acquisition-related activities for the applicable period.
(3) Consists of acquisition and integration-related costs in connection with the Company’s business and franchise acquisitions, including legal, due diligence, and advisory fees incurred in connection with acquisition and integration-related activities for the applicable period. (4) Consists of start-up costs associated with entry into new countries in which the Company has not previously operated, including Brazil and Spain.
For additional information, refer to Note 7 , Long-Term Debt, to the audited Consolidated Financial Statements. Critical Accounting Estimates The financial information discussed in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” is based upon or derived from the audited Consolidated Financial Statements, which have been prepared in conformity with GAAP.
As of December 29, 2024, the Company had drawn $5.0 million under the agreements which is classified within Current portion of long-term debt on the Consolidated Balance Sheets. 51 Table of Contents Critical Accounting Estimates The financial information discussed in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” is based upon or derived from the audited Consolidated Financial Statements, which have been prepared in conformity with GAAP.
In our International segment, where the Hub and Spoke model is most developed, Sales per Hub reached $9.8 million, up from $9.1 million in the fiscal year 2021, and also up from $6.4 million in the fiscal year 2020.
In our International segment, where the Hub and Spoke model originated, Sales per Hub was $10.1 million, up from $9.9 million in fiscal 2023 and $9.6 million in fiscal 2022.
In addition to grocery and convenience stores, we have also begun to look strategically at additional DFD channels such as Quick Service Restaurant (“QSR”), club membership, and drug stores to further broaden availability of our doughnuts to consumers.
In addition to grocery and convenience stores, we are also expanding in DFD channels such as QSR and club membership to further broaden availability of our doughnuts to consumers. This includes our QSR partnership with McDonald’s.
Fiscal 2021 includes the impact of disallowed executive compensation expense incurred in connection with the IPO. (14) Fiscal 2022 consists of the recognition of previously unrecognized tax benefits unrelated to ongoing operations, as well as benefits attributable to multiple tax years due to lapse of the statute of limitations.
Fiscal 2022 consists of the recognition of previously unrecognized tax benefits unrelated to ongoing operations, as well as benefits attributable to multiple tax years due to lapse of the statute of limitations. Fiscal 2022 also includes the effect of discrete adjustments to the Company’s deferred tax liabilities that are unrelated to the Company’s ongoing operations.
(2) Includes Insomnia Cookies revenues and Fresh Revenues generated by Hubs without Spokes. (3) Total International net revenues is equal to Fresh Revenues from Hubs with Spokes for that business segment.
(2) Includes Insomnia Cookies revenues (through the date of the divestiture) and Fresh Revenues generated by Hubs without Spokes. (3) Total International net revenues is equal to Fresh Revenues from Hubs with Spokes for that business segment. (4) International sales per Hub comparative data has been restated in constant currency based on current exchange rates.
(3) Carts and Food Trucks are non-producing, mobile (typically on wheels) facilities without walls or a door where product is received from a Hot Light Theater Shop or Doughnut Factory. Other includes a vending machine. Points of Access in this category are primarily found in international locations, in airports, train stations, etc. (4) Includes locations in Japan, which are Company-owned.
(2) Includes more than 1,900 McDonald’s QSR shops as of December 29, 2024. (3) Carts and Food Trucks are non-producing, mobile (typically on wheels) facilities without walls or a door where product is received from a Hot Light Theater Shop or Doughnut Factory. Other includes a vending machine.
While we believe that our reserves are adequate, issues raised by a tax authority may be resolved at an amount different than the related reserve and could materially increase or decrease our income tax provision in future periods.
While we believe that our reserves are adequate, issues raised by a tax authority may be resolved at an amount different than the related reserve and could materially increase or decrease our income tax provision in future periods. 52 Table of Contents Realization of deferred tax assets involves estimates regarding (i) the timing and amount of the reversal of taxable temporary differences, (ii) expected future taxable income, (iii) the ability to carry back or carry forward net operating losses and tax credits, and (iv) the impact of tax planning strategies.
U.S. and Canada growth was driven by our efforts to increase the number of DFD Doors served by our Hubs and to increase APD for the DFD Door portfolio, as the segment makes progress toward optimizing the model to look more like the International segment.
In the U.S. we continue our efforts to increase the number of quality Spokes served by our Hubs as we make progress toward optimizing the segment to look more like our International segment.
(10) Fiscal 2022 and fiscal 2021 consist primarily of legal expenses incurred outside the ordinary course of business on matters described in Note 14 , Commitments and Contingencies, to the audited Consolidated Financial Statements, including the net settlement of approximately $3.3 million negotiated with TSW in fiscal 2022.
Fiscal 2023 and fiscal 2022 consist primarily of legal and other regulatory expenses incurred outside the ordinary course of business on matters described in Note 15 , Commitments and Contingencies, to the audited Consolidated Financial Statements included in Item 8 of Part II of this Annual Report on Form 10-K.
In the U.S. and Canada, we reached Sales per Hub of $4.6 million, up from $4.0 million in the fiscal year 2021 and up from $3.5 million in the fiscal year 2020.
In the U.S. segment, we had Sales per Hub of $4.9 million, consistent with the $4.9 million in fiscal 2023 and up from $4.5 million in fiscal 2022.
The following table presents our Hubs, by segment and type, as of the end of fiscal 2022, fiscal 2021, and fiscal 2020, respectively: Hubs Fiscal Years Ended January 1, 2023 January 2, 2022 January 3, 2021 U.S. and Canada: Hot Light Theater Shops (1) 232 238 226 Doughnut Factories 4 4 5 Total 236 242 231 Hubs with Spokes 137 126 113 Hubs without Spokes 99 116 118 International: Hot Light Theater Shops (1) 28 25 27 Doughnut Factories 11 11 9 Total 39 36 36 Hubs with Spokes 39 36 36 Market Development: Hot Light Theater Shops (1) 106 106 116 Doughnut Factories 27 27 26 Total 133 133 142 Total Hubs 408 411 409 (1) Includes only Hot Light Theater Shops and excludes Mini Theaters.
The following table presents our Hubs, by segment and type, as of the end of fiscal 2024, fiscal 2023, and fiscal 2022, respectively: Hubs Fiscal Years Ended December 29, 2024 December 31, 2023 January 1, 2023 U.S.: Hot Light Theater Shops (1) 232 220 228 Doughnut Factories 6 4 4 Total 238 224 232 Hubs with Spokes 158 149 133 Hubs without Spokes 80 75 99 International: Hot Light Theater Shops (1) 40 36 34 Doughnut Factories 14 14 14 Total 54 50 48 Hubs with Spokes 54 50 48 Market Development: Hot Light Theater Shops (1) 106 112 104 Doughnut Factories 27 23 24 Total 133 135 128 Total Hubs 425 409 408 (1) Includes only Hot Light Theater Shops and excludes Mini Theaters.
Our future obligations primarily consist of our debt and lease obligations, as well as commitments under ingredient and other forward purchase contracts.
Our primary use of liquidity is to fund the cash requirements of our business operations, including working capital needs, capital expenditures, acquisitions, and other commitments. Our future obligations primarily consist of our debt and lease obligations, as well as commitments under ingredient and other forward purchase contracts.
The following table and discussion present, for the periods indicated, a summary of our key cash flows from operating, investing and financing activities: Fiscal Years Ended (in thousands) January 1, 2023 (52 weeks) January 2, 2022 (52 weeks) Net cash provided by operating activities $ 139,818 $ 141,224 Net cash used for investing activities (121,474) (153,407) Net cash (used for)/provided by financing activities (16,838) 16,096 Cash Flows Provided by Operating Activities Cash provided by operations totaled $139.8 million for fiscal 2022, a decrease of $1.4 million compared with fiscal 2021.
The following table and discussion present, for the periods indicated, a summary of our key cash flows from operating, investing and financing activities: Fiscal Years Ended (in thousands) December 29, 2024 (52 weeks) December 31, 2023 (52 weeks) Net cash provided by operating activities $ 45,832 $ 45,544 Net cash provided by/(used for) investing activities 19,280 (112,588) Net cash (used for)/provided by financing activities (73,949) 71,862 Operating Activities Cash provided by operations totaled $45.8 million for fiscal 2024, an increase of $0.3 million compared with fiscal 2023.
From these Hubs, we deliver doughnuts to our Fresh Shops, Carts and Food Trucks, and DFD Doors (“Spokes”) through an integrated network of Company-operated delivery routes, ensuring quality and freshness. Specific to the U.S. and Canada segment, certain legacy Hubs have not historically had Spokes.
From these Hubs, we deliver doughnuts to our Fresh Shops, Carts and Food Trucks, and DFD Doors (“Spokes”) primarily through an integrated network of Company-operated delivery routes, designed to ensure quality and freshness. Going forward, we expect to outsource these U.S. DFD deliveries to one or more 3PL carriers, an approach we have used in several international markets.
(“GAAP”); however, management evaluates our results of operations using, among other measures, organic revenue growth, adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”), and Adjusted Net Income as we believe these non-GAAP measures are useful in evaluating our operating performance. These non-GAAP financial measures are not universally consistent calculations, limiting their usefulness as comparative measures.
A Mini Theater is a Spoke location that produces some doughnuts for itself and also receives doughnuts from another producing location. 39 Table of Contents Non-GAAP Measures We report our financial results in accordance with GAAP; however, management evaluates our results of operations using, among other measures, organic revenue growth, Sales per Hub, adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”), Adjusted EBIT, Adjusted Net Income, Diluted, and Adjusted EPS as we believe these non-GAAP measures are useful in evaluating our operating performance.
We are also expanding the delivery radius in several key markets around the world through partnerships with third-party aggregators. Innovation is a significant driver of frequency as we create and introduce premium, fresh and buzz-worthy offerings to consumers across our Points of Access.
Growth in our digital channel is due to improvements in our branded digital platform as well as increasing product availability through third party platforms. Innovation is also a significant driver of frequency as we create and introduce premium and buzz-worthy offerings to consumers across our Global Points of Access.
Our organic growth has also been supplemented by effective pricing increases taken in the second half of fiscal 2021 and again during the second half of fiscal 2022 , leading to significant increase in the average transaction size, but offset some by transaction declines.
Our organic growth has been supplemented by effective pricing increases, with average pricing increasing approximately 5% from fiscal 2023 to fiscal 2024, leading to an increase in the average transaction size, but partially offset by transaction volume declines.
Under the terms of the 2019 Facility, we are subject to a requirement to maintain a Total Net Leverage Ratio of less than 5.25 to 1.00 as of January 1, 2023, which reduces to 5.00 to 1.00 by April 2, 2023.
Under the terms of the 2023 Facility, we are subject to a requirement to maintain a leverage ratio of less than 5.00 to 1.00 as of the end of each quarterly Test Period (as defined in the 2023 Facility) through maturity in March 2028.
In fiscal 2023, we expect to use our available cash to support and invest in the growth of our core businesses, including investing in new ways to serve our consumers and support our shop partners, increasing our omni-channel presence as we increase the expansion of DFD Doors in priority areas, as well as investing in new shop openings and new market penetration within the U.S. and internationally.
In fiscal 2025, we expect to use our available cash to continue to position the business for sustainable growth, including investing in shop improvements, ways to better serve our consumers, and ways to increase our omni-channel presence as we expand our DFD Doors in priority areas and channels.
The Company’s adjusted effective tax rate is 24.1%, 22.4%, and 25.2% for each of the fiscal years 2022, 2021, and 2020, respectively. Fiscal 2022 includes the impact 38 Table of Contents of disallowed executive compensation expense and a discrete tax benefit related to a legal accrual.
Fiscal 2022 includes the impact of disallowed executive compensation expense and a discrete tax benefit related to a legal accrual.
Fiscal 2022 also includes the effect of discrete adjustments to the Company’s deferred tax liabilities that are unrelated to the Company’s ongoing operations. Fiscal 2021 consists primarily of the effect of tax law changes on existing temporary differences.
Fiscal 2023 consists of the recognition of a previously unrecognized tax benefit unrelated to ongoing operations, the effect of tax law changes on existing temporary differences, and a discrete tax benefit unrelated to ongoing operations.
We were in compliance with the financial and other covenants related to the 2019 Facility as of January 1, 2023 and as of the date of this filing of our Annual Report on Form 10-K, and expect to remain in compliance over the next 12 months.
Our leverage ratio was 3.91 to 1.00 as of the end of fiscal 2024 compared to 3.48 to 1.00 as of the end of fiscal 2023. We were in compliance with the financial covenants related to the 2023 Facility as of December 29, 2024 and expect to remain in compliance over the next 12 months.
Other companies may calculate similarly titled financial measures differently than we do or may not calculate them at all. Additionally, these non-GAAP financial measures are not measurements of financial performance under GAAP.
Non-GAAP financial measures are not standardized and it may not be possible to compare these financial measures with other companies’ non-GAAP financial measures having the same or similar names, limiting their usefulness as comparative measures. Other companies may calculate similarly titled financial measures differently than we do or may not calculate them at all.
International illustrates the benefits of leveraging our Hub and Spoke model in the most efficient way to grow the business, as shown by the International segment’s quick recovery from the impacts of the COVID-19 pandemic and growth in profit margins.
The International segment illustrates the benefits of leveraging our Hub and Spoke model as the most efficient way to grow the business, as shown by the consistent Sales per Hub and higher Adjusted EBITDA margins despite elevated commodity costs and macroeconomic conditions.
We continue to grow the percentage of our revenues and Adjusted EBITDA generated outside the U.S. We expect to open in at least three new countries a year, with a key focus in Western Europe and select Asian and South American countries.
Growing Our Global Presence Another key strategic initiative on our journey to become the most loved sweet treat brand in the world is to increase our global presence, focusing on the percentage of our revenues and Adjusted EBITDA generated outside the U.S., with a key focus in Europe and select Asian and South American countries.
(2) Refer to “ Key Performance Indicators and Non-GAAP Measures ” below for more information as to how we define and calculate Adjusted EBITDA and Adjusted Net Income and for a reconciliation of Adjusted EBITDA and Adjusted Net Income to net loss, the most comparable GAAP measure. 32 Table of Contents Significant Events and Transactions Executing on our Transformation Strategy We made strong progress on the execution of our omni-channel strategy in fiscal 2022, where we focus on being able to deliver fresh doughnuts and cookies to where our consumers are located.
(2) Refer to “ Key Performance Indicators and Non-GAAP Measures ” below for more information as to how we define and calculate Adjusted EBITDA, Adjusted EBIT, and Adjusted Net Income, Diluted and for a reconciliation of Adjusted EBITDA, Adjusted EBIT, and Adjusted Net Income, Diluted to net loss, the most comparable measure calculated under accounting principles generally accepted in the U.S.
High profile initiatives during the fourth quarter of fiscal 2022 included holiday and seasonal activations such as Halloween, Thanksgiving, and Christmas, among many others around the world.
During the fourth quarter of fiscal 2024 we delivered the joy that is Krispy Kreme through powerful specialty doughnuts and seasonal activations including Halloween, Thanksgiving, and Christmas among many others around the world.
These additions were offset by the strategic exit of Hot Light Theater Shops in the U.S. discussed in “Significant Events and Transactions.” We plan to continue adding new locations and expanding our Ecommerce and delivery platform in order to extend the availability of our products. We also utilize “Hubs” as a key performance indicator.
We plan to continue adding new locations and expanding our digital platform in order to extend the availability of and access to our products. We are excited about our partnership with McDonald’s and the phasing of the U.S. national rollout, which we believe has validated the attractiveness of the QSR channel. We also utilize “Hubs” as a key performance indicator.
Cash Flows (Used for)/Provided by Financing Activities Cash used for financing activities totaled $16.8 million for fiscal 2022, a reduction in financing of $32.9 million compared with fiscal 2021.
Investing Activities Cash provided by investing activities totaled $19.3 million for fiscal 2024, a fluctuation of $131.9 million compared with fiscal 2023.
We did not have any impairment charges of indefinite-lived intangible assets during any of the periods presented, and we do not anticipate incurring significant impairment charges in the next 12 months. 47 Table of Contents New Accounting Pronouncements Refer to Note 1 , Description of Business and Summary of Significant Accounting Policies, to the audited Consolidated Financial Statements for a detailed description of recent accounting pronouncements. 48 Table of Contents
New Accounting Pronouncements Refer to Note 1 , Description of Business and Summary of Significant Accounting Policies, to the audited Consolidated Financial Statements included in Item 8 of Part II of this Annual Report on Form 10-K for a detailed description of recent accounting pronouncements. 54 Table of Contents
We continued to add quality Global Points of Access across our network as we convert markets into fully implemented Hub and Spoke models, including a net total of 1,410 new Global Points of Access in fiscal 2022 to surpass 11,800 Global Points of Access.
(“GAAP”). 35 Table of Contents Significant Events and Transactions Executing on our Omni-Channel Strategy We made strong progress on the execution of our omni-channel strategy in fiscal 2024, as we continue to add quality Global Points of Access across our network and convert markets into fully implemented Hub and Spoke models.
(6) Consists of start-up costs associated with entry into new countries for which the Company’s brands have not previously operated, including the Insomnia Cookies brand entering Canada and the U.K. (7) Includes lease termination costs, impairment charges, and loss on disposal of property, plant and equipment.
(5) Includes lease termination costs, impairment charges, and loss on disposal of property, plant and equipment. (6) Fiscal 2024 consists primarily of costs associated with the restructuring of the U.S. and U.K. executive teams.
Adjusted EBITDA enables operating performance to be reviewed across reporting periods on a consistent basis and is one of the principal measures used by management to evaluate and monitor our operating performance.
Adjusted EBIT is a principal metric that management uses to monitor and evaluate operating performance and provides a consistent benchmark for comparison across reporting periods.
Results of Operations by Segment – Fiscal Year ended January 1, 2023 compared to the Fiscal Year ended January 2, 2022 The following table presents Adjusted EBITDA by segment for the periods indicated: Fiscal Years Ended Change (in thousands, except percentages) January 1, 2023 (52 weeks) January 2, 2022 (52 weeks) $ % Adjusted EBITDA U.S. and Canada $ 118,483 $ 107,571 $ 10,912 10.1 % International 75,512 81,422 (5,910) -7.3 % Market Development 44,421 40,824 3,597 8.8 % Corporate (47,687) (41,872) (5,815) -13.9 % Total Adjusted EBITDA (1) $ 190,729 $ 187,945 $ 2,784 1.5 % (1) Refer to “ Key Performance Indicators and Non-GAAP Measures ” above for a reconciliation of Adjusted EBITDA to net loss.
The fluctuation of $20.3 million from fiscal 2023 to fiscal 2024 was driven primarily by tax impact of the gain on divestiture of Insomnia Cookies. 47 Table of Contents Results of Operations by Segment – Fiscal Year ended December 29, 2024 compared to the Fiscal Year ended December 31, 2023 The following table presents Adjusted EBITDA by segment for the periods indicated: Fiscal Years Ended Change (in thousands, except percentages) December 29, 2024 (52 weeks) December 31, 2023 (52 weeks) $ % Adjusted EBITDA U.S. $ 112,767 $ 130,979 $ (18,212) -13.9 % International 90,716 96,532 (5,816) -6.0 % Market Development 47,904 42,966 4,938 11.5 % Corporate (57,859) (58,853) 994 1.7 % Total Adjusted EBITDA (1) $ 193,528 $ 211,624 $ (18,096) -8.6 % (1) Refer to “ Key Performance Indicators and Non-GAAP Measures ” above for a reconciliation of Adjusted EBITDA to net income.
Other expenses/(income), net: Other expenses, net of $10.2 million in fiscal 2022 were primarily driven by impairment and lease termination costs, net of gains from sale-leaseback transactions described in Note 8 , Leases, to the audited Consolidated Financial Statements.
Other expenses, net of $10.4 million in fiscal 2023 were primarily driven by impairments and lease termination costs associated with the Branded Sweet Treats exit and the decision to exit certain other underperforming shops, net of a gain from a sale-leaseback transaction.
The following table presents a summary of our financial results for the periods presented: Fiscal Years Ended (in thousands, except percentages) January 1, 2023 (52 weeks) January 2, 2022 (52 weeks) % Change Total Net Revenues (1) $ 1,529,898 $ 1,384,391 10.5 % Net Loss (8,775) (14,843) 40.9 % Adjusted Net Income (2) 56,975 66,723 -14.6 % Adjusted EBITDA (2) 190,729 187,945 1.5 % (1) We generated 12.1% and 12.5% organic revenue growth in fiscal 2022 and fiscal 2021, respectively.
The following table presents a summary of our financial results for the periods presented: Fiscal Years Ended (in thousands, except percentages) December 29, 2024 (52 weeks) December 31, 2023 (52 weeks) % Change Net Revenues (1) $ 1,665,397 $ 1,686,104 -1.2 % Net Income/(Loss) Attributable to Krispy Kreme, Inc. 3,095 (37,925) 108.2 % Adjusted Net Income, Diluted (2) 19,170 46,182 -58.5 % Adjusted EBITDA (2) 193,528 211,624 -8.6 % Adjusted EBIT (2) 90,228 115,103 -21.6 % (1) We generated 5.0% organic revenue growth in fiscal 2024.
This has been partially offset by efficiency benefits from DFD expansion as we execute our Hub and Spoke transformation. Selling, general and administrative expense: Selling, general and administrative (“SG&A”) expenses increased $0.8 million, or 0.4%, from fiscal 2021 to fiscal 2022.
Selling, general and administrative expense: Selling, general and administrative (“SG&A”) expenses increased $7.4 million, or 2.8%, from fiscal 2023 to fiscal 2024.
Our International segment net revenue grew $32.9 million, or approximately 9.9%, from fiscal 2021 to fiscal 2022, in spite of foreign currency translation impacts of $26.1 million from a strengthening U.S. dollar . International organic revenue grew $59.0 million or approximately 17.7%, from fiscal 2021 to fiscal 2022.
U.S. organic revenue was also impacted adversely by an estimated $11 million in lost revenues related to the 2024 Cybersecurity Incident in the fourth quarter of fiscal 2024. Our International segment net revenue grew $29.5 million, or approximately 6.0%, from fiscal 2023 to fiscal 2024 , in spite of foreign currency translation i mpacts of $5.9 million.
We expect DFD growth to continue to be one of our most significant drivers of earnings growth, through both increased door count and growth in average revenue per door per week (“APD”), which rose by 9.9% in the U.S. and Canada in fiscal 2022 compared to fiscal 2021.
The increase in DFD Doors is the result of our focus on executing our omni-channel strategy to drive our transformation, and includes expansion with key customers. We expect DFD growth to be one of our most significant drivers of earnings growth, primarily through increased door count and also through optimization of revenue per door.
The interest expense for the fiscal years ended January 2, 2022 and January 3, 2021 was $10.4 million and $22.5 million, respectively. No interest expense was recorded for the fiscal year ended January 1, 2023.
For the fiscal years ended December 31, 2023, and January 1, 2023 the Company recorded lease impairment and termination costs of $6.6 million and $8.2 million, respectively.
Product and distribution costs (exclusive of depreciation and amortization) : Product and distribution costs increased $52.1 million, or 14.7%, from fiscal 2021 to fiscal 2022, largely in line with and attributable to the same factors as our revenue growth.
Market Development organic revenue grew $1.4 million, or approximately 1.5%, from fiscal 2023 to fiscal 2024, due to the continued expansion of our international franchise business. Product and distribution costs (exclusive of depreciation and amortization): Product and distribution costs decreased $34.1 million, or 7.7%, from fiscal 2023 to fiscal 2024.
Our Market Development segment net revenue grew $7.9 million, or approximately 6.4%, from fiscal 2021 to fiscal 2022, in spite of the impacts of franchise acquisitions such as KK Canada and certain foreign currencies devaluing against the U.S. dollar .
Our Market Development segment net revenue declined $4.0 million, or approximately 4.3%, from fiscal 2023 to fiscal 2024, due to the $5.4 million impact of franchise acquisitions in fiscal 2024 (the results of acquired franchise businesses are reported within the Market Development segment prior to the respective dates of acquisition, and are reported within the U.S. or International segments, as applicable, following the respective dates of acquisition).
Refer to Note 7 , Long-Term Debt, Note 8 , Leases, and Note 14 , Commitments and Contingencies, to the audited Consolidated Financial Statements for more information. We had cash and cash equivalents of $35.4 million and $38.6 million as of January 1, 2023 and January 2, 2022, respectively.
Refer to Note 8 , Long-Term Debt, Note 9 , Leases, and Note 15 , Commitments and Contingencies, to the audited Consolidated Financial Statements included in Item 8 of Part II of this Annual Report on Form 10-K for further information.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeA 10% increase or decrease in the average fiscal 2022 exchange rate of the Canadian dollar, the British pound sterling, the Euro, the Australian dollar, the New Zealand dollar, the Mexican peso, and the Japanese yen against the U.S. dollar would have resulted in a decrease or increase of approximately $43.6 million in our total net revenues through the fiscal year ended January 1, 2023.
Biggest changeA 10% increase or decrease in the average fiscal 2024 exchange rate of any of these currencies against the U.S. dollar would have resulted in a decrease or increase, respectively, of approximately $51.9 million in our total net revenues through the fiscal year ended December 29, 2024.
From time to time, we engage in foreign currency exchange and credit transactions with our non-U.S. subsidiaries, which we typically hedge. To date, the impact of such transactions, including the cost of hedging, has not been material. We do not engage in foreign currency or hedging transactions for speculative purposes. 49 Table of Contents
From time to time, we engage in foreign currency exchange and credit transactions with our non-U.S. subsidiaries, which we typically hedge. To date, the impact of such transactions, including the cost of hedging, has not been material. We do not engage in foreign currency or hedging transactions for speculative purposes. 55 Table of Contents
To mitigate the risk of fluctuations in the price of our gasoline purchases, we may directly purchase commodity futures contracts. Interest Rate Risk We are exposed to changes in interest rates on any borrowings under our debt facilities, which bear interest based on the one-month LIBOR (with a floor of zero).
To mitigate the risk of fluctuations in the price of our fuel purchases, we may directly purchase commodity futures contracts. Interest Rate Risk We are exposed to changes in interest rates on any borrowings under our debt facilities, which bear interest based on the one-month SOFR (with a floor of zero).
Additionally, from time to time we may enter into forward contracts for supply through our vendors for raw materials that are ingredients of our products or that are components of such ingredients, including wheat and soybean oil. We are also exposed to the effects of commodity price fluctuations in the cost of gasoline used by our delivery vehicles.
Additionally, from time to time we may enter into forward contracts for supply through our vendors for raw materials which are ingredients of our products or which are components of such ingredients, including wheat, sugar, and vegetable oil. We are also exposed to the effects of commodity price fluctuations in the cost of gasoline used by our delivery vehicles.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk Effects of Changing Prices – Inflation We are exposed to the effects of commodity price fluctuations in the cost of ingredients of our products, of which flour, sugar and shortening are the most significant. Throughout fiscal 2022 we have experienced headwinds from commodity inflation globally.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk Effects of Changing Prices – Inflation We are exposed to the effects of commodity price fluctuations in the cost of ingredients of our products, of which flour, sugar and shortening are the most significant. Throughout fiscal 2024, we continued to experience headwinds from commodity inflation globally.
A substantial majority of these revenues, or approximately $435.7 million through the fiscal year ended January 1, 2023, were attributable to subsidiaries whose functional currencies are the Canadian dollar, the British pound sterling, the Euro, the Australian dollar, the New Zealand dollar, the Mexican peso, and the Japanese yen.
A substantial majority of these revenues, or approximately $519.1 million through the fiscal year ended December 29, 2024, were attributable to subsidiaries whose functional currencies are the Canadian dollar, the British pound sterling, the Euro, the Australian dollar, the New Zealand dollar, the Mexican peso, and the Japanese yen.
Foreign Currency Risk We are exposed to foreign currency translation risk on the operations of our subsidiaries that have functional currencies other than the U.S. dollar, whose revenues accounted for approximately 28% of our total net revenues through the fiscal year ended January 1, 2023.
Foreign Currency Risk We are exposed to foreign currency translation risk on the operations of our subsidiaries that have functional currencies other than the U.S. dollar, whose revenues accounted for approximately 31% of our total net revenues through the fiscal year ended December 29, 2024.
Based on the $243.8 million of unhedged outstanding as of January 1, 2023, a 100 basis point increase or decrease in the one-month LIBOR would result in a $2.4 million increase or decrease, respectively, in interest expense for a 12-month period, based on the daily average of the one-month LIBOR for the fiscal year ended January 1, 2023.
Based on the $324.5 million of unhedged debt outstanding as of December 29, 2024, a 100 basis point increase or decrease in the one-month SOFR would result in a $3.2 million increase or decrease, respectively, in interest expense for a 12-month period, based on the daily average of the one-month SOFR for the fiscal year ended December 29, 2024.
To mitigate the impact of changes in LIBOR on interest expense for a portion of our variable rate debt, we have entered into interest rate swaps on $505.0 million notional of our $748.8 million of outstanding debt as of January 1, 2023, which we account for as cash flow hedges.
To mitigate the impact of changes in SOFR on interest expense for a portion of our variable rate debt, we have entered into interest rate swaps on $500.0 million notional of our $824.5 million of outstanding debt under the 2023 Facility and short-term lines of credit as of December 29, 2024, which we account for as cash flow hedges.
Removed
The Financial Conduct Authority in the U.K. intends to phase out LIBOR by the end of 2023.
Added
The interest rate swap agreements are scheduled to mature in March 2028.
Removed
We have negotiated terms in consideration of this discontinuation and do not expect that the discontinuation of the LIBOR rate, including any legal or regulatory changes made in response to its future phase out, will have a material impact on our liquidity or results of operations.

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