Major Chain Restaurant Reports 10.4% Revenue Decline Amid "Challenges"

During 2024, many restaurants and fast food chains experienced a decline in growth and sales due to various factors, including rising costs and declining foot traffic. This week, one major chain reported a relatively significant decline in revenue growth. In the fourth quarter of 2024, which ended Dec. 29, Krispy Kreme reported a 10.4% decline, and the CEO is offering an explanation for the dip in sales.

The CEO Explains Why This Happened

According to CEO Josh Charlesworth, the company's drop in sales is partially due to the sale of Insomnia Cookies and also a cybersecurity attack, which resulted in delivery services going offline for over a month. During an earnings call on Thursday, Charlesworth said that the company's DFD ("Delivered Fresh Daily" network) is growing, reporting 21% revenue growth and surpassing $250 million in sales during the past quarter.

They Believe Things Will Turn Around Due to a Partnership with McDonald's

The company also has a growing partnership with McDonald's, announcing this week that the doughnuts will be available in New York restaurants. Previously, they had been available in Chicago, Cleveland, Indianapolis, Pittsburgh, and Louisville. "By the end of this year, more than half of all McDonald's restaurants in the U.S. will offer the sweet treat, with nationwide availability by the end of 2026," a press release from McDonald's stated.

They Are Also Expanding Globally

The brand is also growing internationally, currently operating in 40 global markets. However, the CEO admits they are in a transitionary period and are continuing to develop distribution partnerships and add new ones, including Costco.

The CEO Released a Statement

"We simplified the business by divesting a majority stake in Insomnia Cookies," Charlesworth said. "We added national distribution partners in the U.S. and we restructured our management teams to fully focus on our largest growth opportunities: profitable U.S. delivered fresh daily expansion and the wider adoption of our capital-light international franchise model."

They Are Adding Value

They are also committed to adding value and rotating limited-time offers and seasonal doughnuts. "Original Glazed doughnuts will get the spotlight as we evolve our marketing efforts toward simplified pricing and focus on value conscious consumers, who we know are under pressure," Charlesworth said. "Although we will offer fewer days overall on discount, we will use meaningful discounts to drive demand on days like National Donut Day that we can turn into buzz-worthy events."

KFC Also Reported a Decline in Sales

Several other chains reported declines in 2024, including KFC. In November, the fried chicken restaurant's same-store sales in the U.S. dropped 5% in the quarter ending on September 30, marking the chain's third straight quarter of declines in 2024. They also saw worldwide same-store sales decline 2%. "Our sales didn't meet expectations in a few key markets, including China and the Middle East, where we have outsized exposure, and as a result, we tempered our expectations in the fourth quarter," they said in one phone call about the decline.

And, So Did Burger King

Burger King's U.S. sales declined 0.4% in the quarter ended September 30, compared with a 6.6% rise last year, with the company attributing it to "soft demand" in France and "weakness" in China and the Middle East. While they tried to reduce prices, Restaurant Brands CEO Joshua Kobza maintains that aggressive sector-wide promotions made it difficult for their Fiery menu option "to cut through all the value messages in the market."