Krispy Kreme Inc reported a 43% year-over-year increase in adjusted EBITDA to $28.8 million for the second quarter of fiscal 2026, driven by productivity initiatives and strict cost controls.

Net revenue declined 13% to $331 million, reflecting the impact of refranchising operations in the Western U.S. and Japan. Excluding these divestitures, organic revenue remained essentially flat, while system-wide sales grew 2.6% in constant currency to $497 million.

Segment Performance and Margin Expansion

The company’s turnaround strategy yielded significant margin improvements across its business units. Consolidated adjusted EBITDA margin expanded by 340 basis points to 8.7%. The U.S. segment saw adjusted EBITDA rise 38% to $13.8 million, with margins improving by approximately 370 basis points to 8%. This growth was supported by the outsourcing of U.S. logistics and savings from SG&A reductions.

In contrast, the International segment reported an adjusted EBITDA decline of 22% to $14.2 million, primarily due to the refranchising of Japan. The Market Development segment, however, surged with adjusted EBITDA increasing 117% to $19.4 million, fueled by higher royalty revenues from the Middle East, Japan, and Brazil.

Strategic Pivot and Balance Sheet Health

Krispy Kreme continues to execute its capital-light strategy through refranchising. Franchisee-generated sales now account for 42% of system-wide sales, up from approximately 25% last year. The company aims to reach 50% franchisee contribution next year. This shift has contributed to a reduction in net debt, with the net leverage ratio improving to 5.4 times trailing four-quarter adjusted EBITDA, down from 6.7 times at the end of fiscal 2025.

Capital expenditures fell 70% year-over-year to $16.1 million in the first half of 2026, supporting free cash flow generation. The company maintained its full-year guidance, projecting net revenue between $1.25 billion and $1.35 billion, and adjusted EBITDA between $140 million and $150 million.

What the Numbers Show

A divergence exists between top-line contraction and bottom-line expansion. While net revenue fell 13% due to refranchising, system-wide sales grew 2.6%, indicating that underlying consumer demand remains robust despite the structural change in ownership. The 340 bps margin expansion alongside a 70% drop in capex highlights the immediate financial benefits of the asset-light model, prioritizing cash flow and royalty streams over direct operational control.

Investor rights firm Halper Sadeh LLC has launched an investigation into Krispy Kreme, Inc. (NASDAQ: DNUT) officers and directors for potential breaches of fiduciary duties. This new inquiry follows a similar probe by Kahn Swick & Foti, LLC, intensifying legal scrutiny on the company’s management regarding its stalled partnership with McDonald's Corporation.

The investigations center on allegations that executives failed to disclose material information about the pace and profitability of the nationwide rollout. Halper Sadeh specifically seeks to determine if leadership violated state or federal laws by misleading investors during a critical period of operational reassessment.

Timeline of disclosure concerns

The core of both inquiries involves a discrepancy between investor assurances and actual operational progress. On February 25, 2025, Krispy Kreme reassured investors that it remained on track to reach about 6,000 restaurants by year end, highlighting growth opportunities and potential profitability.

However, on May 8, 2025, the company disclosed it was pausing the rollout to reassess the deployment schedule with McDonald's to achieve a profitable business model. It stated it did not expect to launch in any additional restaurants in the second quarter of 2025.

Stagnation in restaurant count

Data disclosed alongside the pause reveals that expansion had effectively halted prior to the announcement. As of March 30, 2025, Krispy Kreme doughnuts were available in just over 2,400 McDonald's restaurants. This figure was effectively unchanged from the total reached on February 25, 2025, indicating that the expansion had stalled almost immediately after management assured investors of continued momentum.

Legal proceedings and investigation scope

Following these disclosures, Krispy Kreme and certain executives were sued in a securities class action lawsuit charging them with failing to disclose material information in violation of federal securities laws. This litigation remains ongoing.

Kahn Swick & Foti’s investigation focuses on whether the company’s leadership breached their fiduciary duties to shareholders. The firm invites long-term holders of Krispy Kreme shares to discuss their legal rights without obligation or cost.

New inquiry by Halper Sadeh

On September 25, 2026, Halper Sadeh LLC announced its own investigation into whether certain officers and directors breached their fiduciary duties. The firm states that shareholders may seek corporate governance reforms, the return of funds to the company, or other relief. Halper Sadeh represents investors globally who have fallen victim to securities fraud and corporate misconduct, having recovered millions of dollars on behalf of defrauded investors.

Contact information for Halper Sadeh includes Daniel Sadeh and Zachary Halper at (212) 763-0060 or via email at sadeh@halpersadeh.com and zhalper@halpersadeh.com . The firm is located at One World Trade Center, New York, NY.

About the law firms

Kahn Swick & Foti, LLC is a boutique securities litigation firm whose partners include former Louisiana Attorney General Charles C. Foti, Jr. In the past year, the firm was ranked among the top 10 nationally by SCAS based on total settlement value.

Halper Sadeh LLC is an investor rights law firm focused on implementing corporate reforms and recovering funds for victims of corporate misconduct.