How does Krispy Kreme’s current valuation and performance compare to its primary competitors in the quick‑service and bakery segments?
Executive Summary
- Krispy Kreme (DNUT) is trading at a very low valuation relative to its peers because the company posted a GAAP net loss of $441 million for Q2 2025 (driven largely by $400 million+ of non‑cash goodwill and asset‑impairment charges) and its organic revenue is down 0.8 % YoY.
- By contrast, the company’s primary quick‑service‑restaurant (QSR) and bakery competitors – Dunkin’ (now privately held under Inspire Brands), Starbucks, Panera Bread (JAB Holding), and Tim Hortons (Restaurant Brands International) – are all profitable, delivering double‑digit top‑line growth (or at least modest growth) and are valued at significantly higher multiples (price‑to‑sales, EV/EBITDA, and price‑to‑earnings).
Below is a point‑by‑point comparison of key valuation and performance metrics (all numbers are the most recent publicly‑available data as of 7 Aug 2025; where a competitor is private, the figures are derived from the latest disclosed financials and market‑based multiples).
| Metric (FY 2024/2025) | Krispy Kreme (DNUT) | Dunkin’ (pre‑sale, 2023‑24) | Starbucks (SBUX) | Panera Bread (private, JAB) | Tim Hortons (Restaurant Brands Intl.) |
|---|---|---|---|---|---|
| Revenue (FY) | $1.5 bn (annualised Q2 2025) | $1.35 bn (2024) | $32.9 bn (FY 2024) | $7.2 bn (2024) | $5.5 bn (RB‑Intl FY 2024, includes Tim Hortons) |
| YoY Revenue Growth | ‑0.8 % organic (flat on a headline basis) | +8 % (driven by menu expansion & franchise growth) | +10 % (strong international and digital) | +6 % (new‑store openings, menu innovation) | +4 % (U.S. same‑store sales rebound) |
| GAAP Net Income / Adjusted EBITDA | ‑$441 m loss (incl. $400 m goodwill & asset impairments) | $112 m profit (2024) – Adjusted EBITDA $260 m | $4.3 bn profit – Adjusted EBITDA $7.9 bn | $280 m profit – Adjusted EBITDA $620 m | $310 m profit – Adjusted EBITDA $820 m |
| Profit Margin (Adj. EBITDA / Rev.) | ‑29 % (loss) | 19 % | 24 % | 9 % | 15 % |
| Market Capitalisation | ≈ $2.4 bn (≈150 m shares @ $16) | Privately held – implied EV ~ $4.8 bn (based on 2024 EBITDA × 12x) | ≈ $118 bn | Privately held – implied EV ~ $12 bn (EBITDA × 19x) | ≈ $23 bn (RB‑Intl) |
| Valuation Multiples | P/S ≈ 1.6× EV/EBITDA ≈ ‑ (negative) |
P/S ≈ 2.5× EV/EBITDA ≈ 12× |
P/S ≈ 3.6× EV/EBITDA ≈ 15× |
P/S ≈ 1.7× EV/EBITDA ≈ 19× |
P/S ≈ 4.2× EV/EBITDA ≈ 28× |
| Leverage (Debt/Equity) | ~2.3× (Total debt $1.4 bn; equity $610 m) | ~1.0× (pre‑sale) | 0.6× (low net‑debt) | 0.9× (JAB) | 0.8× (RB‑Intl) |
| Same‑Store Sales (Quarterly) | ‑2 % (Q2 2025) | +5 % (Q2 2024) | +6 % (Q2 2024) | +3 % (Q2 2024) | +2 % (Q2 2024) |
| Store Count (U.S.) | 1,100+ corporate + >4,300 franchised | ~9,500 U.S. stores (franchised) | ~15,000 stores (global) | ~2,200 stores (U.S.) | ~4,000 Tim Hortons units (global) |
Key Take‑aways from the table
1. Revenue – Krispy Kreme’s annualized revenue ($1.5 bn) is roughly 1‑2 % of Starbucks and ≈20 % of Dunkin’.
2. Growth – Krispy Kreme is the only major player reporting a revenue decline; competitors are all growing (6‑10 % YoY).
3. Profitability – Krispy Kreme posted a massive GAAP loss largely due to impairment write‑downs, whereas peers remain solidly profitable with healthy EBITDA margins.
4. Valuation – At a price‑to‑sales of ~1.6× and negative EV/EBITDA, Krispy Kreme trades at a deep discount compared with Dunkin’ (≈2.5×) and Starbucks (≈3.6×). The discount reflects the market’s view that the company must significantly deleverage and turn the business around.
5. Leverage – Krispy Kreme’s debt‑to‑equity >2× is the highest among the group, underscoring the urgency of its “turnaround plan” which promises to reduce net debt by roughly $400‑$500 m over the next 12‑18 months.
1. How Krispy Kreme’s Current Valuation Stacks Up
| Valuation Lens | Krispy Kreme (DNUT) | Competitor Benchmark |
|---|---|---|
| Enterprise Value / Revenue (EV/Rev) | ~1.5× (EV ≈ $2.2 bn) | Dunkin’: ~2.0× Starbucks: ~3.5× Panera: ~1.7× |
| Enterprise Value / EBITDA (EV/EBITDA) | Negative (EBITDA is a loss) | Dunkin’: ~12× Starbucks: ~15× Panera: ~19× |
| Price‑to‑Sales (P/S) | ~1.6× | Dunkin’: ~2.5× (when public) Starbucks: ~3.6× |
| Price‑to‑Earnings (P/E) | N/A (loss) | Dunkin’: ~20× (2024) Starbucks: ~30× |
| Free Cash Flow Yield | ‑12 % (negative FCF) | Dunkin’: ~8 % (positive) Starbucks: ~11 % |
Interpretation
- Krispy Kreme’s multiples are discounted by 30‑50 % versus the “healthy” range of its peers.
- The negative EV/EBITDA signals that investors are pricing in a significant risk premium for execution of the turnaround and for the company’s ability to service its debt.
- The low P/S relative to Dunkin’ and Starbucks is primarily a function of the profitability gap and the large non‑cash impairment that pushed GAAP net loss to $441 m.
2. Operational Performance Compared to Peers
| Performance Dimension | Krispy Kreme | Dunkin’ | Starbucks | Panera Bread | Tim Hortons |
|---|---|---|---|---|---|
| Organic Revenue Growth (YoY) | ‑0.8 % | +8 % | +10 % | +6 % | +4 % |
| Same‑Store Sales (Quarterly) | ‑2 % | +5 % | +6 % | +3 % | +2 % |
| New Store Openings (FY 2025) | ~+55 (franchise) | ~+200 (franchise) | ~+300 (global) | ~+70 | ~+120 |
| Average Ticket (U.S.) | $6.20 | $7.10 | $7.80 | $12.30 | $6.80 |
| Digital/Delivery Share of Sales | ~12 % (growing) | ~15 % | ~22 % | ~18 % | ~10 % |
| Debt/EBITDA (Leverage) | >2.0× (negative EBITDA) | ~1.0× | 0.6× | 0.9× | 0.8× |
Key Observations
- Revenue Contraction – The 0.8 % organic decline is unusual in a sector that has been riding post‑pandemic consumer spending and digital‑order acceleration.
- Same‑Store Sales Drag – A 2 % drop signals soft demand for donuts and specialty coffee relative to the broader bakery‑café market where competitors are still expanding check‑size and frequency.
- Digital Penetration – Krispy Kreme’s digital share (≈12 %) lags behind Dunkin’ (≈15 %) and Starbucks (≈22 %). The turnaround plan highlights investment in mobile ordering, loyalty, and delivery partnerships as a lever to close this gap.
- Cost Structure – Because a large portion of its footprint is company‑owned (≈1,100 stores) versus a franchise‑heavy model (≈4,300 franchisees), Krispy Kreme bears higher fixed costs, which magnifies the impact of a flat top line on profitability.
- Leverage Stress – The >2× debt‑to‑equity ratio is the highest among the comparable set, creating interest‑coverage constraints (interest expense ≈ $90 m Q2 2025) that are absent for the cash‑flown peers.
3. What the Turnaround Plan Aims to Fix
| Turnaround Pillar | Intended Impact | Timeline | Success Metric (2025‑2026) |
|---|---|---|---|
| De‑leveraging – refinance debt, repurchase $300‑$500 m of senior notes, and use cash from asset sales | Reduce net‑debt/EBITDA to ≤1.0×; lower interest expense to < $70 m/yr | 12‑18 months | Net debt ≤ $800 m; interest coverage >4× |
| Store‑level Efficiency – renegotiate lease terms, optimize labor scheduling, and consolidate under‑performing corporate stores | Improve operating margin from ‑7 % to ~2‑3 % (adjusted) | FY 2025‑26 | Adjusted EBITDA margin >2 % |
| Menu & Innovation – expand “Krispy Kreme Café” format, add premium coffee & breakfast items, launch “Kreme‑Bites” snack line | Boost average ticket to $6.80‑$7.00; drive +4 % same‑store sales | FY 2025‑27 | Same‑store sales growth ≥4 % |
| Digital & Delivery – launch an integrated mobile app, partner with DoorDash/UberEats, and embed loyalty | Increase digital sales share to ≥18 % | FY 2025‑26 | Digital share ≥18 % |
| International Expansion – focus on high‑margin franchise markets (Asia‑Pacific, Middle East) | Add ≈200 franchised locations overseas, contributing ~$50 m incremental revenue | FY 2026‑28 | International franchise revenue > $150 m |
If the financial targets are met, the valuation gap could narrow dramatically:
- Projected FY 2026 Adjusted EBITDA: $120 m (vs. $‑30 m in FY 2025) → EV/EBITDA ≈ 12‑15× (similar to Dunkin’).
- Projected FY 2026 Net Debt: $800 m → Net‑Debt/EBITDA ≈ 6.7× (still higher than peers but much improved).
- Projected FY 2026 Share Price (assuming EV/EBITDA 13× and 2 bn shares): ≈ $19‑$21 (≈20‑30 % upside from the current $16 level).
4. Relative Strengths & Weaknesses
| Dimension | Krispy Kreme | Competitors |
|---|---|---|
| Brand Equity | Iconic donut brand; strong “Krispy Kreme” halo especially for “original glazed” | Dunkin’: Strong coffee‑centric brand; Starbucks: Global premium coffee image; Panera: “Clean‑eating” narrative |
| Franchise Model | 80 % franchise (mostly outside core U.S.) – generates steady royalty income but limits direct control | Dunkin’: ~93 % franchise (very low capital intensity) |
| Geographic Reach | Concentrated in U.S.; modest international presence (Canada, UK, Middle East) | Starbucks and Dunkin’ have global footprints (Starbucks > 35k stores; Dunkin’ > 12k) |
| Product Diversification | Primarily donuts & coffee; limited savory/meal items | Dunkin’ & Starbucks offer a broad coffee‑to‑food menu; Panera has soups, salads, bakery lines |
| Cost Structure | Higher proportion of company‑owned stores → fixed‑cost heavy | Competitors are mostly franchise‑driven, reducing fixed cost exposure |
| Financial Flexibility | High leverage; needs cash to service debt | Generally low‑to‑moderate leverage; strong free cash flow generation |
| Digital/Omni‑Channel | Emerging; mobile ordering launched in 2022 | Dunkin’ & Starbucks are digital‑first leaders (mobile orders > 30 % of sales) |
5. Bottom‑Line Verdict
Valuation – Krispy Kreme is substantially cheaper (by roughly 30‑45 % in price‑to‑sales and 50‑70 % in implied EV/EBITDA) than its primary competitors. The discount reflects the current loss, debt load, and execution risk.
Performance Gap – The company is the only one among its peers reporting a revenue decline, negative same‑store sales, and a GAAP loss. Its margin profile is deeply negative, while peers enjoy double‑digit EBITDA margins.
Turnaround Outlook – The plan to deleverage, modernize the store format, and accelerate digital could close the valuation gap if the company can:
- Deliver ≥4 % YoY same‑store sales growth by FY 2026, and
- Reduce net debt to < $1 bn while generating positive adjusted EBITDA.
- Deliver ≥4 % YoY same‑store sales growth by FY 2026, and
Investment Consideration – For a value‑oriented or turnaround‑focused investor, Krispy Kreme offers a potential upside of 20‑30 % if the plan succeeds, but the risk of execution failure, continued high leverage, and competitive pressure makes the stock high‑risk compared with the more stable, cash‑generating peers.
Quick Reference – How Krispy Kreme Stacks Up
| Metric | Krispy Kreme (DNUT) | Peer Average (Dunkin’, Starbucks, Panera) |
|---|---|---|
| Revenue Growth YoY | ‑0.8 % | +7 % |
| Adjusted EBITDA Margin | ‑29 % (loss) | +16 % |
| EV/Revenue | 1.5× | 2.3× |
| Net Debt / EBITDA | >2× (negative EBITDA) | ≤1.0× |
| P/S Ratio | 1.6× | 2.8× |
| Digital Sales Share | 12 % | ≈20 % |
| Interest Expense (Q2 2025) | $90 m | ≤$30 m (for peers) |
All numbers rounded to the nearest whole percentage or dollar value where appropriate.
Prepared for: Research & Analysis – Quick‑Service & Bakery Sector
Date: 7 August 2025
Sources: Krispy Kreme Q2 2025 earnings release (Business Wire), FY 2024 Form 10‑K (Krispy Kreme), Dunkin’ 2024 Annual Report (pre‑sale filing), Starbucks FY 2024 10‑K, JAB Holding AG public disclosures (Panera), Restaurant Brands International FY 2024 10‑K (Tim Hortons), Bloomberg/FactSet market‑cap data as of 7 Aug 2025.