Krispy Kreme Raises 2026 Revenue Outlook as Q3 Margin Improves

Krispy Kreme Inc. (NASDAQ: DNUT) increased and narrowed its full-year 2026 net revenue guidance after reporting stronger underlying profitability, substantially improved free cash flow and lower leverage in the third quarter. Quarterly net revenue declined to $328.8 million from $375.3 million a year earlier, while international franchise expansion supported growth in systemwide sales.

The doughnut chain now expects 2026 net revenue of $1.35 billion to $1.40 billion, compared with its previous range of $1.25 billion to $1.35 billion. The company maintained an outlook for adjusted EBITDA of $140 million to $150 million and systemwide sales growth of 2% to 4%.

Krispy Kreme also expects more than $15 million of free cash flow for the year and a net leverage ratio of 5.50 times. Planned capital expenditures were reduced to less than $40 million to $45 million from a previous range of $50 million to $60 million. The company continues to target more than 100 shop openings, nearly all through franchisees.

Underlying margin expands

Third-quarter adjusted EBITDA was $35.3 million, with an adjusted EBITDA margin of 10.7%. On an as-reported basis, adjusted EBITDA declined 13% from $41 million a year earlier, and the margin slipped 10 basis points from 10.8%.

However, the prior-year period included a $9.3 million cybersecurity insurance recovery. Excluding that benefit, third-quarter 2025 adjusted EBITDA was approximately $31 million with an 8.3% margin. On that basis, adjusted EBITDA increased 13% and the margin expanded by 240 basis points in the latest quarter. Adjusted EBITDA and its related margin are non-GAAP measures.

Cash generation also improved. Free cash flow for the first nine months of 2026 was negative $10 million, an $82 million year-over-year improvement from negative $92 million in the comparable 2025 period. Krispy Kreme defines free cash flow as cash provided by operating activities less property and equipment purchases.

The net leverage ratio fell to 5.5 times at the end of the third quarter, compared with 6.7 times in the fourth quarter of 2025 and 7.5 times in the second quarter of 2025. The company attributed the improvement since announcing its turnaround in August 2025 to lower net debt and higher adjusted EBITDA.

Refranchising remains central to turnaround

Krispy Kreme’s turnaround plan centers on refranchising international operations, improving operating efficiency, reducing capital intensity and focusing U.S. expansion on sustainable, profitable revenue streams. The company also plans to use strategic partners and existing assets to support growth while limiting direct capital requirements.

During 2026, Krispy Kreme completed the refranchising of Japan and its joint venture in the western United States. It also completed the outsourcing of U.S. logistics ahead of schedule and signed four new international development agreements. Franchisees accounted for approximately 42% of systemwide sales, up from about 25% in 2025, though still below the company’s stated goal of roughly 50%.

Management said it remains focused on executing the turnaround, including further international refranchising, franchise-led market development and operational efficiency initiatives.

The outlook remains subject to execution and financial risks. The presentation identified the company’s significant debt load, compliance with credit-facility covenants, franchisee and service-provider performance, supply-chain disruptions, commodity and fuel costs, tariffs, inflation, currency movements and geopolitical tensions among the principal uncertainties. Krispy Kreme also cited food-safety, cybersecurity, brand, consumer-demand, labor and regulatory risks that could cause actual results to differ from its expectations.