Krispy Kreme is stepping back from paying for its own growth. The doughnut chain reduced capital outlays by 70% in the first half of 2026, largely because it transferred many locations to franchisees.
Spending cuts that size free up cash, which is what a company trying to lower its debt needs. Moving many stores to franchisees helped shrink the bill, and the goal is to pay down debt while the company rebuilds how it operates.
Krispy Kreme is not shrinking, though. It is changing who pays for new stores and how the brand reaches customers.
Franchisees run Krispy Kreme-branded shops as independent operators. Franchised locations now bring in about 42% of sales.
That share was up from roughly 25% in 2025. Krispy Kreme wants franchisees to handle half of all sales starting next year.
Krispy Kreme still expects to open 100 or more locations in 2026, and franchisees will operate almost all of them. That is how a business can keep expanding while spending less on new shops.
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The same approach is moving overseas, where Krispy Kreme finished re-franchising Japan earlier this year and wants two to three more deals like that. Farther out, the company wants most overseas operations run by franchisees.
In late July, the company announced shops in Mauritius and plans to enter the Netherlands and Estonia. Executives also said talks continue about moving additional non-U.S. markets to franchise partners.
Franchising is only part of the story. The rest of the plan is to put doughnuts and baked goods where people already shop, including Walmart, Target, and supermarkets. Krispy Kreme's factories have plenty of room for that push. "They are running at about 25% of their full production capacity," CEO Josh Charlesworth told analysts.
That unused capacity could turn into extra sales without a big round of spending. Discounts are playing a role, too. Krispy Kreme says deals have led to larger orders and higher sales. That runs counter to pizza chains and some eateries that have pulled back on discounts because those restaurants say promotions hurt revenue.
Krispy Kreme has been shifting responsibilities to franchise partners for some time. Those partners now account for a much larger share of sales than they did in 2025, when franchisees generated roughly 25% of the total. The push is meant to lower the company's debt load while still letting the brand expand through outside capital. The overseas effort follows the same logic, and the company is counting on supermarkets and big retailers to sell more doughnuts without building new shops.
For investors, the debt number is worth watching. Krispy Kreme's net leverage, a common measure of debt compared with earnings, ended the second quarter at 5.4x.
That is below its goal of less than 5.5x for the year. Getting under a target is good, but the real test is staying there while the franchise transition plays out.
Franchise-led growth comes with a trade-off. The company gives up a share of store revenue, but it gets cheaper expansion and a lighter debt load.
The company is betting that selling more doughnuts through retail partners will make up for the revenue it no longer keeps from company-run stores. How that bet plays out matters outside the company's books because it could land in your portfolio.
If franchisees deliver, you are looking at a leaner Krispy Kreme with a healthier balance sheet. If growth stalls, the stock stays a story about debt, and that is a harder one to sell.
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