DNUT

Krispy Kreme, Inc.

NASDAQ · CONSUMER DISCRETIONARY · RETAIL-FOOD STORES

2.88

−0.09 −3.03%

USD · close Oct 21

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MKT CAP $499.7MP/E —DIV YIELD —FCF YIELD 7.47%REV TTM $1.5B −4.8%NET INCOME −$90.3MNET DEBT $772.4M52W 2.87 – 4.70SEC XBRL · TTM TO Invalid Date

How DNUT rewrote its risk factors

10-K ITEM 1A · FY2024 → FY2025

Text kept

34%

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256

new sentences

Dropped

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+3,074

words, now 15,274

New in FY2025

These disclosures reflect the Company’s beliefs and opinions as to risks or uncertainties that could have a material adverse effect on the Company, our business, financial condition, prospects, results of operations, cash flows, and stock price.
References to past events are examples only and are not intended to be a complete listing or to indicate the likelihood of similar events occurring in the future.
Summary Risk Factors Risks Related to Food Safety and Consumer Preferences • Our business may be adversely affected by food safety issues, including food-borne illnesses, tampering, contamination, or cross-contamination. • Changes in consumer preferences and demographic trends could negatively impact our business.
Risks Related to Cybersecurity, Data Privacy, Information Technology, and Internal Controls • Any material failure, inadequacy, or interruption of our information technology has and may in the future adversely affect our ability to effectively operate our business and result in financial or other loss. • Breaches or failures of our information technology systems or other cybersecurity or data security-related incidents have and may in the future have an adverse effect on our business, financial condition, and results of operations. • If we, our franchisees, or our third-party service providers fail to protect, or to comply with laws and regulations governing our data, we or our franchisees could be exposed to data loss, litigation, fines, and other liabilities that could harm our reputation and have a material adverse effect on our business, financial condition, and results of operations. • If our remediation of the previously identified material weakness is not effective, or if we fail to develop and maintain an effective system of internal controls, our ability to produce timely and accurate financial statements may be impaired, investors may lose confidence in our financial reporting, and the price of our common stock may decline.
Risks Related to Executing Our Business Strategy • We may be unable to successfully execute our business strategy, including our turnaround plan. • We may not realize the anticipated benefits from past or potential future acquisitions, divestitures (including refranchising), investments, or other strategic transactions. • We have recognized significant impairment charges for our goodwill and long-lived assets and may be required to recognize additional impairment charges in the future for goodwill and other assets.
Future impairment of these assets could have a material adverse effect on our financial condition and results of operations. • We have limited influence over the operations of our franchisees and subfranchisees, and any failure by them to operate effectively or to maintain safety and quality standards in compliance with applicable law could have a material adverse effect on our operating results and reputation. • Our fresh delivery business channels depend on key customers and are subject to risks if such key customers reduce their purchases or terminate their relationships with us. • Our reputation and brand image are essential to our business success and a failure to protect our brand image could have a material adverse effect on our business, results of operations or financial condition. • Our success depends on our ability to compete with many food service businesses. • If we cannot keep pace with technological changes impacting our industry, we may be unable to compete effectively, and our results of operations could be negatively affected. • Our significant indebtedness could adversely affect us.
Risks Related to Our Global Expansion and Growth • A key portion of our growth strategy depends on opening new and maintaining existing Krispy Kreme shops and Points of Access both domestically and internationally. • Our future growth and profitability will depend on our ability to successfully accelerate international development with strategic partners and joint ventures. • We face risks as we continue to focus on profitable expansion of our fresh delivery and digital channels. • Political, economic, currency, and other risks associated with our international operations could have a material adverse effect on our and our international franchisees’ operating results.
Risks Related to Our Supply Chain • We are the exclusive or primary supplier of doughnut mixes and other key ingredients to shops worldwide and any problems supplying these ingredients could negatively affect our and our franchisees’ ability to make doughnuts. • We are the only manufacturer of our doughnut-making equipment.
Any interruption in supply could impair our ability to make and deliver our signature products, adversely affecting our business, financial condition, and results of operations. • Our reliance on a single vendor for nearly all distribution of materials and supplies in the U.S. and Canada poses risks to our and our franchisees’ ability to make doughnuts. • Our profitability is sensitive to changes in the cost of commodities and we may not be able to increase prices to fully offset inflationary pressures on costs, which may adversely affect our financial condition or results of operations.
Risks Related to Our Human Capital • An inability to recruit and retain personnel could have a material adverse effect on our operations. • Changes in the cost of labor could adversely affect our business, financial condition, and results of operations.
Risks Related to Regulation, Litigation and Intellectual Property • We may be subject to litigation that could adversely affect us by increasing our expenses, diverting management attention, or subjecting us to significant monetary damages and other remedies. • Our business may be adversely affected by litigation, regulation and publicity concerning food or occupational safety, quality, health, and other issues, which could negatively affect public policy and consumer preferences toward our products. • We are subject to franchise laws and regulations that govern our status as a franchisor and regulate some aspects of our franchise relationships.
Our ability to develop new franchised shops and to enforce contractual rights against franchisees may be adversely affected by these laws and regulations, which could cause our franchise revenues to decline. • Healthcare and employment legislation could adversely affect our business, financial condition, and results of operations. • Changes in tax laws and regulations could have a material impact to our tax expense or cash tax obligations. • Our annual effective income tax rate can change materially as a result of changes in our geographic mix of U.S. and foreign earnings and other factors, including changes in tax laws and changes made by regulatory authorities. • The full realization of our deferred tax assets may be affected by a number of factors, including future earnings and the feasibility of ongoing planning strategies. • We may be affected by matters related to environmental, social, and governance (“Responsibility”) trends and events, including governmental regulation and supply chain disruptions, that may adversely affect our business and reputation. • Our failure or inability to obtain, maintain, protect, and enforce our trademarks or other intellectual property could adversely affect our business and the value of our brand.
Risks Related to Crises, Catastrophic Events, and Business Continuity • Public health outbreaks, epidemics, or pandemics have disrupted and may in the future disrupt, our business, and could have a material adverse effect on our business, financial condition, and results of operations. • Adverse weather conditions, natural disasters, war or terrorist attacks, pandemics, or other catastrophic events could have a material adverse effect on our business.
Risks Related to Ownership of our Common Stock • Certain provisions of Delaware Law, our governing documents, and the ownership of approximately 43% of our common stock by JAB (defined below) could delay or prevent a change in control, which could adversely affect the price of our common stock. • If the ownership of our common stock continues to be highly concentrated, it may limit stockholders other than JAB from influencing significant corporate decisions and may result in conflicts of interest. • Sales of substantial amounts of our common stock could negatively affect the price of our common stock.
We operate in the food service and manufacturing sector and are subject to food safety concerns, which are common both in the food service industry and the food supply chain.
These concerns include risks of food-borne illnesses/injuries, tampering, contamination, and cross-contamination.
Although we maintain a food safety system, such system may be insufficient in design and execution to prevent or avoid risks associated with such food safety concerns.
These risks may escalate as we launch new products, broaden our distribution through channels such as our fresh delivery operations and digital channels, and expand our manufacturing and production facilities.
Inadequate food safety measures, including in our facilities and Points of Access, could lead to shutdowns or other interruptions, disrupting operations in both our in-shop and fresh delivery operations.
Moreover, we and our franchisees rely on domestic and international suppliers to provide quality ingredients and to properly handle, store and transport our ingredients for delivery to our shops in compliance with our established procedures and standards and in compliance with applicable laws and regulations, including sanitation and pest control standards.
Any failure by our domestic or international suppliers to meet our quality standards, or to comply with domestic or international food industry standards, could cause our ingredients to be contaminated, which could be difficult to detect and could jeopardize the safety of our food.
Any such disruption in our supply chain could negatively impact our brand and our results.
Moreover, our dependence on third-party delivery services and third-party Points of Access heightens the risk of these food safety issues.
Additionally, food safety concerns may expose us to legal actions, regulatory investigations, product recalls, and financial consequences, including penalties.
Any association of our brand, our franchisees, or the broader food service industry with food safety issues could harm our reputation, leading to a decline in revenue and profitability and could have a material adverse effect on our business, financial condition, and results of operations.
In addition, our products fall into the category of indulgences, making them particularly sensitive to shifts in discretionary spending patterns and dietary trends (including use of weight loss medication).
Shifts in consumer behavior based on any of these factors may lead to reduced sales.
In the event of unfavorable economic conditions where we or our franchisees operate, our consumers may have reduced disposable income, leading to potential reductions in their consumption of our products.
Any such reductions could have a material adverse effect on our business, financial condition, and results of operations.
Risks Related to Cybersecurity, Data Privacy, Information Technology, and Internal Controls We rely on information technology in our operations.
Among other things, the effectiveness of our business management is closely tied to the reliability and capacity of these systems, and our omni-channel strategy relies heavily on robust information technology systems.
For example, during fiscal 2024, unauthorized activity on a portion of our information technology systems resulted in the Company experiencing certain operational disruptions, which materially affected the Company’s business operations and results of operations.
For further information regarding the 2024 Cybersecurity Incident (defined below), see “Cybersecurity” in Item 1C of Part I of this Annual Report and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in Item 7 of Part II of this Annual Report.
Moreover, to the extent we invest in and utilize emerging technologies, including artificial intelligence and machine learning, such technologies may not deliver expected efficiencies and could introduce new risks, such as those related to cybersecurity, data privacy, inaccuracies, hallucinations, bias or discrimination and intellectual property infringement, which may become more pronounced as our reliance on such technologies increases.
We regularly experience directed attacks intended to lead to interruptions and delays in operations as well as loss, misuse or theft of personal information and other data, confidential information, or intellectual property.
We have in the past experienced cybersecurity incidents, such as the 2024 Cybersecurity Incident, which materially affected the Company’s business operations and results of operations.
For more information regarding the 2024 Cybersecurity Incident, see “Cybersecurity” in Item 1C of Part I of this Annual Report and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in Item 7 of Part II of this Annual Report.
Any interruption, such as those caused by a breach, in our or our third-party providers’ information technology systems could severely interrupt our operations, negatively affect our business, financial standing, and operational results, and harm our reputation and brand credibility among consumers and business partners.
Our cybersecurity insurance may not fully cover the consequences of potential future security breaches or cybersecurity incidents, and future coverage may not be available at reasonable costs or at all.
Insurers might also deny claims for cybersecurity incidents.

and 216 more.

Gone since FY2024

If any of the following risks or uncertainties materialize, our business, financial condition, prospects, results of operations, cash flows, and stock price could be materially and adversely affected.
Summary Risk Factors Risks Related to Food Safety and Consumer Preferences • Our business may be adversely affected by food safety issues, including food-borne illnesses, tampering, contamination, or cross-contamination. • Changes in consumer preferences and demographic trends, including in response to unfavorable economic conditions, could negatively impact our business.
Risks Related to Cybersecurity, Data Privacy, Information Technology, and Internal Controls • Any material failure, inadequacy, or interruption of the information technology that we use in our operations has and may in the future adversely affect our ability to effectively operate our business and result in financial or other loss. • Breaches or failures of our information technology systems or other cybersecurity or data security-related incidents have and may in the future have an adverse effect on our business, financial condition, and results of operations. • If we, our franchisees, or our third-party service providers are unable to protect regulated, protected, or personally identifiable information, we or they could be exposed to data loss, litigation, regulatory fines, and other liability, which could harm our reputation and have a material adverse effect on us. • We have identified a material weakness in our internal control over financial reporting.
Risks Related to Executing Our Business Strategy • We may not realize the anticipated benefits from acquisitions, divestitures, investments, or other strategic transactions. • Our franchisees may affect our operating results and reputation. • Our DFD business channels depend on key customers and are subject to risks if such key customers reduce their purchases or terminate their relationships with us. • Our reputation and brand image are essential to our business success. • Our success depends on our ability to compete with many food service businesses. • If we cannot keep pace with technological changes impacting our industry, we may be unable to compete effectively, and our results of operations could be negatively affected. • We have incurred significant indebtedness, which could adversely affect us.
Risks Related to Our Global Expansion and Growth • A key portion of our growth strategy depends on opening new Krispy Kreme shops and Points of Access both domestically and internationally. • We face risks as we continue to focus on expansion of our omni-channel business model. • Political, economic, currency, and other risks associated with our international operations could adversely affect our and our international franchisees’ operating results.
Risks Related to Our Supply Chain • We are the exclusive or primary supplier of key ingredients to shops worldwide and any problems supplying these ingredients could negatively affect our and our franchisees’ ability to make doughnuts. • We are the only manufacturer of our doughnut-making equipment.
Any interruption in supply could impair our ability to make and deliver our signature products, adversely affecting our business, financial condition, and results of operations. • Our reliance on a single vendor for nearly all distribution of materials and supplies in the U.S. and Canada poses risks to our and our franchisees’ ability to make doughnuts if the vendor fails to provide these materials and supplies in accordance with our agreement. • Our profitability is sensitive to changes in the cost of raw materials and other commodities and we may not be able to increase prices to fully offset inflationary pressures on costs, which may adversely affect us.
Risks Related to Our Human Capital • An inability to recruit and retain personnel could have a material adverse effect on our operations. • Changes in the availability or cost of labor could adversely affect us.
Risks Related to Regulation, Litigation and Our Intellectual Property • We may be subject to litigation that could adversely affect us by increasing our expenses, diverting management attention, or subjecting us to significant monetary damages and other remedies. • Our business may be adversely affected by litigation, regulation and publicity concerning food quality, health, and other issues, which could negatively affect public policy and consumer preferences toward our products. • Our ability to develop new franchised shops and to enforce contractual rights against franchisees may be adversely affected by laws and regulations governing our status as a franchisor, which could cause franchise revenues to decline. • Healthcare legislation and other potential employment legislation could adversely affect our business, financial condition, and results of operations. • Our annual effective income tax rate can change materially as a result of changes in our geographic mix of U.S. and foreign earnings and other factors, including changes in tax laws and changes made by regulatory authorities. • The full realization of our deferred tax assets may be affected by a number of factors, including future earnings and the feasibility of ongoing planning strategies. • We may be affected by matters related to environmental, social, and governance (“Responsibility”) trends and events, including governmental regulation and supply chain disruptions, that may adversely affect us. • Our failure or inability to obtain, maintain, protect, and enforce our trademarks or other intellectual property could adversely affect our business and the value of our brand.
Risks Related to Crises, Catastrophic Events, and Business Continuity • Public health outbreaks, epidemics, or pandemics have disrupted and may in the future disrupt, our business, and could have a material adverse effect on our business, financial condition, and results of operations. • Adverse weather conditions, natural disasters, war or terrorist attacks, pandemics, or other catastrophic events could adversely affect our business.
Risks Related to Ownership of our Common Stock • Certain provisions of Delaware Law, our certificate of incorporation, and our bylaws and the Investors’ Rights Agreement with JAB Holdings B.V.
("JAB") could hinder, delay, or prevent a change in control of us. • If the ownership of our common stock continues to be highly concentrated, it may prevent shareholders from influencing significant corporate decisions and may result in conflicts of interest. • The market price of our common stock could be negatively affected by sales of substantial amounts of our common stock in the public markets. • We may be unable to pay dividends on our common stock.
We operate in the food service sector and are subject to food safety concerns, including risks of food-borne illnesses, tampering, contamination, and cross-contamination.
These risks may escalate as we launch new products, broaden our distribution through channels such as our DFD operations, and expand our manufacturing and production facilities.
Inadequate food safety measures in our manufacturing facilities and Points of Access could lead to temporary shutdowns, disrupting operations in both our in-shop and DFD operations.
Moreover, our dependency on third-party delivery services and third-party Points of Access heightens the risk of these food safety issues.
The risk is even higher with partners we do not monitor or monitor less rigorously.
Additionally, food safety concerns may expose us to legal actions, regulatory investigations, product recalls, and financial penalties.
Any association of our brand, our franchisees, or the broader food service industry with food safety issues could harm our reputation, leading to a decline in revenue and profitability.
In addition, our products fall into the category of indulgences, making them particularly sensitive to shifts in discretionary spending patterns.
In the event of unfavorable economic conditions where we and our franchisees operate, our consumers may have reduced disposable income, leading to potential reductions in their consumption of our products.
Consumer preferences could also be negatively impacted by the litigation, legislative and regulatory risks described below under “Risks Related to Regulation and Litigation—Our business may be adversely affected by litigation, regulation and publicity concerning food quality, health, and other issues, which can negatively affect public policy and consumer preferences toward our products.” Risks Related to Cybersecurity, Data Privacy, Information Technology, and Internal Controls We rely on information technology in our operations.
Among other things, the effectiveness of our business management is closely tied to the reliability and capacity of these systems, and our omni-channel strategy, particularly our delivery model, relies heavily on robust information technology systems.
For example, during the fourth quarter of fiscal 2024, unauthorized activity on a portion of our information technology systems resulted in the Company experiencing certain operational disruptions, including with online ordering in parts of the U.S., which materially affected the Company’s business operations.
For further information regarding the 2024 Cybersecurity Incident (defined below), see “Cybersecurity” in Item 1C of Part I of this Annual Report on Form 10-K and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in Item 7 of Part II of this Annual Report on Form 10-K.
We periodically experience directed attacks intended to lead to interruptions and delays in operations as well as loss, misuse or theft of personal information and other data, confidential information, or intellectual property.
We have in the past experienced cybersecurity incidents.
For example, the 2024 Cybersecurity Incident materially affected the Company’s business operations.
For further information regarding the 2024 Cybersecurity Incident, see “Cybersecurity” in Item 1C of Part I of this Annual Report on Form 10-K and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in Item 7 of Part II of this Annual Report on Form 10-K.
A breach or perceived breach in our or our third-party providers’ information technology systems could severely interrupt our operations, negatively affect our business, financial standing, and operational results, and harm our reputation and brand credibility among consumers and business partners.
Our cybersecurity insurance may not fully cover the consequences of the 2024 Cybersecurity Incident or potential future security breaches or cybersecurity incidents, and future coverage may not be available at reasonable costs or at all.
Insurers might also deny claims for the 2024 Cybersecurity Incident or other incidents.
If we, our franchisees, or our third-party service providers are unable to protect our consumer and employee data and other regulated, protected, or personally identifiable information, we or our franchisees could be exposed to data loss, litigation, regulatory fines, and other liability, which could harm our reputation and have a material adverse effect on our business, financial condition and results of operations.
Our operations necessitate collecting, transmitting, and storing large amounts of consumer and employee data, including sensitive information like credit and debit card numbers and other personally identifiable details.
Non-compliance with legal requirements or industry standards could severely damage our brand or reputation, result in significant fines or penalties, and have a material adverse effect on our business, financial condition, or results of operations.
Additionally, our reliance on independent service providers for payment processing poses risks if these providers are unable or unwilling to offer services or if their costs escalate.
Non-compliance with these international regulations could result in significant penalties and legal liabilities for us and our franchisees.
Adapting our and our franchisees’ systems to these evolving requirements may require substantial investment and time.
We have identified a material weakness in our internal control over financial reporting .
We are evaluating steps to remediate the material weakness.

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Sentence-level comparison of Item 1A in the two most recent 10-Ks (FY2024 ↗, FY2025 ↗). A reworded sentence counts as one dropped and one added, so heavy edits read as low “kept”. Headings and page furniture are stripped; nothing is summarised by a model.

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