Krispy Kreme Inc
For the period ended Dec 29, 2024. Filed Feb 27, 2025.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Feb 27, 2025
DNUT$4.03-3.4%Stored close · as of Nov 9, 2026
What changed in Risk Factors?
Read the current filingPrevious report: 10-K
Period ended 2023-12-31; filed 2024-02-27.
0001857154-24-000018
Item 1A. Risk FactorsCurrent report: 10-K
Period ended 2024-12-29; filed 2025-02-27.
0001857154-25-000013
Item 1A. Risk FactorsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 181 previous paragraphs and 228 current paragraphs.
57 unchanged; 104 reworded; 29 added; 18 removed; 2 previous and 38 current paragraphs rearranged.
Tables are not compared: 0 previous and 0 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (29)
Current report
Risks Related to Cybersecurity, Data Privacy, Information Technology, and Internal Controls
Current report
•We have identified a material weakness in our internal control over financial reporting. If our remediation of the 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.
Current report
•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.
Current report
Risks Related to Regulation, Litigation and Our Intellectual Property
Current report
•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.
Current report
•Adverse weather conditions, natural disasters, war or terrorist attacks, pandemics, or other catastrophic events could adversely affect our business.
Current report
Changes in consumer preferences and demographic trends, including in response to unfavorable economic conditions, could negatively impact our business.
Current report
Risks Related to Cybersecurity, Data Privacy, Information Technology, and Internal Controls
Current report
We have identified a material weakness in our internal control over financial reporting. If our remediation of the 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.
Current report
We are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and other laws and regulations applicable to public companies. These laws and regulations require, among other things, that we maintain effective internal control over financial reporting and disclosure controls and procedures. They also require management to perform an annual assessment of the effectiveness of our internal control over financial reporting and disclosure of any material weaknesses in such controls. We are required to have our independent registered public accounting firm provide an attestation report on the effectiveness of our internal control over financial reporting.
Current report
We have identified a material weakness in our internal control over financial reporting. We are evaluating steps to remediate the material weakness. These remediation measures may be time consuming and costly, and there is no assurance that these measures will ultimately have the intended effects or that additional material weaknesses will not be identified. In addition, even if we are successful in strengthening our controls and procedures, in the future those controls and procedures may not be adequate to prevent or identify irregularities or errors or to facilitate the fair presentation of our financial statements. For additional information related to the material weakness in internal control over financial reporting and the related remedial measures, see Item 9A, “Controls and Procedures,” of Part II of this Annual Report on Form 10-K.
Current report
Any failure to remediate the identified material weakness, or develop or maintain effective internal control over financial reporting and disclosure controls, or any difficulties encountered in their implementation or improvement, could result in a restatement of our consolidated financial statements for prior periods, cause us to fail to meet our financial and other reporting obligations, result in an adverse opinion regarding our internal control over financial reporting from our independent registered public accounting firm, or lead to investigations or sanctions by regulatory authorities or other potential claims or litigation. Any of the foregoing could have a material adverse effect on our business, financial condition, and results of operations, and could cause our investors to lose confidence in the accuracy and completeness of our financial reports and the price of our common stock to decline.
Current report
Our ability to compete will depend on the success of our plans to effectively respond to consumer preferences, improve existing products, develop and roll-out new products, and manage the complexity of operations as well as the impact of our competitors’ actions. In addition, our long-term success will depend on our ability to strengthen our consumers’ digital experience through mobile ordering, delivery, kiosks, loyalty programs, and social interaction. Some of our competitors offer a broader product range and have substantially greater financial resources, higher revenues, and greater economies of scale than we do. These advantages may allow them to offer aggressive pricing, implement their operational strategies more quickly or effectively than we can, or benefit from changes in technologies, which could harm our competitive position. These competitive advantages may be exacerbated in a difficult economy, thereby permitting our competitors to gain market share. We may be unable to successfully respond to changing consumer preferences, including with respect to new technologies and alternative methods of delivery. In addition, online platforms and aggregators may direct potential customers to other options based on paid placements, online reviews or other factors. If we are unable to maintain our competitive position, we could experience lower demand for products, downward pressure on prices, reduced margins, an inability to take advantage of new business opportunities, a loss of market share, and reduced profitability.
Current report
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.
Current report
Emerging technologies such as artificial intelligence, machine learning, and automation are impacting many industries and business operations, including ours. If we do not adequately invest in new technology, appropriately implement new technologies, or evolve our business at sufficient speed and scale in response to such developments, or if we do not make strategic investments to respond to these developments, our products, results of operations, and ability to develop and maintain our business could be negatively affected. Our competitors or other third parties may incorporate such technologies into their products and operations more quickly or more successfully than us, which could impair our ability to compete effectively and adversely affect our results of operations.
Current report
Moreover, we cannot predict consumer or team member acceptance of these developing technologies (e.g. automation, artificial intelligence, and new delivery channels) or their impact on our business, nor can we be certain of our ability to implement such technologies, any of which could result in loss of sales, dissatisfaction from our customers and employees, or negative publicity that could adversely affect our reputation and financial results.
Current report
As previously disclosed, we expect to outsource to one or more third-party logistics (“3PL”) carriers the daily delivery of fresh doughnuts to grocers, convenience stores, quick service restaurants, and others. To the extent that we outsource logistics, we would have reduced control over the related processes, costs, and quality control. Our reliance on third parties may lead to shipping delays and disruptions, unanticipated costs, and failures to provide adequate customer service that are outside of our direct control. If we are not satisfied with a 3PL carrier, we may be unable to quickly pivot away from utilizing its services and, even if we are able to do so, we may be subject to significant penalties for doing so. Any of these consequences could have a material adverse effect on our reputation, business, operating results, and financial condition.
Current report
•Political unrest, disputes or war, or labor unrest impacting countries in which we or our franchisees operate; and
Current report
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 our financial condition or results of operations.
Current report
Our attempts to offset these cost pressures, such as through increases in the selling prices of some of our products and leveraging our market size to secure economies of scale in procurement, may not be successful. Higher product prices may result in reductions in sales volume. Consumers may be less willing to pay a price differential for our branded products and may increasingly purchase lower-priced offerings, or may forego some purchases altogether, during an economic downturn or times of increased inflationary pressure. To the extent that price increases or packaging size decreases are not sufficient to offset these increased costs adequately or in a timely manner, or if they result in significant decreases in sales volume, our financial condition, results of operations, and cash flows may be adversely affected.
Current report
Given the recent changes to streamline our management structure, the departure of any key person could have a significant impact and would be potentially disruptive to our business until such time as a suitable replacement is hired. These changes may also increase the likelihood of turnover amongst our employees and impact our relationships with our customers and other market participants, which may create uncertainty concerning our future direction and performance and negatively impact our ability to execute our business strategy quickly and effectively. Moreover, a failure to maintain an adequate number of employees with appropriate skill sets and talent could delay the execution of our operational strategies, result in loss of institutional knowledge, and reduce our supply of future management skill. Any of these consequences could adversely affect our business, operating results and financial condition.
Current report
We manage and mitigate certain legal risks through policies, terms of use, arbitration agreements, limitations of liability, venue selection, choice-of-law, and indemnification requirements. These requirements may be subject to differing interpretations, rulings, and legal frameworks in different U.S. federal, state, and foreign courts, and may not be enforceable in some jurisdictions.
Current report
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.
Current report
Additional labor-related regulation or further increases in labor expenses could increase our costs and adversely affect our business, financial condition, and results of operations.
Current report
Moreover, we have and in the future may establish certain commitments, targets, or goals related to Responsibility matters. Our ability to meet these commitments and navigate the associated risks is subject to various external factors and uncertainties, many of which are beyond our control. If we are not successful or are perceived as ineffective in achieving our stated goals, or if stakeholders are dissatisfied with our Responsibility strategy or actions we take in response to Responsibility-related matters, we could be exposed to market, operational, or reputational challenges and costs. Any failure or perceived failure to adequately address these considerations in line with legal requirements or stakeholder expectations could have an adverse effect on our business or brand reputation.
Current report
Adverse weather conditions, natural disasters, war or terrorist attacks, pandemics, or other catastrophic events could have an adverse effect on our business.
Current report
Unforeseen events such as severe adverse weather conditions, earthquakes, hurricanes, tornadoes, flooding, and other natural disasters, wars or terrorist attacks, pandemics, or other catastrophic events, as well as the actions taken in response to these unforeseen events could affect guest traffic at our Company-owned and franchisee-operated shops. In more extreme scenarios, temporary shop closures may become necessary, sometimes for extended durations. If our disaster recovery and business continuity plans do not resolve disruptions caused by these unforeseen events in an effective and timely manner, they could result in prolonged interruptions in our operations and could have an adverse effect on our sales, business, financial condition, and results of operations.
Removed paragraphs (18)
Previous report
Concerns about our data privacy and security practices, even if unfounded, could harm our reputation, deter potential users, and negatively impact our business. Any of these outcomes could adversely affect our business operations, financial condition, and future prospects.
Previous report
In our shop operations, we face challenges from aggressive pricing by competitors and the potential entry of new players into our markets, which could affect our sales and profit margins. Additionally, many competitors offer a broader product range and possess significantly greater financial and other resources, enabling them to better adapt to pricing and market shifts in the quick service restaurant industry. The relatively low start-up costs for retail indulgence and similar food service ventures also lower the barriers to entry, further escalating competition.
Previous report
Ensuring the reliability and continuity of our supply chain is of utmost importance to safeguard the seamless operation of our shops in the U.S. and Canada, and we actively monitor and assess potential risks in this regard.
Previous report
While we strive to leverage our market size to secure economies of scale in procurement, it is essential to recognize that effective cost management cannot always be guaranteed. Unfavorable shifts in commodity prices have the potential to impact our profitability, underscoring the importance of ongoing diligence in managing and mitigating these risks.
Previous report
It is important to note that not all current or former employees may have valid arbitration agreements and waivers of class certification in place, and certain arbitration agreements may not fully protect us from specific claims, particularly in certain states such as California where Private Attorney General Act claims are involved. Additionally, unfavorable rulings or developments may occur in cases unrelated to our direct involvement.
Previous report
Considering these factors, in combination with other potential increases in labor expenses, there is a possibility of material adverse effects on our business, financial condition, and operational results. We remain vigilant in monitoring developments in labor-related legislation to adapt and comply accordingly.
Previous report
Loss of our trade secret recipes could adversely affect our sales.
Previous report
Our competitive advantage is significantly driven by the fact that our doughnut recipes and formulations are closely guarded trade secrets. While we take reasonable precautions to protect these trade secrets, any inadvertent disclosure to competitors could potentially have a substantial adverse impact on our competitive standing. It is essential to acknowledge that safeguarding trade secrets can be a complex endeavor.
Previous report
Moreover, it is feasible that others may independently discover our trade secrets and confidential information. In such instances, we would be unable to assert any trade secret rights against these parties. We remain vigilant in our efforts to protect our trade secrets, recognizing the critical role they play in maintaining our competitive edge.
Previous report
Adverse economic conditions or disruptions in the markets where we operate could adversely impact our business, results of operations, and financial condition.
Previous report
It is crucial to acknowledge that government interventions in response to economic disruptions do not always guarantee the restoration of consumer confidence. Prolonged disruptions in both domestic and global economies have the potential to exert adverse effects on our business, financial performance, and overall financial health. We remain vigilant in monitoring economic developments and their potential impact on our operations.
Previous report
Adverse weather conditions could adversely affect our business.
Previous report
Unfavorable weather conditions have the potential to affect guest traffic at our Company-owned and franchisee-operated shops. In more extreme scenarios, such as hurricanes, tornadoes, flooding, or other natural disasters, which may be exacerbated by the effects of climate change, temporary shop closures may become necessary, sometimes for extended durations. Such closures would invariably have an adverse impact on our shop sales.
Previous report
Moreover, as part of our commitment to making a positive global impact, we have established specific commitments, targets, and goals related to Responsibility concerns. We are also evaluating opportunities to expand these commitments further. It is important to note that our competitors may not share a similar level of ambition in setting environmental or sustainability objectives, potentially leading to lower supply chain and operational costs for them. We may choose to communicate these commitments, targets, and goals through public disclosures. Nevertheless, our ability to meet these commitments and navigate the associated risks is subject to various external factors and uncertainties, many of which are beyond our control. If we are not successful, or if we are perceived as ineffective, in achieving our Responsibility strategy or in mitigating Responsibility-related risks to our business, we could be exposed to market, operational, reputational, and execution challenges and costs.
Previous report
Moreover, credit rating agencies assess our creditworthiness by considering our capital structure, financial policies, as well as our financial position and operating results at the time. A downgrade in our credit ratings could occur due to changes in our capital structure, shifts in the methodology used by credit rating agencies to evaluate our creditworthiness, their perceptions of credit market conditions impacting our current or future financial position, or other factors. Such a downgrade could lead to increased borrowing costs. Furthermore, a significant credit rating downgrade may reduce financial institutions' willingness to participate in our vendor finance programs and diminish their attractiveness to suppliers who may seek to sell payment obligations to financial institutions. Additionally, a significant credit rating downgrade might restrict our business's flexibility to engage in certain transactions, including the execution and renewal of specific leases.
Reworded paragraphs (104)
Previous wording
Investing in our securities involves a variety of risks and uncertainties, known and unknown, including, among others, those discussed below. You should carefully consider the risks described below together with other information set forth in this Annual Report on Form 10-K. If any of the following risks or uncertainties occur, our business, financial condition, prospects, results of operations, and cash flows could be materially and adversely affected. The risks discussed below are not the only risks we face. Additional risks or uncertainties not currently known to us, or that we currently deem immaterial, may also have a material adverse effect on our business, financial condition, prospects, results of operations, or cash flows. We cannot assure you that any of the events discussed in the risk factors below will not occur.
Current wording
Investing in our securities involves a variety of risks and uncertainties including those discussed below. 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. The risks discussed below are not the only risks we face. Additional risks or uncertainties not currently known to us, or that we currently deem immaterial, may also have a material adverse effect on our business, financial condition, prospects, results of operations, cash flows, or stock price.
Previous wording
Our business may be adversely affected by food safety issues, including food-borne illnesses, tampering, or contamination.
Current wording
•Our business may be adversely affected by food safety issues, including food-borne illnesses, tampering, contamination, or cross-contamination.
Previous wording
Changes in consumer preferences and demographic trends could negatively impact our business.
Current wording
•Changes in consumer preferences and demographic trends, including in response to unfavorable economic conditions, could negatively impact our business.
Previous wording
Breaches or failures of our information technology systems or other cybersecurity or data security-related incidents may have an adverse impact on our business, financial condition, and results of operations.
Current wording
•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.
Previous wording
We will face risks as we continue to focus on expansion of our omni-channel business model.
Current wording
•We face risks as we continue to focus on expansion of our omni-channel business model.
Previous wording
We are the only manufacturer of substantially all our doughnut-making equipment. If we have any problems producing this equipment, our shops’ ability to make doughnuts could be negatively affected.
Current wording
•We are the only manufacturer of our doughnut-making equipment. Any problems producing this equipment could negatively affect our shops’ ability to make doughnuts.
Previous wording
We have limited suppliers for many of the product components and services that we rely on and 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.
Current wording
•We have limited vendors for many of the product components and services that we rely on, and we have a single vendor for our glaze flavoring. 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.
Previous wording
Our reliance on a single vendor for distribution of materials and supplies in the U.S. and a portion of Canada poses risks to our and our franchisees’ ability to make doughnuts if the vendor fails to provide these materials and supplies per the agreement.
Current wording
•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.
Previous wording
Our profitability is sensitive to changes in the cost of raw materials and other commodities.
Current wording
•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.
Previous wording
An inability to recruit and retain personnel could have materially adverse effects on our operations.
Current wording
•An inability to recruit and retain personnel could have a material adverse effect on our operations.
Previous wording
Changes in the availability or cost of labor could adversely affect our business.
Current wording
•Changes in the availability or cost of labor could adversely affect us.
Previous wording
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 brands.
Current wording
•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.
Previous wording
Public health outbreaks, epidemics, or pandemics, including the global COVID-19 outbreak, have disrupted and may continue to disrupt, our business, and could materially affect our business, financial condition, and results of operations.
Current wording
•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.
Previous wording
We operate in the food service sector and are subject to potential food safety concerns, including risks of food-borne illnesses, tampering, and 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 shops could lead to temporary shutdowns, disrupting both our in-shop and DFD operations. Food safety incidents might also negatively impact the cost and availability of ingredients, leading to supply chain disruptions or reduced profit margins for us and our franchise partners.
Current wording
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. Food safety incidents might also negatively impact the cost and availability of ingredients, leading to supply chain disruptions or reduced profit margins for us and our franchise partners.
Previous wording
Moreover, our dependency on third-party delivery services heightens the risk of food safety issues arising from external factors. While we oversee some of these partners' operations, the quality and service they provide could be compromised by various unforeseeable factors, making it challenging to identify contamination or other defects. The risk is even higher with partners we do not monitor or monitor less rigorously.
Current wording
Moreover, our dependency on third-party delivery services and third-party Points of Access heightens the risk of these food safety issues. While we oversee some of these third parties’ operations, the quality and service they provide could be compromised by various factors, including factors that are beyond our control or are unforeseeable, making it challenging to identify contamination or other defects. The risk is even higher with partners we do not monitor or monitor less rigorously.
Previous wording
Unfavorable economic circumstances or market disturbances within the regions where we and our franchisees conduct business have the potential to lead to higher unemployment rates, shortages in the labor market, inflationary pressures, and a decrease in consumer confidence and spending. Our products fall into the category of indulgences, making them particularly sensitive to shifts in discretionary spending patterns. In the event of such adverse conditions, our consumers may find themselves with reduced disposable income, leading to potential reductions in their consumption of our products.
Current wording
The food service industry is highly susceptible to shifts in consumer preferences, including dietary choices and health concerns, as well as broader factors like economic conditions, spending habits, demographic changes, traffic trends, and competition from other brands. 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.
Previous wording
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.
Current wording
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.”
Previous wording
We rely on information technology in our operations. Any material failure, inadequacy, or interruption of that technology could adversely affect our ability to effectively operate our business and result in financial or other loss.
Current wording
We rely on information technology in our operations. Any material failure, inadequacy, or interruption of that technology has and may in the future adversely affect our ability to effectively operate our business and result in financial or other loss.
Previous wording
Our business and that of our franchisees significantly depend on computer systems and information technology for efficient operation. The effectiveness of our business management is closely tied to the reliability and capacity of these systems. Our omni-channel strategy, particularly our delivery model, relies heavily on robust information technology systems. As we diversify our business channels, our susceptibility to related risks intensifies.
Current wording
Our business and that of our franchisees significantly depend on computer systems and information technology. 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. As we diversify and grow our business channels, our susceptibility to related risks intensifies.
Previous wording
We also face potential business disruptions due to failures in other critical information technology platforms, including those hosted or provided by third parties. These disruptions can stem from hardware and software issues, cyber-attacks (including distributed denial-of-service attacks), natural disasters (like earthquakes, hurricanes, floods, and fires), power outages, telecommunications failures, human errors, criminal activities (including those by state-sponsored groups), and intentional vandalism. These risks extend to threats like computer viruses, ransomware, and malware.
Current wording
We also have experienced business disruptions due to failures in critical information technology platforms and continue to face potential business disruptions due to such failures, including those hosted or provided by third parties. These disruptions can stem from hardware and software issues; cyber-attacks, such as those involving computer viruses, ransomware, other malware, distributed denial-of-service attacks, and nation-state sponsored malicious cyber activity; natural disasters, such as earthquakes, hurricanes, floods, and fires; power outages; telecommunications failures; human errors; criminal activities; and intentional vandalism. 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.
Previous wording
Adapting to evolving consumer expectations and technological advancements is crucial. Any interruption, delay, or flaw in developing and implementing these systems, or misjudging the costs and revenue potential of these initiatives, can hamper our essential business functions. This could negatively impact our reputation, competitive edge, operational results, and financial health.
Current wording
Adapting to evolving consumer expectations and technological advancements is crucial. Any interruption, delay, or flaw in developing and implementing such advancements, or misjudging the costs and revenue potential of these initiatives, can hamper our essential business functions. This could negatively impact our reputation, competitive edge, operational results, and financial health.
Previous wording
While we strive to keep our systems updated, there is no absolute assurance of uninterrupted maintenance. If our mitigation controls fail, especially when updates are not feasible, it could lead to Ecommerce outages, information technology system disruptions, and heightened vulnerability to cyber threats.
Current wording
We strive to keep our systems updated. However, maintenance of our information technology systems can interrupt access to our systems. If our mitigation controls fail, especially when updates are not feasible, it could lead to outages, including digital outages, information technology system disruptions, and heightened vulnerability to cyber threats.
Previous wording
Our business interruption insurance might not fully cover losses from service disruptions caused by system failures or similar events. Therefore, significant impacts from system failures could materially and adversely affect our business operations, results, and financial standing.
Current wording
Our business interruption insurance might not fully cover losses from service disruptions caused by system failures or similar events. Therefore, significant impacts from system failures have and may in the future materially and adversely affect our business, financial condition, and results of operations.
Previous wording
Our and our franchisees' information systems and records are at risk of cyber-attacks and security breaches. These include hacking attempts, software or system failures, viruses, operator errors, and accidental data leaks. Cyber-attacks are increasingly sophisticated and varied, often involving phishing, social engineering, service disruption attacks, malware, or ransomware, and they may not be detected until they have been active for some time. Additionally, internal threats exist from employees, franchisees, contractors, or third parties who might bypass security measures to access or leak sensitive, regulated, or personally identifiable information, either maliciously or inadvertently.
Current wording
Our and our franchisees’ information systems and records are at risk of cyber-attacks and security incidents. 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. Such attacks or security incidents have occurred and could occur as a result of hacking attempts, software or system failures, viruses, operator errors, and accidental data leaks. Cyber-attacks are increasingly sophisticated and varied, often involving phishing, social engineering, service disruption attacks, malware, or ransomware, and they may not be detected until they have been active for some time. Further, these types of threats may be exacerbated by recent developments in artificial intelligence and its increased use to produce sophisticated malware, ransomware, phishing schemes, and other fraudulent activities. Additionally, internal threats exist from employees, franchisees, contractors, or third parties who might bypass security measures to access or leak sensitive, regulated, or personally identifiable information, either maliciously or inadvertently. 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.
Previous wording
We cannot guarantee that the security measures and controls implemented by us or our third-party providers are foolproof against such incidents. 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.
Current wording
The security measures and controls implemented by us or our third-party providers are not foolproof against such incidents and may be inadequate to prevent a cyber-attack or security breach. 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. As a result of the 2024 Cybersecurity Incident, the Company experienced certain operational disruptions that resulted in lost sales and increased expenses related to remediation.
Previous wording
Furthermore, significant incidents involving unauthorized access to, theft, exposure, alteration, or misuse of consumer, employee, or proprietary data could lead to legal actions, regulatory investigations, and non-compliance penalties, disrupting our operations, tarnishing our reputation, and leading to substantial financial repercussions.
Current wording
Furthermore, significant incidents involving unauthorized access to, theft, exposure, alteration, or misuse of consumer, employee, or proprietary data, such as the 2024 Cybersecurity Incident, may lead to legal actions, regulatory investigations, and non-compliance penalties, which could disrupt our operations, tarnish our reputation, and have a material adverse effect on our business, results of operations, and financial condition.
Previous wording
Our cybersecurity insurance may not fully cover the consequences of such breaches or incidents, and future coverage may not be available at reasonable costs or at all. Insurers might also deny claims for certain incidents. Addressing a security breach would require substantial financial and operational resources, including remediation of security vulnerabilities, legal defense, and compliance with notification obligations. Such efforts could divert management attention and resources away from our business activities, adversely affecting our business operations, financial condition, and results. Additionally, our efforts to remedy these issues may not be successful, and we might face challenges in implementing, maintaining, and upgrading effective safeguards.
Current wording
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. Addressing a security breach requires substantial financial and operational resources, including remediation of security vulnerabilities, legal defense, and compliance with notification obligations. Such efforts divert management attention and resources away from our business activities, adversely affecting our business operations, financial condition, and results. Additionally, our efforts to remedy these issues may not be successful, and we might face challenges in implementing, maintaining, and upgrading effective safeguards.
Previous wording
If we or our franchisees or licensees 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, and our reputation could be significantly harmed.
Current wording
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.
Previous wording
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. This data is housed in our own and our franchisees' information technology systems, as well as those of third-party service providers. Ensuring the integrity and security of this data is paramount. Non-compliance with legal and industry standards could severely damage our brand, reputation, and operational results. 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.
Current wording
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. This data is housed in our own and our franchisees’ information technology systems, as well as those of third-party service providers. 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.
Previous wording
The interpretation and enforcement of data privacy and security laws and standards are evolving, leading to potential inconsistencies with our data processing practices and policies. Any perceived non-compliance could lead to fines, audits, investigations, lawsuits, and other penalties. Additionally, any failure to adhere to our public statements and privacy policies could expose us to legal action for deceptive or unfair practices.
Current wording
The interpretation and enforcement of data privacy and security laws and standards are evolving, leading to potential inconsistencies with our data processing practices and policies. Any non-compliance or perceived non-compliance could lead to fines, audits, investigations, lawsuits, and other penalties. Additionally, any failure to adhere to our public statements and privacy policies could expose us to legal action, harm our reputation and have a material adverse effect on our business, financial condition, and results of operations.
Previous wording
We may not realize the anticipated benefits from past or potential future acquisitions, investments, or other strategic transactions.
Current wording
We may not realize the anticipated benefits from past or potential future acquisitions, divestitures, investments, or other strategic transactions.
Previous wording
We periodically assess and may engage in mergers, acquisitions, divestitures, joint ventures, strategic partnerships, minority investments, or other strategic initiatives to broaden our Global Points of Access. These efforts may involve opportunities to acquire or collaborate with both domestic and international franchisees. In some cases, our former or current franchisees might retain a minority interest in the shops we acquire and continue to be involved in their operations. We make these decisions based on individual circumstances.
Current wording
We periodically assess and may engage in mergers, acquisitions, full or partial divestitures, joint ventures, strategic partnerships, minority investments, or other strategic initiatives to execute on our growth strategy. We make these decisions based on individual circumstances.
Previous wording
•The risk of not achieving expected revenue, profit, or cash flow from newly acquired Krispy Kreme franchised shops, Points of Access, companies, partnerships, or investments;
Current wording
•The risk of not achieving expected revenue, profit, or cash flow from acquisitions (including newly acquired Krispy Kreme franchised shops), full or partial divestitures (including in connection with refranchising certain international equity markets), investments or other strategic transactions;
Previous wording
Our past and future strategic transactions may not yield the anticipated benefits, and could negatively impact our reputation and have a material adverse effect on our business, financial health, and operational outcomes.
Current wording
Our past and future strategic transactions may not yield the anticipated benefits, and could negatively impact our reputation and have a material adverse effect on our business, financial condition, and results of operations.
Previous wording
Our ability to influence the management of our franchisees' businesses is limited, and their potential failure to operate effectively could negatively impact our overall operating results. While we provide training and support, our franchisees run their own independent businesses. This means that the operational quality of franchised shops may suffer due to factors outside our control. Additionally, franchisees might not always manage their shops in compliance with relevant laws and regulations or align with our established standards and requirements. Furthermore, there's a risk that franchisees may struggle to recruit and train competent managers and staff.
Current wording
Our ability to influence the management of our franchisees’ businesses is limited, and their potential failure to operate effectively could negatively impact our overall operating results and reputation. While we provide training and support, our franchisees run their own independent businesses. This means that the operational quality of franchised shops may suffer due to factors outside our control. Additionally, franchisees might not always manage their shops in compliance with relevant laws and regulations or align with our established standards and requirements. Furthermore, there’s a risk that franchisees may struggle to recruit and train competent managers and staff.
Previous wording
Currently, we enjoy a generally positive relationship with our franchisees. However, future developments, some of which may be beyond our control, could potentially strain these relationships with both existing and new franchisees. Should our franchisees fail to operate successfully or adhere to our standards and requirements, it could substantially harm the image and reputation of both individual franchisees and our overall brand. Such scenarios could lead to a marked decline in Krispy Kreme-branded sales, adversely affecting our revenue and profitability.
Current wording
Currently, we maintain a generally positive relationship with our franchisees. However, future developments, some of which may be beyond our control, could potentially strain these relationships with both existing and new franchisees. Should our franchisees fail to operate successfully or adhere to our standards and requirements, it could substantially harm the image and reputation of both individual franchisees and our overall brand. Such scenarios could lead to a marked decline in Krispy Kreme-branded sales, adversely affecting our revenue and profitability.
Previous wording
A considerable portion of our revenue comes from sales to retail customers via our DFD channels, which necessitate a substantial infrastructure with notable fixed and semi-fixed costs. In our global operations, we serve a number of large retail customers, yet no single customer contributed to more than 10% of our total revenue in the fiscal years ending December 31, 2023, January 1, 2023, or January 2, 2022. These relationships are not bound by long-term contracts; rather, purchases are influenced by factors like pricing, product quality, consumer demand, and service excellence. Looking ahead, there is a possibility that these customers might reallocate their shelf space, currently occupied by our products, to other items, possibly including private label goods. Consequently, a loss or significant decrease in sales to one of these key retail customers, or if they encounter substantial financial issues, could have a negative impact on our business's health, financial stability, and operational results.
Current wording
A considerable portion of our revenue comes from sales to retail customers via our DFD channels, which necessitate a substantial infrastructure with notable fixed and semi-fixed costs. In our global operations, we serve a number of large retail customers, yet no single customer contributed to more than 10% of our total revenue in the fiscal years ending December 29, 2024, December 31, 2023, or January 1, 2023. These customers are not committed to purchase any particular quantities and purchases are influenced by factors like pricing, product quality, consistency, consumer demand, and service excellence. Moreover, if we fail to adhere to the terms of our agreement with a customer, such customer may be entitled to remedies under the contract such as money damages or early termination. In addition, there is a possibility that our DFD customers might reallocate their shelf space or menu offering, currently occupied by our products, to other items, possibly including private label goods. Consequently, a loss or significant decrease in sales to one of these key retail customers, or if they encounter substantial financial issues, could adversely affect our business, financial condition, and results of operations.
Previous wording
Krispy Kreme is one of the most beloved and well-known sweet treat brands in the world. Our continued success hinges on our and our franchisees’ ability to uphold our brand image, penetrate new markets and distribution channels, innovate with new product offerings, and consistently deliver high-quality, delectable products to our consumers.
Current wording
We believe Krispy Kreme is one of the most beloved and well-known sweet treat brands in the world. Our continued success hinges on our and our franchisees’ ability to uphold our brand image, penetrate new markets and distribution channels, innovate with new product offerings, and consistently deliver high-quality, delectable products to our consumers.
Previous wording
Our reputation is also shaped by consumers’ subjective perceptions. Any regulatory or legal challenges, product recalls, or other negative publicity could tarnish our reputation and brand image, erode consumer trust, and diminish long-term demand for our products. Failure to effectively maintain, enhance, and grow our brand image could materially and adversely impact our business operations, financial health, and overall performance.
Current wording
Our reputation is also shaped by consumers’ subjective perceptions. Real or perceived quality or food safety concerns or failures to comply with applicable food regulations and requirements, whether or not ultimately based on fact and whether or not involving us (such as incidents involving our competitors), could cause negative publicity and reduced confidence in our company, brand or products, or the industry as a whole, which could in turn harm our reputation and sales, and could have a material adverse effect on our business, financial condition, and operating results. There is no assurance that this health risk will always be preempted by our quality control processes. Any regulatory or legal challenges, product recalls, or other negative publicity could tarnish our reputation and brand image, erode consumer trust, and diminish long-term demand for our products. Failure to effectively maintain, enhance, and grow our brand image could have a material adverse effect on our business operations, financial health, and overall performance.
Previous wording
We operate in a highly competitive food service landscape, vying against numerous established players. Our shops face competition from a diverse array of indulgence retailers and bakeries, specialty coffee shops, bagel stores, quick service restaurants, delicatessens, take-out services, convenience stores, and supermarkets.
Current wording
We operate in a highly competitive food service landscape. With relatively low start-up costs for retail indulgence and similar food service ventures and few barriers to entry, our competitors include a variety of independent local operators, in addition to well-capitalized regional, national, and international players and franchises, and new competitors may emerge at any time. We face competition from a diverse array of indulgence retailers and bakeries, specialty coffee shops, other specialty shops offering doughnuts or other sweet treats, bagel stores, quick service restaurants, delicatessens, take-out services, convenience stores, and supermarkets.
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Rearranged current paragraphs (38)
Current report — wording carried from elsewhere
•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.
Current report — wording carried from elsewhere
•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.
Current report — wording carried from elsewhere
•We may not realize the anticipated benefits from acquisitions, divestitures, investments, or other strategic transactions.
Current report — wording carried from elsewhere
•We have incurred significant indebtedness, which could adversely affect us.
Current report — wording carried from elsewhere
•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.
Current report — wording carried from elsewhere
•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.
Current report — wording carried from elsewhere
•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.
Current report — wording carried from elsewhere
•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.
Current report — wording carried from elsewhere
Risks Related to Food Safety and Consumer Preferences
Current report — wording carried from elsewhere
Our business may be adversely affected by food safety issues, including food-borne illnesses, tampering, contamination, or cross-contamination.
Current report — wording carried from elsewhere
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.
Current report — wording carried from elsewhere
Risks Related to Executing Our Business Strategy
Current report — wording carried from elsewhere
Our franchisees may affect our operating results and reputation.
Current report — wording carried from elsewhere
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.
Current report — wording carried from elsewhere
Our reputation and brand image are essential to our business success.
Current report — wording carried from elsewhere
Our success depends on our ability to compete with many food service businesses.
Current report — wording carried from elsewhere
Risks Related to Our Global Expansion and Growth
Current report — wording carried from elsewhere
A key portion of our growth strategy depends on opening new Krispy Kreme shops and Points of Access both domestically and internationally.
Current report — wording carried from elsewhere
We face risks as we continue to focus on expansion of our omni-channel business model.
Current report — wording carried from elsewhere
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.
Current report — wording carried from elsewhere
Risks Related to Our Supply Chain
Current report — wording carried from elsewhere
We are the only manufacturer of our doughnut-making equipment. Any problems producing this equipment could negatively affect our shops’ ability to make doughnuts.
Current report — wording carried from elsewhere
We have limited vendors for many of the product components and services that we rely on, and we have a single vendor for our glaze flavoring. 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.
Current report — wording carried from elsewhere
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.
Current report — wording carried from elsewhere
Risks Related to Our Human Capital
Current report — wording carried from elsewhere
An inability to recruit and retain personnel could have a material adverse effect on our operations.
Current report — wording carried from elsewhere
Changes in the availability or cost of labor could adversely affect our business, financial condition, and results of operations.
Current report — wording carried from elsewhere
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.
Current report — wording carried from elsewhere
Healthcare legislation and other potential employment legislation could adversely affect our business, financial condition, and results of operations.
Current report — wording carried from elsewhere
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.
Current report — wording carried from elsewhere
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.
Current report — wording carried from elsewhere
Recent years have seen the introduction of new Responsibility disclosure requirements in various jurisdictions. The evolving nature and complexity of these rules and regulations, together with evolving stakeholder expectations, render compliance more challenging and uncertain.
Current report — wording carried from elsewhere
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.
Current report — wording carried from elsewhere
Risks Related to Crises, Catastrophic Events, and Business Continuity
Current report — wording carried from elsewhere
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.
Current report — wording carried from elsewhere
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.
Current report — wording carried from elsewhere
The market price of our common stock could be negatively affected by sales of substantial amounts of our common stock in the public markets.
Current report — wording carried from elsewhere
We may be unable to pay dividends on our common stock.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
The food service industry is highly susceptible to shifts in consumer preferences, including dietary choices and health concerns, as well as broader factors like regional economic conditions, spending habits, demographic changes, traffic trends, and competition from other brands in terms of their number, type, and location. Additionally, there is increasing legal and legislative focus on the industry, particularly concerning menu labeling and packaging. This scrutiny is largely due to concerns that the practices and offerings of food service companies may contribute to issues like poor nutrition, excessive caloric intake, obesity, or other health issues among consumers.
Previous report — wording carried elsewhere
This situation underscores the importance of safeguarding our manufacturing operations to ensure the consistent supply of equipment to support our expanding network of shops and the maintenance requirements of our existing locations.