Krispy Kreme, Inc.
For the period ended Sep 28, 2025. Filed Nov 6, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 28, 2025 · Filed Nov 6, 2025
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Item 2. Results of Operations
Results of Operations
The following comparisons are historical results and are not indicative of future results, which could differ materially from the historical financial information presented.
Quarter ended September 28, 2025 compared to the Quarter ended September 29, 2024
The following table presents our unaudited condensed consolidated results of operations for the quarter ended September 28, 2025 and the quarter ended September 29, 2024:
| Quarter Ended | ||||||
|---|---|---|---|---|---|---|
| September 28, 2025 · September 29, 2024 · Change | ||||||
| (in thousands, except percentages) | Amount | % of Revenue | Amount | % of Revenue | $ | % |
| Net revenues | ||||||
| Product sales | $365,701 | 97.4% | $370,662 | 97.6% | $(4,961) | -1.3% |
| Royalties and other revenues | 9,597 | 2.6% | 9,205 | 2.4% | 392 | 4.3% |
| Total net revenues | 375,298 | 100.0% | 379,867 | 100.0% | (4,569) | -1.2% |
| Product and distribution costs | 96,214 | 25.6% | 95,840 | 25.2% | 374 | 0.4% |
| Operating expenses | 195,939 | 52.2% | 192,027 | 50.6% | 3,912 | 2.0% |
| Selling, general and administrative expense | 49,393 | 13.2% | 71,110 | 18.7% | (21,717) | -30.5% |
| Marketing expenses | 11,796 | 3.1% | 10,680 | 2.8% | 1,116 | 10.4% |
| Pre-opening costs | 666 | 0.2% | 619 | 0.2% | 47 | 7.6% |
| Goodwill and other asset impairments | 4,805 | 1.3% | — | —% | 4,805 | nm |
| Other income, net | (9,781) | -2.6% | (5,781) | -1.5% | (4,000) | -69.2% |
| Depreciation and amortization expense | 33,446 | 8.9% | 31,376 | 8.3% | 2,070 | 6.6% |
| Operating loss | (7,180) | -1.9% | (16,004) | -4.2% | 8,824 | 55.1% |
| Interest expense, net | 16,358 | 4.4% | 16,280 | 4.3% | 78 | 0.5% |
| Gain on divestiture of Insomnia Cookies | — | —% | (87,128) | -22.9% | 87,128 | 100.0% |
| Other non-operating income, net | (591) | -0.2% | (407) | -0.1% | (184) | -45.2% |
| (Loss)/income before income taxes | (22,947) | -6.1% | 55,251 | 14.5% | (78,198) | -141.5% |
| Income tax (benefit)/expense | (2,816) | -0.8% | 17,679 | 4.7% | (20,495) | -115.9% |
| Net (loss)/income | (20,131) | -5.4% | 37,572 | 9.9% | (57,703) | -153.6% |
| Net loss attributable to noncontrolling interest | (687) | -0.2% | (1,991) | -0.5% | 1,304 | 65.5% |
| Net (loss)/income attributable to Krispy Kreme, Inc. | $(19,444) | -5.2% | $39,563 | 10.4% | $(59,007) | -149.1% |
The following table presents a further breakdown of total net revenue and organic revenue growth by segment for the quarter ended September 28, 2025 compared to the quarter ended September 29, 2024:
| (in thousands, except percentages) | U.S. | International | MarketDevelopment | TotalCompany |
|---|---|---|---|---|
| Total net revenues in third quarter of fiscal 2025 | $216,187 | $140,237 | $18,874 | $375,298 |
| Total net revenues in third quarter of fiscal 2024 | 228,376 | 130,697 | 20,794 | 379,867 |
| Total Net Revenues (Decline)/Growth | (12,189) | 9,540 | (1,920) | (4,569) |
| Total Net Revenues (Decline)/Growth % | -5.3% | 7.3% | -9.2% | -1.2% |
| Less: Impact of Insomnia Cookies divestiture | (10,037) | — | — | (10,037) |
| Less: Impact of refranchising | (133) | — | 39 | (94) |
| Adjusted net revenues in third quarter of fiscal 2024 | 218,206 | 130,697 | 20,833 | 369,736 |
| Adjusted net revenue growth/(decline) | (2,019) | 9,540 | (1,959) | 5,562 |
| Impact of acquisitions | (2,721) | (234) | 857 | (2,098) |
| Impact of foreign currency translation | — | (1,243) | — | (1,243) |
| Organic Revenue Growth/(Decline) | $(4,740) | $8,063 | $(1,102) | $2,221 |
| Organic Revenue Growth/(Decline) % | -2.2% | 6.2% | -5.3% | 0.6% |
Total net revenue declined $4.6 million, or approximately 1.2%, from the third quarter of fiscal 2024 to the third quarter of fiscal 2025, primarily due to the $10.0 million reduction associated with the divestiture of a controlling interest in Insomnia Cookies in the third quarter of fiscal 2024. Organic revenue increased $2.2 million, or approximately 0.6%, primarily driven by growth in the International segment. The organic revenue increase reflects a Global Points of Access decline of 960, or 6.1%, impacted by the strategic closure of underperforming DFD Doors.
Our U.S. segment net revenue declined $12.2 million, or approximately 5.3%, from the third quarter of fiscal 2024 to the third quarter of fiscal 2025, primarily due to the $10.0 million reduction associated with the divestiture of a controlling interest in Insomnia Cookies in the third quarter of fiscal 2024. U.S. organic revenue declined $4.7 million, or approximately 2.2%, primarily driven by lower Doughnut Shop transaction volume impacted by consumer softness in a challenging macroeconomic environment. The organic revenue decline was also driven by U.S. Points of Access decline of 743, or 9.3%, impacted by the strategic closure of underperforming DFD Doors. The organic revenue decline was partially offset by success from the Harry Potter specialty doughnuts.
Our International segment net revenue increased $9.5 million, or approximately 7.3%, from the third quarter of fiscal 2024 to the third quarter of fiscal 2025, aided byforeign currency translation impacts of $1.2 million. International organic revenue grew $8.1 million, or approximately 6.2%, driven primarily by strength in Canada, Japan, and Mexico and recovery in the U.K.
Our Market Development segment net revenue declined $1.9 million, or approximately 9.2%, from the third quarter of fiscal 2024 to the third quarter of fiscal 2025, partially due to the $0.9 million impact of franchise acquisitions in fiscal 2024 (the results of acquired franchise businesses are reported within the Market Development segment prior to the respective dates of acquisition, and are reported within the U.S. or International segments, as applicable, following the respective dates of acquisition). Market Development organic revenue declined $1.1 million, or approximately 5.3%, as growth in royalty revenue from certain international franchise markets was more than offset by lower franchisee product sales and less shipments of equipment to franchisees.
Operating expenses: Operating expenses increased $3.9 million, or 2.0%, from the third quarter of fiscal 2024 to the third quarter of fiscal 2025, driven mainly by an increase of $9.0 million in operating expenses for the global Krispy Kreme brand, partially offset by a $5.1 million decrease resulting from the divestiture of a controlling interest in Insomnia Cookies. Operating expenses as a percentage of revenue increased by approximately 160 basis points, from 50.6% in the third quarter of fiscal 2024 to 52.2% in the third quarter of fiscal 2025, primarily due to higher logistics costs, the impact of lower transaction volumes on operating leverage, and approximately $3 million of operating costs associated with our now-ended McDonald’s USA partnership early in the third quarter of fiscal 2025.
Selling, general and administrative expense: Selling, general and administrative (“SG&A”) expense decreased $21.7 million, or 30.5%, from the third quarter of fiscal 2024 to the third quarter of fiscal 2025. As a percentage of revenue, SG&A expense decreased approximately 550 basis points, from 18.7% in the third quarter of fiscal 2024 to 13.2% in the third quarter of fiscal 2025, primarily driven by lower employee costs and share-based compensation expenses related to restructuring initiatives.
Other income, net: Other income, net of $9.8 million in the third quarter of fiscal 2025 was primarily related to $9.3 million of business interruption insurance recoveries related to the 2024 Cybersecurity Incident. Other income, net of $5.8 million in the third quarter of fiscal 2024 was primarily driven by a gain of $5.6 million related to the remeasurement of equity method investments to fair value immediately prior to the acquisition of Krispy Kreme shops referenced in Note 2, Acquisitions and Divestitures to the Condensed Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q.
Depreciation and amortization expense: Depreciation and amortization expense increased $2.1 million, or 6.6%, from the third quarter of fiscal 2024 to the third quarter of fiscal 2025. As a percentage of revenue, Depreciation and amortization expense increased approximately 60 basis points, from 8.3% in the third quarter of fiscal 2024 to 8.9% in the third quarter of fiscal 2025, primarily driven by higher finance lease amortization expense.
Gain on divestiture of Insomnia Cookies: In the third quarter of fiscal 2024, we sold our controlling interest in Insomnia Cookies in exchange for cash proceeds. Following the transaction, we owned approximately 34.7% of Insomnia Cookies and lost the ability to exercise control. Accordingly, we deconsolidated Insomnia Cookies and recorded a gain on divestiture of $87.1 million (gross of income taxes). Refer to Note 2, Acquisitions and Divestitures to the Condensed Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q for further information.
Income tax (benefit)/expense: Income tax benefit was$2.8 million in the third quarter of fiscal 2025, while income tax expense was$17.7 million in the third quarter of fiscal 2024. The variancewas primarily driven by lower pre-tax results in thethird quarter of fiscal 2025.
Results of Operations by Segment – Quarter ended September 28, 2025 compared to the Quarter ended September 29, 2024
The following table presents Adjusted EBITDA by segment for the periods indicated:
| Quarter Ended · Change | ||||
|---|---|---|---|---|
| (in thousands, except percentages) | September 28, 2025 | September 29, 2024 | $ | % |
| Adjusted EBITDA | ||||
| U.S. | $21,010 | $13,922 | $7,088 | 50.9% |
| International | 23,157 | 22,779 | 378 | 1.7% |
| Market Development | 11,994 | 11,271 | 723 | 6.4% |
| Corporate | (15,564) | (13,273) | (2,291) | -17.3% |
| Total Adjusted EBITDA (1) | $40,597 | $34,699 | $5,898 | 17.0% |
(1) Refer to “Key Performance Indicators and Non-GAAP Measures” above for a reconciliation of Adjusted EBITDA to net loss.
U.S. segment Adjusted EBITDA increased $7.1 million, or 50.9%, with margin expansion of 360 basis points to 9.7% in the third quarter of fiscal 2025 compared to the third quarter of fiscal 2024, primarily driven by $9.3 million of business interruption insurance recoveries related to the 2024 Cybersecurity Incident. Excluding these insurance recoveries and the divestiture of Insomnia Cookies, U.S. Adjusted EBITDA still increased sequentially by approximately $1.8 million compared to the second quarter of fiscal 2025, beginning to benefit from our turnaround plan initiatives as well as the removal of costs associated with our now-ended McDonald’s USA partnership.
International segment Adjusted EBITDA increased $0.4 million, or 1.7%, aided by benefits from the revenue growth in Japan and Mexico. The margin decline of 90 basis points to 16.5% in the third quarter of fiscal 2025 compared to the third quarter of fiscal 2024, was due to the ongoing turnaround in the U.K.
Market Development segment Adjusted EBITDA increased $0.7 million, or 6.4%, with margin expansion of 930 basis points to 63.5% in the third quarter of fiscal 2025 compared to the third quarter of fiscal 2024, driven mainly by changes in the revenue mix, including fewer shipments of lower-margin equipment to franchisees, and growth in royalties.
Three Quarters ended September 28, 2025 compared to the Three Quarters ended September 29, 2024
The following table presents our unaudited condensed consolidated results of operations for the three quarters ended September 28, 2025 and the three quarters ended September 29, 2024:
| Three Quarters Ended | ||||||
|---|---|---|---|---|---|---|
| September 28, 2025 · September 29, 2024 · Change | ||||||
| (in thousands, except percentages) | Amount | % of Revenue | Amount | % of Revenue | $ | % |
| Net revenues | ||||||
| Product sales | $1,103,557 | 97.6% | $1,233,585 | 97.8% | $(130,028) | -10.5% |
| Royalties and other revenues | 26,692 | 2.4% | 27,789 | 2.2% | (1,097) | -3.9% |
| Total net revenues | 1,130,249 | 100.0% | 1,261,374 | 100.0% | (131,125) | -10.4% |
| Product and distribution costs | 279,577 | 24.7% | 310,701 | 24.6% | (31,124) | -10.0% |
| Operating expenses | 605,494 | 53.6% | 609,726 | 48.3% | (4,232) | -0.7% |
| Selling, general and administrative expense | 171,718 | 15.2% | 207,150 | 16.4% | (35,432) | -17.1% |
| Marketing expenses | 34,220 | 3.0% | 35,211 | 2.8% | (991) | -2.8% |
| Pre-opening costs | 3,066 | 0.3% | 2,691 | 0.2% | 375 | 13.9% |
| Goodwill and other asset impairments | 411,899 | 36.4% | 448 | —% | 411,451 | nm |
| Other income, net | (16,854) | -1.5% | (6,878) | -0.5% | (9,976) | -145.0% |
| Depreciation and amortization expense | 103,129 | 9.1% | 99,562 | 7.9% | 3,567 | 3.6% |
| Operating (loss)/income | (462,000) | -40.9% | 2,763 | 0.2% | (464,763) | nm |
| Interest expense, net | 49,250 | 4.4% | 44,468 | 3.5% | 4,782 | 10.8% |
| Loss/(gain) on divestiture of Insomnia Cookies | 11,501 | 1.0% | (87,128) | -6.9% | 98,629 | 113.2% |
| Other non-operating (income)/expense, net | (2,161) | -0.2% | 1,115 | 0.1% | (3,276) | -293.8% |
| Loss before income taxes | (520,590) | -46.1% | 44,308 | 3.5% | (564,898) | nm |
| Income tax (benefit)/expense | (25,936) | -2.3% | 18,330 | 1.5% | (44,266) | -241.5% |
| Net loss | (494,654) | -43.8% | 25,978 | 2.1% | (520,632) | nm |
| Net (loss)/income attributable to noncontrolling interest | (6,666) | -0.6% | 440 | —% | (7,106) | nm |
| Net loss attributable to Krispy Kreme, Inc. | $(487,988) | -43.2% | $25,538 | 2.0% | $(513,526) | nm |
The following table presents a further breakdown of total net revenue and organic revenue growth by segment for the three quarters ended September 28, 2025 compared to the three quarters ended September 29, 2024:
| (in thousands, except percentages) | U.S. | International | MarketDevelopment | TotalCompany |
|---|---|---|---|---|
| Total net revenues in first three quarters of fiscal 2025 | $682,830 | $392,627 | $54,792 | $1,130,249 |
| Total net revenues in first three quarters of fiscal 2024 | 813,615 | 380,716 | 67,043 | 1,261,374 |
| Total Net Revenues (Decline)/Growth | (130,785) | 11,911 | (12,251) | (131,125) |
| Total Net Revenues (Decline)/Growth % | -16.1% | 3.1% | -18.3% | -10.4% |
| Less: Impact of Insomnia Cookies divestiture | (138,522) | — | — | (138,522) |
| Less: Impact of refranchising | (133) | — | 39 | (94) |
| Adjusted net revenues in first three quarters of fiscal 2024 | 674,960 | 380,716 | 67,082 | 1,122,758 |
| Adjusted net revenue growth/(decline) | 7,870 | 11,911 | (12,290) | 7,491 |
| Impact of acquisitions | (25,641) | (3,102) | 8,335 | (20,408) |
| Impact of foreign currency translation | — | 8,557 | — | 8,557 |
| Organic Revenue (Decline)/Growth | $(17,771) | $17,366 | $(3,955) | $(4,360) |
| Organic Revenue (Decline)/Growth % | -2.6% | 4.6% | -5.9% | -0.4% |
Total net revenue declined $131.1 million, or approximately 10.4%, fromthe first three quarters of fiscal 2024 tothe first three quarters of fiscal 2025, primarily due to the $138.5 million reduction associated with the divestiture of a controlling interest in Insomnia Cookies in the third quarter of fiscal 2024. Organic revenue declined $4.4 million, or approximately 0.4%, primarily driven by lower Doughnut Shop transaction volume impacted by consumer softness in a challenging macroeconomic environment and by Global Points of Access decline of 960, or 6.1%, impacted by the strategic closure of underperforming DFD Doors. The organic revenue decline was partially offset by increased pricing of approximately 2% (primarily driven by our planned reduced discounting).
Our U.S. segment net revenue declined $130.8 million, or approximately 16.1%, fromthe first three quarters of fiscal 2024 tothe first three quarters of fiscal 2025, primarily due to the $138.5 million reduction associated with the divestiture of a controlling interest in Insomnia Cookies in the third quarter of fiscal 2024. U.S. organic revenue declined $17.8 million, or approximately 2.6%, primarily driven by lower Doughnut Shop transaction volume impacted by consumer softness in a challenging macroeconomic environment. The organic revenue decline was also driven by Points of Access decline of 743, or 9.3%, impacted by the strategic closure of underperforming DFD Doors. The organic revenue decline was partially offset by increased pricing of approximately 2% (primarily driven by our planned reduced discounting).
Our International segment net revenue grew $11.9 million, or approximately 3.1%, fromthe first three quarters of fiscal 2024 tothe first three quarters of fiscal 2025, in spite of adverse foreign currency translation impacts of $8.6 million. International organic revenue grew$17.4 million, or approximately 4.6%, driven primarily by growth in Canada, Japan, and Mexico. The organic revenue growth was partially offset by lower transaction volume in the U.K.
Our Market Development segment net revenue declined$12.3 million, or approximately 18.3%, fromthe first three quarters of fiscal 2024 tothe first three quarters of fiscal 2025, primarily due to the$8.3 million impact of franchise acquisitions in fiscal 2024. Market Development organic revenue declined$4.0 million, or approximately 5.9%, as expansion of our international franchise business in new markets such as Brazil was more than offset by timing of shipments of mix and equipment to franchisees.
Operating expenses: Operating expenses decreased $4.2 million, or 0.7%, from the first three quarters of fiscal 2024 to the first three quarters of fiscal 2025, driven mainly by a $66.4 million decrease resulting from the divestiture of a controlling interest in Insomnia Cookies that was partially offset by an increase of $62.2 million in operating expenses for the global Krispy Kreme brand primarily due to higher shop and delivery labor expenses, including logistics costs. Operating expenses as a percentage of revenue increased approximately 530 basis points, from 48.3% in the first three quarters of fiscal 2024 to 53.6% in the first three quarters of fiscal 2025, primarily due to the impact of lower transaction volumes on operating leverage, operating costs associated with our now-ended McDonald’s USA partnership, and an estimated $5 million related to the 2024 Cybersecurity Incident, primarily related to operational inefficiencies.
Selling, general and administrative expense: SG&A expense decreased $35.4 million, or 17.1%, from the first three quarters of fiscal 2024 to the first three quarters of fiscal 2025, driven mainly by a $23.8 million impact from the divestiture of a controlling interest in Insomnia Cookies. As a percentage of revenue, SG&A expense decreased approximately 120 basis points, from 16.4% in the first three quarters of fiscal 2024 to 15.2% in the first three quarters of fiscal 2025, primarily driven by lower employee costs and share-based compensation expenses related to restructuring initiatives.
Goodwill and other asset impairments: For discussion of the $411.9 million non-cash goodwill and other asset impairments in the first three quarters of fiscal 2025, refer to Note 1, Description of Business and Summary of Significant Accounting Policies to the Condensed Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q.
Other income, net: Other income, net of $16.9 million in the first three quarters of fiscal 2025 was primarily related to $9.3 million of business interruption insurance recoveries related to the 2024 Cybersecurity Incident and gains on sale-leaseback transactions described in Note 5, Leases to the Condensed Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q. Other income, net of $6.9 million in the first three quarters of fiscal 2024 was primarily driven by a gain of $5.6 million related to the remeasurement of equity method investments to fair value immediately prior to the acquisition of Krispy Kreme shops referenced in Note 2, Acquisitions and Divestitures to the Condensed Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q.
Depreciation and amortization expense: Depreciation and amortization expense increased $3.6 million, or 3.6%, from the first three quarters of fiscal 2024 to the first three quarters of fiscal 2025. As a percentage of revenue, Depreciation and amortization expense increased approximately 120 basis points, from 7.9% in the first three quarters of fiscal 2024 to 9.1% in the first three quarters of fiscal 2025, primarily driven by higher finance lease amortization expense and increased depreciation associated with capital assets placed into service to support our U.S. national expansion, including the McDonald’s USA rollout. We recorded long-lived asset and lease impairment charges during the second quarter of fiscal 2025, a portion of which related to assets supporting the U.S. national expansion, including the McDonald’s USA rollout, which we expect to impact the future rate of depreciation expense for these assets.
Interest expense, net: Interest expense, net increased $4.8 million, or 10.8%, from the first three quarters of fiscal 2024 to the first three quarters of fiscal 2025 primarily driven by higher finance lease interest expense and a higher average debt balance.
Loss/(gain) on divestiture of Insomnia Cookies: In the third quarter of fiscal 2024, we sold our controlling interest in Insomnia Cookies in exchange for cash proceeds. Following the transaction, we owned approximately 34.7% of Insomnia Cookies and lost the ability to exercise control. Accordingly, we deconsolidated Insomnia Cookies and recorded a gain on divestiture of $87.1 million (gross of income taxes). In the second quarter of fiscal 2025, we sold the remainder of our ownership interest in Insomnia Cookies for cash proceeds and recognized a loss on divestiture of $11.5 million (gross of income taxes). Refer to Note 2, Acquisitions and Divestitures to the Condensed Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q for further information.
Income tax (benefit)/expense: Income tax benefit was $25.9 million in the first three quarters of fiscal 2025, while income tax expense was $18.3 million in the first three quarters of fiscal 2024. The variance was primarily driven by lower pre-tax results in the first three quarters of fiscal 2025, offset by the tax effect of nondeductible goodwill impairment charges.
Results of Operations by Segment – Three Quarters ended September 28, 2025 compared to the Three Quarters ended September 29, 2024
The following table presents Adjusted EBITDA by segment for the periods indicated:
| Three Quarters Ended · Change | ||||
|---|---|---|---|---|
| (in thousands, except percentages) | September 28, 2025 | September 29, 2024 | $ | % |
| U.S. | $46,851 | $89,206 | $(42,355) | -47.5% |
| International | 56,275 | 64,970 | (8,695) | -13.4% |
| Market Development | 31,989 | 36,046 | (4,057) | -11.3% |
| Corporate | (50,427) | (42,609) | (7,818) | -18.3% |
| Total Adjusted EBITDA (1) | $84,688 | $147,613 | $(62,925) | -42.6% |
(1) Refer to “Key Performance Indicators and Non-GAAP Measures” above for a reconciliation of Adjusted EBITDA to net income.
U.S. segment Adjusted EBITDA decreased $42.4 million, or 47.5%, with $15.8 million of the reduction associated with the divestiture of a controlling interest in Insomnia Cookies in the third quarter of fiscal 2024. The margin decline of 410 basis points to 6.9% in the first three quarters of fiscal 2025 compared to the first three quarters of fiscal 2024 was primarily driven by an estimated $13 million to $15 million adverse impact associated with our now-ended McDonald’s USA partnership, lower transaction volumes impacting operating leverage, and an estimated $5 million related to the 2024 Cybersecurity Incident, primarily related to operational inefficiencies. The U.S. Adjusted EBITDA decrease was partially offset by $9.3 million of business interruption insurance recoveries related to the 2024 Cybersecurity Incident.
International segment Adjusted EBITDA decreased $8.7 million, or 13.4%, with margin decline of 280 basis points to 14.3% in the first three quarters of fiscal 2025 compared to the first three quarters of fiscal 2024, as lower transaction volume continued to impact operating leverage for the International equity markets, particularly the U.K.
Market Development segment Adjusted EBITDA decreased $4.1 million, or 11.3%, impacted by franchise acquisitions in fiscal 2024. Market Development Adjusted EBITDA margin expansion of 460 basis points to 58.4% in the first three quarters of fiscal 2025 compared to the first three quarters of fiscal 2024, was driven mainly by changes in the revenue mix, including fewer shipments of lower-margin equipment to franchisees, and growth in royalties.
Capital Resources and Liquidity
Our principal sources of liquidity to date have included cash from operating activities, cash on hand, commercial trade financing including our structured payables programs, and proceeds from strategic transactions such as the divestiture of Insomnia Cookies. Our primary use of liquidity is to fund the cash requirements of our business operations, including working capital needs, capital expenditures, acquisitions, and other commitments.
Our future obligations primarily consist of our debt and lease obligations, as well as commitments under ingredient and other forward purchase contracts. As of December 29, 2024, we had the following future obligations:
An aggregate principal amount of $819.5 million outstanding under the 2023 Facility;
An aggregate principal amount of $5.0 million outstanding under short-term, uncommitted lines of credit;
Non-cancellable future minimum operating lease payments totaling $664.3 million;
Non-cancellable future minimum finance lease payments totaling $97.0 million; and
Purchase commitments under ingredient and other forward purchase contracts of $98.9 million.
As of September 28, 2025, the principal amount outstanding under our 2023 Facility was $883.3 million. The increase from the 2023 Facility balance as of December 29, 2024 was primarily driven by our need for cash to fund business operations, including impacts from the 2024 Cybersecurity Incident and our U.S. national expansion, as well as payments on structured payables associated with our acquisition of the noncontrolling interest in our consolidated subsidiary Awesome Doughnut. Refer to Note 9, Long-Term Debt to the Condensed Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q for further information.
We had cash and cash equivalents of $30.7 million and $29.0 million as of September 28, 2025 and December 29, 2024, respectively. We believe that our existing cash and cash equivalents and available borrowing capacity under our credit facilities discussed above will be sufficient to fund our operating and capital needs for at least the next twelve months. Our assessment of the period of time through which our financial resources will be adequate to support our operations could vary because of, and our future capital requirements will depend on, many factors, including our growth rate, the growth of our presence in new markets, and the expansion of our omni-channel model in existing markets. We have based this estimate on assumptions that may prove to be wrong, and we could use our available capital resources sooner than we currently expect. We may be required to seek additional equity or debt financing. In the event that additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all. If we are unable to raise additional capital when desired, or if we cannot expand our operations or otherwise capitalize on our business opportunities because we lack sufficient capital, our business, results of operations, and financial condition would be adversely affected.
Dividend Policy
In order to more closely align our capital allocation priorities with our growth strategy, we no longer expect to pay quarterly cash dividends to holders of our common stock. This represents a change to our dividend policy previously disclosed in Item 5 of Part II of the Company’s Annual Report on Form 10-K for the year ended December 29, 2024.
Cash Flows
We have historically generated cash from operations and have credit availability and capacity to fund operating and discretionary spending such as capital expenditures and debt repayments. Our requirement for working capital is not significant because our consumers pay us in cash or on debit or credit cards at the time of the sale and we are able to sell many of our inventory items before payment is due to the vendors for the various inputs to such items. The following table and discussion present, for the periods indicated, a summary of our key cash flows from operating, investing, and financing activities:
| Three Quarters Ended | ||
|---|---|---|
| (in thousands) | September 28, 2025 | September 29, 2024 |
| Net cash (used for)/provided by operating activities | $(11,095) | $18,787 |
| Net cash provided by investing activities | 3,419 | 44,745 |
| Net cash provided by/(used for) financing activities | 12,398 | (77,348) |
Operating Activities
Cash used for operations totaled $11.1 million for the first three quarters of fiscal 2025, a fluctuation of $29.9 million compared with the first three quarters of fiscal 2024, primarily due to less operating income generated in the first three quarters of fiscal 2025, partially offset by the intentional paydown of obligations due under our SCF programs (discussed in Note 8, Vendor Finance Programs to the Condensed Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q) in the first three quarters of fiscal 2024.
Investing Activities
Cash provided by investing activities totaled $3.4 million for the first three quarters of fiscal 2025, a decrease of $41.3 million compared with the first three quarters of fiscal 2024. The cash provided by investing activities in the first three quarters of fiscal 2025 was primarily due to the divestiture of our remaining ownership interest in Insomnia Cookies for $75.0 million in aggregate cash proceeds (discussed in Note 2, Acquisitions and Divestitures to the Condensed Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q) and proceeds from sale-leaseback transactions (discussed in Note 5, Leases to the Condensed Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q), partially offset by cash for capital expenditures. As part of our turnaround plan, we expect to reduce capital investment by using existing assets and focusing on franchise development.
The cash provided by investing activities in the first three quarters of fiscal 2024 was primarily due to the receipt of net proceeds of $117.6 million from the divestiture of Insomnia Cookies and an additional $45.0 million from the repayment of an intercompany loan due from Insomnia Cookies (discussed in Note 2, Acquisitions and Divestitures to the Condensed Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q). These proceeds were partially offset by our use of $26.6 million cash for the acquisition of franchised shops in the first three quarters of fiscal 2024, discussed in Note 2, Acquisitions and Divestitures to the Condensed Consolidated Financial Statements included in Item 1 of Part 1 of this Quarterly Report on Form 10-Q.
Financing Activities
Cash provided by financing activities totaled $12.4 million for the first three quarters of fiscal 2025, a fluctuation of $89.7 million compared with the first three quarters of fiscal 2024, primarily driven by the pay down of long term debt balances with a portion of the net proceeds received from the divestiture of Insomnia Cookies in the first three quarters of fiscal 2024.
Debt
Our long-term debt obligations consist of the following:
| (in thousands) | September 28, 2025 | December 29, 2024 |
|---|---|---|
| 2023 Facility — term loan | $753,288 | $647,500 |
| 2023 Facility — revolving credit facility | 130,000 | 172,000 |
| Short-term lines of credit | 10,476 | 5,000 |
| Less: Debt issuance costs | (3,239) | (3,322) |
| Finance lease obligations | 88,938 | 79,725 |
| Total long-term debt | 979,463 | 900,903 |
| Less: Current portion of long-term debt | (73,255) | (56,356) |
| Long-term debt, less current portion | $906,208 | $844,547 |
2023 Secured Credit Facility
As of September 28, 2025, the 2023 Facility consisted of a $300.0 million senior secured revolving credit facility and a term loan with an original principal amount of $700.0 million. During the second quarter of fiscal 2025, the Company amended the 2023 Facility to, among other things, establish additional, incremental term loan commitments in an aggregate principal amount of $125.0 million. Refer to Note 9, Long-Term Debt to the Condensed Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q for further information.
Under the terms of the 2023 Facility, we are subject to a requirement to maintain a leverage ratio of less than 5.00 to 1.00 as of the end of each quarterly Test Period (as defined in the 2023 Facility) through maturity in March 2028. The leverage ratio under the 2023 Facility is defined as the ratio of (a) Total Indebtedness (as defined in the 2023 Facility, which includes all debt and finance lease obligations) minus unrestricted cash and cash equivalents to (b) a defined calculation of Adjusted EBITDA (2023 Facility Adjusted EBITDA) for the most recently ended Test Period. Our leverage ratio was 4.5 to 1.00 as of the end of the third quarter of fiscal 2025 compared to 3.9 to 1.00 as of the end of fiscal 2024.
We were in compliance with the financial covenants related to the 2023 Facility as of September 28, 2025. If we are unable to meet the 2023 Facility financial or other covenants in future periods, it could limit our ability to draw on the revolving credit facility, could result in the lenders accelerating the maturity of such indebtedness and foreclosing upon the collateral pledged thereunder, and could require the replacement of the 2023 Facility with new sources of financing, which we may be unable to secure on favorable terms or at all, any of which could negatively impact our liquidity.
Short-Term Lines of Credit
We are party to two agreements with existing lenders providing for short-term, uncommitted lines of credit up to an aggregate of $25.0 million. Borrowings under these short-term lines of credit are payable to the lenders on a revolving basis for tenors up to three months and are subject to an interest rate of adjusted term SOFR plus a credit spread adjustment of 0.10% plus a margin of 1.75%.
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