Dive Brief:
- Krispy Kreme wants to ramp up its use of third-party delivery providers in the U.S. to help bring doughnuts to retailers' stores, President and CEO Joshua Charlesworth said on the company's Nov. 9 earnings call.
- The doughnut maker launched a request for proposal on Oct. 9 with several carriers, including national and major regional delivery providers, to kick off the process. Whichever carrier wins Krispy Kreme's business will help transport doughnuts to stores for its "Delivered Fresh Daily" network.
- Charlesworth said it's too early to discuss financial impacts but acknowledged cost pressures tied to growing an internal truck fleet. "While we continue to successfully build-out our logistics and delivery network in-house, we believe this approach is aligned with our evolved strategy and the desire to focus on what we do best," he added.
Dive Insight:
The request for proposal came after successful pilots with an unnamed logistics provider in Los Angeles and Washington, D.C., according to the company's earnings release last week. The pilots proved "that working with a third-party partner can deliver excellent quality and service," Charlesworth said.
While Krispy Kreme has used outside carriers in international markets, in the U.S. it uses its own daily delivery routes to transport doughnuts from local facilities to retail partners. Outsourcing some of this activity could help tame costs as it begins delivering to more locations, including McDonald's restaurants.
Krispy Kreme has already launched delivery to more than 400 McDonald's locations since mid-October, and it will add more than 1,000 additional locations in November, Charlesworth said. The biggest challenge of the rollout for Krispy Kreme is on the delivery side, he added, "making sure that we know all the best routes to all these locations."
Krispy Kreme has served McDonald's with its existing in-house model in the early days of the expansion, but the doughnut maker's use of third-party logistics providers will be part of its McDonald's rollout as well, EVP and CFO Jeremiah Ashukian said.
"We'll absolutely deliver on that, supporting the nationwide rollout as we've aligned with them," Ashukian said of McDonald's. "But we can and likely will leverage a third-party fleet and drivers and partners if that makes for a better system."
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