According to Forbes, Krispy Kreme’s stock recently increased by 6.5%. The upgrade was made by analysts at Truist, citing great business potential from Krispy Kreme’s future partnership with McDonald’s. The partnership would entail selling Krispy Kreme’s iconic doughnuts at thousands of McDonald’s locations, giving the brand more visibility and accessibility.
As of late 2023, Krispy Kreme has an impressively growing network of 1,521 shops and 15,800 access points worldwide, employing around 22,800 people. The company has also signed a strategic partnership with McDonald’s, allowing its products to be available in thousands of additional locations and increasing its sponsorship. The collaboration kick-started the successful test in Kentucky but will have a broad-scale roll-out in significant markets, including Chicago.
Krispy Kreme plans to have their doughnuts served at over 12,000 McDonald’s across the United States by the end of 2026. This partnership will not be unrepresentative of a growing trend among food brands in optimizing synergies with strategic partner brands against a competitive landscape to fortually beneficial results.
Overview of the Cyberattack
Krispy Kreme is a very popular American doughnut brand. On November 29, 2024, it fell prey to an enormous cyberattack that has affected its business in many ways, mainly in online ordering systems across different parts of the United States and beyond. However, Krispy Kreme continues to operate its physical stores for in-person orders, allowing customers uninterrupted access to their favorite doughnuts.
Krispy Kreme has also employed cybersecurity professionals to try to access and improve the attack while informing Federal enforcement. The company is working to resume online ordering; however, it has started to realize that the attack is expected to materially affect its financial results due to lost digital sales and recovery costs.
Immediate Impact on Operations
As you may have guessed, this cyber incident has many serious consequences. Krispy Kreme reported that its revenue stream is approximately 15.5% dependent on digital orders, accounting for approximately half of its total sales, highlighting the importance of online ordering.
According to the USA Today report, the price of shares dropped approximately 2%, demonstrating how worried investors were about its long-term effects on business operations and finances.
Krispy Kreme also assures customers that its daily deliveries to retail and restaurant partners remain undisturbed. However, online orders and delivery have been badly affected in some areas. The company works hard with external cybersecurity experts to investigate the breach and mitigate its consequences.
Krispy Kreme expects this cyberattack to have “reasonable” financial implications because of lost income related to digital sales during the recovery period and expenses incurred by hiring cybersecurity vendors. The company is also assessing whether some portion of these expenses could be covered by its cybersecurity insurance. In brief, although Krispy Kreme believes this incident will impact material areas of operation until recovery establishes it, it will be repaired over time.
Industry Background and Future Considerations
The Krispy Kreme incident highlights growing concern within food service about security vulnerabilities to cyberattacks in the increasing digital sales and marketing of businesses involving customers. Analysts see companies like Krispy Kreme being compelled to strengthen their cybersecurity systems to prevent future attacks. Some key improvement actions are conducting regular security penetration tests and updating a complete incident response plan.
In this context, investing in advanced security measures, such as those provided by a company like Auxin Security, could provide valuable insights into potential vulnerabilities. Their cloud cybersecurity and threat modeling expertise enables organizations like Krispy Kreme to prepare for fast-evolving threats and digitally streamline operations.
Final Takeaway
A recent cyberattack at Krispy Kreme highlights how businesses are increasingly vulnerable in a digital landscape. However, while Krispy Kreme continues to operate its physical stores without disruption, net losses from online ordering, which doesn’t affect 15.5% of revenue, have serious concerns about the loss of sales and recovery costs. Krispy Kreme’s severe progression from such a scenario makes it necessary for companies to invest in improved cybersecurity mechanisms and robust incident response plans for possible future threats.
