Krispy Kreme forecasts higher revenue on online, drive-through bet

[BENGALURU] Krispy Kreme Inc forecast stronger annual revenue after beating second-quarter estimates on Tuesday, betting on its online business, drive-through and new menu items to soften any hit from the Covid-19 Delta variant.

The doughnut maker's shares rose 2 per cent in extended trading after its first earnings report since returning as a listed company in July. The company also said it plans to raise prices in September to offset higher labour and commodity costs.

Major US restaurants including McDonald's Corp and Starbucks have doubled down on their online businesses to cut wait times for delivery and drive-through, hoping that the lockdown-driven shift to eating at home more is here to stay.

With the highly contagious Delta coronavirus variant driving a resurgence in cases worldwide, using multiple channels for delivery is key, Krispy Kreme chief executive officer Mike Tattersfield told Reuters in a call.

"You could be closing down your front door but using your drive-through or using your e-commerce model or using your 'Delivered Fresh Daily' model in the grocery business."

The "Original Glazed" doughnut maker forecast annual net revenue between US$1.34 billion and US$1.38 billion, as much as 23 per cent higher than last year and compared with Refinitiv IBES estimates of US$1.34 billion.

Across the sector, the easing of coronavirus curbs, reopening of offices and new menu items have allowed chains like Starbucks, McDonald's and Wendy's Co to serve up strong forecasts.

Krispy Kreme has also added new items including doughnuts dipped in Hershey Co's chocolate icing to draw in returning customers.

It expects to pay a cash dividend of 3.5 cents per share for the quarter ending Oct 3, the company said.

Net revenue rose 42.6 per cent to US$349.2 million in the second quarter ended July 4 versus estimates of US$333.4 million.

Excluding items, it earned 13 cents per share, a cent below expectations.

REUTERS