In case you haven’t heard: Krispy Kreme is coming back to Minnesota early next year after exiting the market nearly 20 years ago. The North Carolina-based donut maker is opening up a retail and dine-in location with a drive-thru in Fridley, but it’ll primarily be a donut production factory for its product to be sold at ancillary locations, such as other restaurants and retail stores.

Despite record-breaking opening sales when Krispy Kreme first came to the state in 2002, the donut company abruptly shut down its Minnesota location in Maple Grove just six years later. So, what happened then, and why is the donut maker coming back now?

According to Jonathan Maze, editor-in-chief at Restaurant Business, it was an issue of “overestimation.” Krispy Kreme has developed a cult-like reputation for its glazed donuts. The iconic brand and the scarcity of Krispy Kreme in Minnesota is what drove first-week sales of more than $480,000 at its Maple Grove location in 2002. But once that novelty wears off, what happens?

“The mistake that [Krispy Kreme] made was in assuming that it was going to be able to generate and keep generating those sales from those existing locations,” said Maze. You can only eat donuts so many times, he added, unlike coffee which is often purchased repeatedly throughout the week.

Krispy Kreme is also one of the few donut chains that makes its donuts fresh in-house, but donuts have a low shelf-life and usually aren’t as good on day two, said Maze. Freshly baked donuts vary with Dunkin’ locations, for example, which can help keep costs low.

Although Krispy Kreme did sell some donuts at ancillary locations like gas stations, it wasn’t enough to sustain the brand in Minnesota. “It had a tough time paying for these [Krispy Kreme stores] because they’re really expensive, and you needed really strong sales to be able to pay for those giant donut balances,” said Maze.

In 2008, Krispy Kreme was struggling, and not just in Minnesota. Quarterly sales declined immensely and many franchise stores closed, which also caused Krispy Kreme stock to fall. There was also a health movement at the time, where Krispy Kreme along with other fast food chains switched out ingredients for more healthy alternatives.

“Krispy Kreme had to pull back massively. It exited a ton of markets, Minneapolis included, and the result is we lost our Krispy Kreme, and it never really came back,” he said.

The differentiator 

In early 2024, Krispy Kreme and McDonald’s announced an expanded national partnership where the latter will begin selling Krispy’s donuts in its restaurants. A phased market rollout has already begun, and nationwide availability at participating restaurants is expected at the end of 2026.

This partnership is what’s helping fuel Krispy Kreme’s return to the Minnesota market. “Essentially, Krispy Kreme created a hub-and-spoke model where it just opens a smaller number of these giant donut palaces and then it uses these donut facilities to ship donuts every day to ancillary sites,” said Maze, adding that the company piloted out the model successfully in the United Kingdom.

Krispy Kreme calls it the Delivered Fresh Daily (DFD) door expansion, which it began heavily rolling out in the U.S. in 2022. The new McDonald’s partnership is accelerating that initiative, and it appears to be working so far. In 2024, the company had a third quarter net income of $37.6 million—a positive net income after three consecutive years of losses and its first positive quarter this year.

That’s why Krispy Kreme is taking over a former CVS location in Fridley. It’s right near Interstate 694, making it more accessible for quick transportation to ancillary sites. Currently, Fridley is still waiting on a contractor to be selected to issue the building permit for the Krispy Kreme store, according to Stacy Stromberg, planning manager for the city of Fridley.

Maze also predicts the Fridley location will be Krispy Kreme’s only Minnesota location, applying lesson learned by making its product still somewhat limited. “Krispy Kreme has quietly done a really good job of figuring this out,” he said. “It’s perfected this hub-and-spoke model.”

Krispy Kreme’s reentrance will likely be met with much excitement. That glazed donut hype is what drove one enterprising Minnesota college student to drive across state lines to Iowa—the nearest Krispy Kreme location—to pick up Krispy Kreme donuts to resell in the Twin Cities.

Maze also added that he doesn’t think the Fridley location will do any damage to other existing donut brands in Minnesota, but actually generate more demand. “Krispy Kreme is gonna get us all thinking about donuts for a while,” he said.