Krispy Kreme (DNUT) Risk Analysis

We operate in the food service and manufacturing sector and are subject to food safety concerns, which are common both in the food service industry and the food supply chain. These concerns include risks of food-borne illnesses/injuries, tampering, contamination, and cross-contamination. Although we maintain a food safety system, such system may be insufficient in design and execution to prevent or avoid risks associated with such food safety concerns. These risks may escalate as we launch new products, broaden our distribution through channels such as our fresh delivery operations and digital channels, and expand our manufacturing and production facilities. Inadequate food safety measures, including in our facilities and Points of Access, could lead to shutdowns or other interruptions, disrupting operations in both our in-shop and fresh delivery operations. Moreover, we and our franchisees rely on domestic and international suppliers to provide quality ingredients and to properly handle, store and transport our ingredients for delivery to our shops in compliance with our established procedures and standards and in compliance with applicable laws and regulations, including sanitation and pest control standards. Any failure by our domestic or international suppliers to meet our quality standards, or to comply with domestic or international food industry standards, could cause our ingredients to be contaminated, which could be difficult to detect and could jeopardize the safety of our food. Food safety incidents might also negatively impact the cost and availability of ingredients, leading to supply chain disruptions or reduced profit margins for us and our franchise partners. Any such disruption in our supply chain could negatively impact our brand and our results. Moreover, our dependence on third-party delivery services and third-party Points of Access heightens the risk of these food safety issues. While we oversee some of these third parties' operations, the quality and service they provide could be compromised by various factors, including factors that are beyond our control or are unforeseeable, making it challenging to identify contamination or other defects. Additionally, food safety concerns may expose us to legal actions, regulatory investigations, product recalls, and financial consequences, including penalties. Any association of our brand, our franchisees, or the broader food service industry with food safety issues could harm our reputation, leading to a decline in revenue and profitability and could have a material adverse effect on our business, financial condition, and results of operations.

Our success depends to a significant extent on the continued availability and service of our executive officers and other key personnel. Given our streamlined management structure, the departure of any key person could have a significant impact and would be potentially disruptive to our business until such time as a suitable replacement is identified. Moreover, significant leadership transitions, even with succession plans in place, can create risks as individuals are integrated into new roles and onboarding shifts management attention from business concerns. These changes may increase the likelihood of turnover amongst our Krispy Kremers and impact our relationships with our customers and other market participants. The loss of, or failure to engage in adequate succession planning for, any of our executive officers or other key personnel could harm our culture, reputation, or business. Moreover, our shop-level management and hourly Krispy Kremers play a critical role in the operation of our Doughnut Shops, manufacturing facilities, and delivery logistics, and we rely on them to deliver operational and customer service excellence. Our ability to maintain the highest product quality heavily relies on our Krispy Kremers. Any failure to retain and adequately train key talent could have an adverse effect on our ability to maintain consistent product quality and deliver outstanding consumer experiences worldwide. Furthermore, we could encounter challenges related to the availability of labor for in-shop positions. This shortage may be influenced by evolving economic, social, and generational trends, the emergence of new telecommuting job opportunities, labor shortages, shifting employee expectations, and other factors that can reduce the pool of qualified talent for critical roles within our organization. A failure to maintain an adequate number of employees with appropriate skill sets and talent could increase our costs or negatively impact our ability to execute our business strategy, result in loss of institutional knowledge, and reduce our supply of future management skill. Any of these consequences could adversely affect our business, operating results and financial condition. If we encounter difficulties in recruiting, retaining, and motivating Krispy Kremers to support our projected growth and strategic initiatives, it could have a material adverse effect on our overall operations.

We serve as the exclusive supplier of doughnut mixes to numerous domestic and international Krispy Kreme shops. In support of international markets, we produce a concentrate that is mixed with commodity ingredients in local markets to get to a finished doughnut mix. We serve as the exclusive supplier of such mix concentrate. Furthermore, we are the sole supplier of specific critical ingredients to all domestic Company-owned shops, the majority of domestic franchise shops, and select international franchise shops. Our mix concentrate is manufactured at our facility located in Winston-Salem, North Carolina. Domestic doughnut mix production occurs at our Winston-Salem plant and a third-party facility in Pico Rivera, California. The distribution of doughnut mixes, essential ingredients, and flavors to Krispy Kreme shops, both domestically and internationally, is facilitated by a limited number of independent contract distributors. Any disruption in the production or distribution of our mixes and concentrates would have a cascading effect on our global supply chain, with no adequate alternative source available. A production interruption at any significant manufacturing facility could hinder our, and our franchisees', ability to produce doughnuts domestically. Internationally, we operate several plants for doughnut mix production, and any disruption at these facilities could impact doughnut production capabilities regionally, affecting our locations and those of our franchisees. Any such production disruption poses a significant risk to revenue and could have a material adverse effect on our business, financial condition and results of operations. Our international shipments of mixes and concentrates primarily depart from a single port in Florida. Any delays in shipping or disruptions in logistics chains could adversely affect our and our franchisees' international operations. Such delays may result from known or unforeseen events, including those related to adverse weather conditions, customs and border closures, trade conflicts, and general trade route delays. Furthermore, unexpected termination of our relationships with raw material suppliers, even when multiple suppliers exist for the same ingredient, may hinder our ability to secure adequate quantities of high-quality ingredients at competitive prices. As we continue our global expansion, these risks may intensify, leading to supply shortages, logistical challenges, and increased operational costs associated with managing and supplying a global network of Krispy Kreme shops.

As a food service business, we face potential adverse impacts stemming from litigation, regulatory actions, and consumer or government complaints related to food or occupational safety, food quality, illness, injuries, health concerns, environmental, or operational issues. These concerns may arise from individual shops or a limited number of shops, including those operated by our franchisees. Additionally, such risks may increase as we introduce new products or expand distribution channels, such as our fresh delivery business channel, and our business becomes subject to new regulations and higher regulatory scrutiny. There is increasing legal, legislative and regulatory focus on the industry, including areas such as menu labeling, packaging, food additives and other ingredients. This scrutiny is largely due to concerns that the practices and offerings of food service companies may contribute to issues like poor nutrition, excessive caloric intake, obesity, or other health issues among consumers. Class action lawsuits have been filed against various food service businesses, including quick service restaurants. These lawsuits may allege, among other things, the failure to disclose health risks associated with high-fat foods and marketing practices that encourage obesity or may challenge a company's classification of its ingredients or products. Given that one of our core competitive advantages lies in the taste and quality of our doughnuts, adverse publicity or regulations related to food quality or similar concerns have a more pronounced impact on our business compared to food service businesses that primarily compete on other factors. Changes in regulations addressing such health issues, including new or changing restrictions on the inclusion of certain products in benefit programs, such as the U.S. supplemental nutrition assistance program known as SNAP, changes in interpretations of such regulations by relevant regulators, or the introduction of new legislation could affect any of our operational markets and result in decreased demand for our products. Failure to effectively adapt to these changes or to comply with new or existing regulations could adversely affect our business, financial condition, and results of operations. Furthermore, we may face significant liabilities from any such lawsuits or claims that result in unfavorable judgments or due to litigation costs, regardless of the final outcome.

We are subject to federal, state, and local income taxes both in the U.S. and in foreign jurisdictions. The impact of potential changes in tax laws or changes in the interpretation of such laws could materially increase our tax expense or cash tax payments and adversely affect our business, financial condition, and results of operations. Additionally, our income tax returns are subject to examination by the Internal Revenue Service and other tax authorities. While we have taken measures to provision for taxes in the jurisdictions where we operate, challenges from tax authorities could result in assessments that increase our tax liabilities. Furthermore, the cost of complying with new legislation could adversely affect our results of operations.

We collect, transmit, and store large amounts of data regarding our consumers and employees, including personally identifiable details. This data is housed in our own and our franchisees' information technology systems, as well as those of third-party service providers. A failure to protect our systems, or those provided by our third-party service providers and franchisees, from damage, disruption, fraud or cyber-attacks, could harm our reputation, result in significant fines or penalties, and have a material adverse effect on our business, financial condition, or results of operations. We operate under various data privacy and security laws, directives, and regulations, both domestically and internationally. The U.S. has a complex landscape of federal and state data protection regulations, with some state laws offering more stringent protections. The potential introduction of a comprehensive federal data privacy law could increase complexity and compliance costs, impact data use strategies, and necessitate additional investments in compliance infrastructure. Internationally, we are subject to regulations like the European Union's General Data Protection Regulation ("GDPR") and the U.K.'s GDPR and Data Protection Act of 2018. These laws impose strict requirements on data handling, including consent, individual rights, cross-border data transfer, breach notifications, and data security and confidentiality. Non-compliance with these international regulations could result in significant penalties and legal liabilities for us or our franchisees. Adapting our systems to these evolving requirements may require substantial investment and time. The interpretation and enforcement of data privacy and security laws and standards are evolving, leading to potential inconsistencies with our data processing practices and policies. Any non-compliance or perceived non-compliance could lead to fines, audits, investigations, lawsuits, and other penalties. Additionally, any failure to adhere to our public statements and privacy policies could expose us to legal action, harm our reputation and have a material adverse effect on our business, financial condition, and results of operations. Further, the standards and technology currently used for transmission and approval of electronic payment transactions are determined and controlled by the payment card industry. If we or our franchisees fail to comply with these standards or if a third party circumvents our data security measures or those of our franchisees or vendors, we and our franchisees could be exposed to litigation, liability, reputational harm, fines from the payment card companies and increased costs, which could have a material adverse effect on our business, financial condition, and results of operations.

The food service industry is highly susceptible to shifts in consumer preferences, including dietary choices and health concerns, as well as broader factors like economic conditions, spending habits, demographic changes, traffic trends, and competition from other brands. In addition, our products fall into the category of indulgences, making them particularly sensitive to shifts in discretionary spending patterns and dietary trends (including use of weight loss medication). Shifts in consumer behavior based on any of these factors may lead to reduced sales. In the event of unfavorable economic conditions where we or our franchisees operate, our consumers may have reduced disposable income, leading to potential reductions in their consumption of our products. Any such reductions could have a material adverse effect on our business, financial condition, and results of operations.

Our company operates a substantial portion of its business outside the U.S. As of December 28, 2025, there were 7,656 Krispy Kreme Points of Access internationally, excluding Doughnut Factories. This accounts for 50% of the total number of our Points of Access. Among these, 2,834 are managed by franchisees. Our international operations, encompassing various business segments, are subject to numerous risks inherent to foreign markets. These risks include, but are not limited to: - Laws, regulations and policies adopted by foreign or U.S. governmental authorities to manage national economic conditions, such as increases in taxes, austerity measures that impact consumer spending, monetary policies that may impact inflation rates and currency fluctuations;- The effects of legal and regulatory changes and the burdens and costs of our compliance with a variety of foreign laws;- Changes in the laws and policies that govern foreign investment and trade in and among the countries in which we operate, including trade disputes, restrictive actions of foreign or U.S. governmental authorities affecting trade or foreign investment, potential imposition of or increase in tariffs, import restrictions or controls or similar trade policies;- Exposure to recessionary or growth trends in global markets, impacting consumer spending and market stability;- Ongoing reforms in areas like public health, food safety, tariffs, taxation, sustainability, and climate change response leading to regulatory uncertainties and potential spikes in compliance costs;- Challenges in adhering to international food safety regulations and maintaining high standards of product quality and safety;- Navigating varying import and business licensing requirements across countries;- Constraints in fund repatriation and foreign currency exchange, influenced by U.S. and international laws;- Difficulties in managing and staffing international operations, supply chain logistics, and ensuring consistent product quality and service;- Risks associated with franchisee disputes, operational failures, development delays, or site selection issues;- Complexities and costs arising from local labor laws in hiring, retaining, or terminating staff;- Facing strong competition in new markets with established local players;- Political events and instability, conflicts, disputes or war, or labor unrest impacting countries in which we or our franchisees operate; and - Potential increase in anti-American sentiment affecting brand image, as Krispy Kreme is widely recognized as an American brand. Our financial performance and asset valuation in foreign markets are susceptible to currency exchange rate fluctuations and liquidity issues, which could negatively impact reported earnings. Royalties from international franchisees, calculated as a percentage of their net sales, are subject to currency conversion risks. An increase in our reliance on international operations amplifies our vulnerability to foreign political and economic instability, currency volatility, and regulatory constraints on currency conversion and remittance. Moreover, our international operations predominantly rely on exporting doughnut mixes and concentrates to franchisees. These exports are governed by numerous U.S. and international regulations concerning food products. In the event of a ban or other restrictions on any of our ingredients, we may not be able to identify suitable alternatives on acceptable time frames or at all, potentially delaying our expansion plans. Our expanding international presence heightens our exposure to a diverse range of risks associated with foreign market operations, regulatory environments, and global economic conditions.

Health epidemics or pandemics can have detrimental effects on consumer spending, confidence levels, supply chain availability, and associated costs within the markets where we and our franchisees operate. These factors can collectively influence our business, financial condition, and operational results. A notable instance of this was the global spread of the COVID-19 epidemic in recent years, which disrupted global health, economic conditions, consumer behaviors, and food service operations. While we have implemented measures to address significant public health risks on a large scale, we acknowledge the potential for future outbreaks to impact our shops and other facilities. Such outbreaks may result in a substantial portion of our workforce or the workforce of our business partners being unable to work. Furthermore, our business is influenced by shifting consumer preferences and perceptions. Concerns regarding virus transmission have prompted employees and guests to avoid congregating in public places, leading to adverse effects on guest traffic at our locations and the ability to adequately staff our shops. The COVID-19 pandemic triggered changes in consumer behaviors, some of which have endured and may continue to evolve even though the pandemic has subsided. These shifts have already had and may continue to exert negative impacts on consumer traffic and the sales of both our Company-owned and franchisee-operated shops. We remain attentive to evolving consumer trends and their potential implications for our business and operational performance.