Profits at doughnut giant Krispy Kreme UK have been hit by ‘significant increases’ in commodities and other input costs, the business has revealed in its full-year accounts.
Despite the company reporting a 9% increase in revenue to £117.2m for the 52 weeks ended 1 January 2023, its latest filing on Companies House shows a 29% decrease in adjusted EBITDA. It sat at £23.7m for the year ended 2 January 2022 but fell to £16.8m for the latest period.
The major difference, Krispy Kreme noted, was due to an increase in input costs as well as one off benefits in 2021 related to insurance and leases.
An exceptional charge of £2.7m was also made in the 2022 financial year, which was attributed to aborted projects, gain on disposal of fixed assets, and employee redundancy costs.
The UK saw many economic challenges in 2022 with the cost-of-living crisis impacting consumer income, inflation hitting input costs, and labour and supply issues affecting operators. Krispy Kreme took several actions during the year to combat this including locking in contacts for input price stability, improving employee pay, working to reduce cost overheads and taking price increases.
This, the firm said, was paired with a ‘continuous drive in doughnut innovation’ to deliver a strong brand experience for customers. One such example of this was the limited edition Jaffanut it created in collaboration with McVitie’s.
“The directors continue to monitor the ongoing impacts of the economic challenges and the inflationary pressures on the UK economy and are taking appropriate actions as necessary to mitigate the short and long-term risks,” the accounts stated.
“They are satisfied that the company has continued to strengthen its position during 2022 with a portfolio of strong retail locations, successful partners and diversified routes to market that demonstrate its resilience and ability to remain both highly profitable and cash generative.”
Krispy Kreme increased its estate by four to 125 retail locations across the UK during the period and continued to refine and develop its Delivered Fresh Daily (DFD) business with new and long-standing partners, as well as grow sales in the delivery and ecommerce channels as part of its omnichannel strategy.
In the year ahead, the business plans to open shops in ‘quality, high profile locations’, expand with its DFD partners, invest further in digitally enhanced cabinets, and grow sales in its digital channels.
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