Krispy Kreme sells Japan operations to Unison Capital for $65 million as debt crisis deepens with $900M+ in long-term debt

Krispy Kreme has agreed to sell its entire Japan operations to private equity firm Unison Capital for $65 million, marking a critical step in the doughnut chain’s aggressive debt reduction strategy. The sale of 89 stores and 300 touchpoints comes as the Charlotte-based company faces mounting financial pressures with over $900 million in long-term debt. CEO Josh Charlesworth has made deleverage the primary focus.

The Strategic Refranchising Model Reshaping Krispy Kreme

Krispy Kreme’s Japan sale is the first major international refranchising agreement since the company launched its comprehensive turnaround plan in August 2025. The transaction involves selling all shares of Krispy Kreme Doughnut Japan Co. to Unison Capital, a Japanese investment firm focused on long-term value creation in established markets.

CEO Charlesworth emphasized that refranchising international markets represents the first critical step in addressing the company’s balance sheet crisis. Unlike traditional franchising, this strategic refranchising transfers operational control to experienced local partners equipped to manage the business more efficiently. The company is actively seeking experienced long-term potential partners across additional international markets.

Debt Crisis Deepens as Stock Plummets 64% in 2025

Krispy Kreme’s financial deterioration has been severe throughout 2025. The company reported a net loss of approximately $488 million in the first nine months of the year, compared to a profit of just $25.5 million during the same period in 2024. Diluted earnings losses reached $2.86 per share through September.

The company’s stock has cratered, dropping more than 64 percent in 2025 alone from its 52-week high of $12.68. In Q2 2025 earnings release, when the company first announced its turnaround plan, it disclosed a staggering $441.1 million net loss. Q3 2025 results showed a smaller but still concerning $20.1 million net loss. These losses stem from declining sales, higher operating costs, and the lasting impact of the failed McDonald’s partnership that ended in August 2025.

Asset Fire Sale Strategy: Japan Follows Insomnia Cookies Exit

The Japan refranchising is not an isolated transaction but part of a broader asset liquidation strategy. Krispy Kreme previously divested Insomnia Cookies through two separate transactions totaling more than $200 million, generating crucial cash for debt reduction. These strategic exits signal the company’s shift toward an asset-light international model.

CFO Raphael Duvivier confirmed the company maintains sufficient liquidity for short-term obligations and long-term investments, though the leverage ratio climbing from 3.9x at end of fiscal 2024 to 4.5x in Q3 2025 demonstrates increasing financial stress. The company edges dangerously close to its 5x leverage ratio limit under its credit facility. Interest expense decreases if the company maintains leverage below 4.0x, creating urgency to close more deals.

Structural Challenges Beyond the Debt Crisis

While the Japan sale addresses symptoms, underlying operational problems persist. Global points of access dropped by approximately 950 locations year-over-year in Q3 2025, though the company frames this as strategic retrenchment focused on eliminating unprofitable units. The most dramatic contraction involved exiting 2,400 McDonald’s locations after failing to achieve sustainable unit economics.

Net revenue fell approximately $4.5 million year-over-year in the third quarter, driven by declining product sales across the combined portfolio. The cost-of-living crisis has depressed consumer spending, while higher operational expenses and delivery network costs continue squeezing margins. First-quarter 2025 revenue declined 15.3% compared to the prior year.

Will the Turnaround Plan Save Krispy Kreme Before Debt Becomes Unmanageable?

The urgency of Krispy Kreme’s position cannot be overstated. The company has acknowledged declining sales, persistently high expenses that consume an increasing percentage of revenue, and profitability metrics worse than industry peers. If the company cannot maintain leverage below 4.0x, interest expenses will rise further, compounding financial pain.

Krispy Kreme’s turnaround plan includes not just international refranchising but outsourcing U.S. logistics and optimizing production assets. However, the scale of the debt burden and the deteriorating sales environment create significant execution risk. Investors and stakeholders are watching closely to see whether asset sales generate enough momentum to stabilize the business before the debt crisis becomes irreversible.

Sources

• Restaurant Dive – Comprehensive analysis of the Japan sale’s role in debt reduction strategy
• Wall Street Journal and BusinessWire – Official announcement and financial transaction details
• Multiple Financial Publications – Stock performance, debt levels, and quarterly earnings data through December 2025

Patrick Graham

Patrick Graham is a business and finance journalist translating Wall Street’s complexities into stories that matter to everyday readers. With extensive experience in financial journalism and economic analysis, this expert journalist provides sharp insights on market trends, corporate developments, and the economic forces affecting daily life. His reporting helps readers make sense of the business world’s biggest moves.