Krispy Kreme Sold Its Majority Ownership of Insomnia Cookies. Here’s Why

Krispy Kreme has announced the sale of its majority ownership of Insomnia Cookies. The sale comes amidst reports that Insomnia Cookies now has a $350 million valuation — double what it was in 2017. Let’s take a look at what we know about this latest business move.

Krispy Kreme Sold Insomnia Cookies for $127.4M

According to The Philadelphia Inquirer, Krispy Kreme sold the majority of its investment in Insomnia Cookies, a company based in Philadelphia that is well known for its cookies served late at night, for $127.4 million. The company revealed on Monday, July 22, that Krispy Kreme anticipates receiving an additional $45 million from the purchase once Insomnia Cookies refinances intercompany debt.

“It’s a pretty remarkable journey here. We’ve been working with Krispy Kreme nearly six years. The business has grown beautifully, globally,” Insomnia Cookies founder Seth Berkowitz said to the outlet.

The majority of the business was sold to the New York City-based private equity firm Mistral Equity Partners and Verlinvest, an investment group that was established in 1995. According to Berkowitz, a major investor at Mistral was among the original backers of Insomnia Cookies in 2006 and later sold their shares as part of the Krispy Kreme transaction. The company is now making a comeback.

“Krispy Kreme gave me the opportunity to understand what a CEO role really needs to look like…I’m expecting this new chapter to demand more of me,” Berkowitz, who will continue as the company’s CEO, said. “I love the challenge, I love the growth.”

According to a statement released by Krispy Kreme last year, Insomnia Cookies tripled its income between 2017 and October 2023, generating over $200 million in sales. The press release announcing this move states that the doughnut company plans to use the proceeds to “further strengthen its fresh doughnut business,” continue growing its footprint, and pay off debt.

The CEO and president of Krispy Kreme, Josh Charlesworth, explained in the release the goal of the sale. “As we build a bigger and better Krispy Kreme, this transaction allows us to focus on our core strategy of producing, selling, and distributing fresh doughnuts daily while also further strengthening our balance sheet,” he said.

Big Moves for Little Doughnuts

This move is just the latest for Krispy Kreme, whose stocks have been soaring in recent months.

Back in June, the potential of the company’s recently announced cooperation with McDonald’s was highlighted by analysts. By the end of 2026, Krispy Kreme doughnuts will be available at 12,000 McDonald’s outlets thanks to this clever partnership, which might greatly increase Krispy Kreme’s earnings. According to preliminary testing conducted in Kentucky, the rollout might generate an additional $320 million in income annually, thereby increasing the company’s presence by 80%.

Analyst Bill Chappell led Truist’s upgrade, which included an updated 12-month price objective of $15, up from $13. Following a series of meetings with institutional clients, Chappell and his team recently joined the CEO and CFO of Krispy Kreme and came away feeling even more optimistic about the company’s future. They pinpointed a number of important elements influencing their optimistic view.

Truist also brought up an important point about how the market is responding to the growing usage of GLP-1 medications, such as Ozempic, for weight reduction and diabetes. Even if these medications, which are made by businesses like Novo Nordisk and Eli Lilly, have had great success, Truist thinks the influence they have had on Krispy Kreme’s price has been adequately taken into consideration. They contended that the U.S. market for decadent snacks has grown at a significant rate despite health trends, demonstrating a steadfast consumer need for sweets.

The analysts also pointed out that even before the full rollout is finished, this alliance is probably going to increase revenue growth in Krispy Kreme’s traditional company. This expectation of immediate cash gains highlights the doughnut maker’s bright future prospects.

Krispy Kreme’s stock had previously skyrocketed by 40% in a single day back in March when McDonald’s first announced the deal.