Written by Bryan Lutz, Editor at Dollarcollapse.com:
Right now Blue Owl Capital, one of the biggest names in private credit, is in crisis mode. Retail investors want their money back and Blue Owl can’t give it to them fast enough. It turns out the exit door was always smaller than advertised.
It’s a good week to zoom out and ask a simple question:
Where did all that private credit money actually go?
Sometimes it goes into software companies. Sometimes into real estate.
And in the case of JAB Holding Company, another private equity firm, about $1.35 billion of it went into a donut shop from North Carolina.
The Krispy Kreme story is a perfect illustration of what private credit actually does to the brands ordinary people grew up loving. Spoiler: it involves a lot of debt and a lot of donuts in the dumpster.
American show what his local Krispy Kreme donuts does to their unsold donuts at the end of the night
Since being bought by a private equity firm Krispy Kreme has gradually raised the price of a dozen donuts to as much as $22 in some cities
Instead of selling at lower prices.… pic.twitter.com/OlfhNIoy35
— Wall Street Apes (@WallStreetApes) March 1, 2026
Someone posts a video of an employee tossing trays of unsold Krispy Kremes into a dumpster at the end of the night. Mountains of perfectly glazed donuts. Gone. Meanwhile the price of a dozen has quietly crept up to levels that would have seemed absurd ten years ago.
This is the private equity business model in one image. Load the company with debt. Raise prices to service that debt. Overproduce to hit distribution targets. Throw out what doesn’t sell. Repeat until the math stops working.
The math stopped working.
From Vernon’s Hole in the Wall to a Luxembourg Boardroom
Krispy Kreme started the way all great American food stories start, with one guy and a secret recipe. Vernon Rudolph rented a building in Winston-Salem in 1937 and started selling yeast-raised donuts to grocery stores. The aroma from the production process drew people off the street. So Rudolph cut a hole in the wall and started selling direct. That was the whole business plan.
For decades it worked beautifully.
Rudolph’s “Hot Light” was the sign that told customers fresh donuts were coming off the line right now. It became one of the most effective pieces of retail theater in American food history. The brand grew slowly, meaningfully, and regionally. People drove out of their way for it. It was the kind of loyalty that takes generations to build.
Then the suits got involved.
In 1976, a Chicago conglomerate called Beatrice Foods bought the company and spent six years trying to standardize it into mediocrity. Franchisees hated it. In 1982, they bought it back for $22 million and refocused on the hot donut experience. That worked too.
Then came the IPO.
In 2000 Krispy Kreme went public on NASDAQ. The stock went crazy. Wall Street loved the story. The company moved to the NYSE in 2001. And then, as always happens when a beloved brand has to justify itself to quarterly earnings calls, the pressure to grow started destroying the thing that made it worth growing.
By 2009 the SEC issued a cease and desist order. The company had been stuffing channels, shipping excess equipment and ingredients to franchisees at quarter-end to book fake sales. Accounting irregularities. Propped-up earnings. The stock collapsed. Krispy Kreme was now a cautionary tale.
Which made it a perfect target for private equity.
The PE Playbook, Glazed and Delivered
In May 2016 JAB Holding Company announced it would buy Krispy Kreme for $1.35 billion. The maths worked out to $21 per share in cash at a 25% premium to market. JAB is the investment vehicle of the Reimann family of Germany. They trace their wealth back to the 1800s and operate with a patience that traditional PE firms can’t match. No five-year fund cycle. No pressure to exit. Just patient family capital looking for global consumer brands to own forever.
JAB was on a buying spree. They’d just closed a $13.9 billion deal for Keurig Green Mountain two months earlier. Peet’s Coffee. Caribou Coffee. Einstein Bagels. Panera Bread would come in 2017. The vision was a vertically integrated breakfast empire…
Coffee, bagels, and donuts all under one roof, or at least one holding company in Luxembourg.
Krispy Kreme fit the thesis. Globally recognized brand. Fiercely loyal customers. Broken public market story. Cheap to fix if you had the capital and the patience.
The fix was the “Hub-and-Spoke” model. Instead of every Krispy Kreme being its own factory — expensive real estate, high utilities, massive capital outlay — JAB built large Hub production facilities that would supply smaller Spoke locations, kiosks, and grocery stores with fresh donuts daily. They called it “Delivered Fresh Daily” or DFD. The footprint grew from 1,100 shops in 2016 to over 1,400 by 2021 with thousands of additional points of access.
On paper it was elegant. In practice it required building out enormous production and logistics infrastructure. That cost money, and JAB borrowed a lot of it.
By the time Krispy Kreme went public again in July 2021, (trading on NASDAQ under the ticker DNUT) the company was carrying $1.2 billion in debt. The IPO raised $500 million. JAB stayed on as the controlling shareholder with over 50% of the vote. The public got the stock. JAB kept the keys.
When the IPO hit, it was priced at $17. That was well below the projected $21-$24 range. The market already knew something was off.
When the Model Melts
The big bet after the IPO was McDonald’s. In March 2024 Krispy Kreme announced it would roll out fresh donuts to all 13,600+ McDonald’s locations in the US by end of 2026. The logic made sense on a whiteboard. McDonald’s gets a dessert menu boost. Krispy Kreme gets an instant national distribution network without building another store. Analysts projected over $340 million in incremental annual revenue.
What they didn’t project was the operational reality of delivering fresh donuts daily to thousands of fast food restaurants across the country. Krispy Kreme had to invest heavily in new production hubs and logistics to even attempt it. The demand that was supposed to justify all that investment never materialized.
By May 2025 the CEO was on an earnings call announcing a pause in the rollout. By June 24 the partnership was officially dead. At termination Krispy Kreme was in about 2,400 McDonald’s locations… roughly 18% of the planned rollout. The stock fell more than 24% in a single day. Investors filed a class action lawsuit alleging misleading statements about the partnership’s viability.
The full year 2025 numbers were brutal. A GAAP net loss of $523.8 million. $355.9 million in goodwill impairment. A net leverage ratio of 6.7x on $1.46 billion in debt.
The turnaround plan involved selling everything that wasn’t bolted down.
In 2018 Krispy Kreme had acquired Insomnia Cookies, which was a late-night college-town cookie delivery brand for about $175 million. It seemed like a clever diversification play at the time. By July 2024 they sold the majority stake for $127 million. By June 2025 they sold the remaining 34% for $75 million. Total recovery: $202 million on a $175 million investment. Not a disaster but not the business that was supposed to anchor Krispy Kreme’s growth strategy either.
In December 2025, they agreed to sell their Japan operations (89 shops and 300 delivery points) to private equity firm Unison Capital for $65 million. Japan had been a Krispy Kreme market since 2006. All of it going to pay down debt.
Now the dumpster in that X post makes a lot more sense when you understand the balance sheet behind it.
None of This Happens Without the Fed
Here is the part that never makes the business press.
The story of Krispy Kreme’s transformation isn’t really a story about donuts. It’s a story about what happens when money is artificially cheap for a long time. The Federal Reserve spent the better part of two decades keeping interest rates at or near zero. That policy didn’t just affect mortgage rates. It reshaped the entire logic of capital allocation.
When borrowing costs are near zero a $1.35 billion acquisition of a donut company makes sense. You borrow most of the purchase price. The interest payments are manageable. You restructure the business. You re-IPO at a higher valuation. You pocket the spread. The whole transaction is essentially subsidized by the Fed’s interest rate policy.
Private equity as an industry is largely a creature of cheap fiat money. The leverage that makes the returns possible only pencils out when the cost of that leverage is artificially suppressed. JAB is more patient than most PE firms, but the basic arithmetic is the same.
You need cheap debt to make these deals work.
It’s the same old story when rates go up. The debt that was manageable at 2% becomes crushing at 6%. The deals that looked like genius become problems.
The assets get sold…
The donuts hit the trash…
Blue Owl is dealing with the same underlying reality right now at a much larger scale. A $1.3 trillion private credit market was built on the assumption that money would stay cheap and that the companies borrowing it could service the debt. When that assumption gets stress-tested by rising rates, by AI disrupting software businesses, by deals that don’t work out, investors start asking for their money back. And the exit is smaller than anyone admitted.
Vernon Rudolph cut a hole in the wall to sell donuts because people wanted them. That’s an honest business. What happened to his company over the last decade has very little to do with donuts and everything to do with the financial system that surrounds them.
The Hot Light is still on but, what’s being made fresh daily, is now the bill.
