October 04, 2023
Provided Image/Insomnia Cookies
Insomnia Cookies has more than doubled its store count and started an international expansion over the last five years.
Krispy Kreme is looking to sell off its majority stake in Insomnia Cookies in order to focus more heavily on growing its core doughnut business, the company announced Tuesday.
Krispy Kreme, which acquired a majority stake in the Philadelphia-based cookie company in 2018, said on Tuesday that it is "exploring strategic alternatives" for the brand, including the possibility of an all-cash sale. The businesses operate as independent, standalone companies as per the terms of their agreement.
The decision to put the cookie brand on the market is based on Krispy Kreme's desire to expand its own business, which serves doughnuts via retail shops, convenience stores, food carts and full-service bakeries in 37 countries. Its goal is to bring the doughnut brand to three to five countries each year and expand to more than 75,000 points of access around the world.
"We acquired a majority stake in Insomnia Cookies to build our e-commerce and digital capability as well as assist Insomnia's U.S. and international expansion," said Mike Tattersfield, CEO of Krispy Kreme. "Both efforts have been successful and it's time for the next strategic step for both companies."
When Krispy Kreme acquired its majority stake in Insomnia Cookies in mid-2018, the cookie company was valued at less than $500 million, CNBC reported at the time. The cookie company is expected to bring in about $230 million in revenue in the fiscal year 2023, Tattersfield said.
Since joining forces with Krispy Kreme in 2018, Insomnia Cookies has more than doubled its store count, expanding to more than 250 locations throughout the country. Earlier this year, founder Seth Berkowitz announced that the company would begin its first expansion into Canada and the United Kingdom while continuing to expand its footprint in the United States.
While store locations in Toronto and Manchester, U.K. are slated to open by the end of this year, the U.S. expansion aims to make cookies available to 90% of households with about 600 locations by 2027, the company said in February.
"It has been an honor to partner with Krispy Kreme in an unprecedented chapter of growth for Insomnia Cookies," said Seth Berkowitz, founder and CEO of Insomnia Cookies. "As we enter our 20th year of delivering warm, delicious cookies, we are now a sizeable multi-channel enterprise... I look forward to leading our Insomniacs in our next phase of significant domestic and global expansion."
Berkowitz founded Insomnia Cookies in 2003 while studying at the University of Pennsylvania. The company began as a local delivery service that expanded by adding locations near college campuses in Philadelphia and Syracuse, New York. Over the years, the company has created new flavors and added other treats like cookie cakes, cookie sandwiches and ice cream.
The cookie company is now moving its Philly headquarters to a 23,000-square-foot space at the corner of Broad and Chestnut streets in Center City. The former Super Walgreens is being converted into a three-story office building with a test kitchen and ground-floor store.
