Krispy Kreme sells its majority ownership of Insomnia Cookies

Krispy Kreme has sold its majority ownership stake in Insomnia Cookies, the Philly-founded business known for its late-night cookies, for $127.4 million. Krispy Kreme, known for its doughnuts, expects to receive an additional $45 million from the deal after Insomnia Cookies refinances intercompany debt, the company announced on Monday.

“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 in an interview with The Inquirer on Monday.

Krispy Kreme, which is headquartered in North Carolina, will become a minority shareholder in Insomnia Cookies with an approximate 34% stake. The company originally bought a 74.5% of the Insomnia Cookies stake in 2018 for around $139.5 million, according to CNBC.

The majority ownership was sold to Verlinvest, an investment company founded in 1995, and Mistral Equity Partners, a private equity firm based in New York City. A principal investor at Mistral was one of the first investors in Insomnia Cookies in 2006 who then sold their stake as part of the Krispy Kreme deal, and that firm is now coming back, Berkowitz said.

The new deal “positions us for tremendous success,” he said.

Berkowitz, who founded the cookie company in 2003 as a student at the University of Pennsylvania, will continue in his position as CEO.

“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,” he said, noting the continued growth of the company. “I love the challenge, I love the growth.”

Insomnia Cookies tripled its revenue between 2017 and October 2023, according to a statement from Krispy Kreme last year, bringing in over $200 million in revenue in 2023, CNBC reports.

The doughnut company plans to use the proceeds of the sale to pay down debt, continue expanding its presence, and “further strengthen its fresh doughnut business,” according to the announcement.

News of the sale comes as Krispy Kreme leaders had been exploring a possible sale of Insomnia Cookies, at least as of October.

“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,” Mike Tattersfield, Krispy Kreme CEO at the time, said in a statement in October. “Both efforts have been successful, and it’s time for the next strategic step for both companies.”

The majority acquisition of Insomnia Cookies by Krispy Kreme in 2018 came right before several years of change, said Berkowitz, who described the two brands as having a “wonderful relationship in a very tumultuous time.”

”It took us about a year to get our footing, and then COVID hit, and then Krispy Kreme went public about a year later. There was quite a bit going on over the course of the five- to six-year relationship that was consistently changing.”

The deal comes as Insomnia Cookies has been expanding its products and reach in recent years. In 2022, Insomnia Cookies launched a signature line of ice creams that included chunks of their cookies and in 2023 announced it would launch stores in Canada and the United Kingdom.

Earlier this year, Insomnia Cookies opened a flagship bakery at 1 S. Broad St. in Center City and launched a four-day workweek for its corporate employees at its new headquarters in the same building. The company, which has around 290 stores, is on track to open 55 new stores this year, according to Berkowitz.

Krispy Kreme has three stores in the Philadelphia suburbs.