Dunkin’ Donuts announced that 100 stores will be closing starting this year and moving into 2016. America may run on Dunkin’, but some of us may have to do without our favorite donut and coffee corner shop. Dunkin’ downplayed the move – citing growth in some states and internationally – but indicated “disappointment” with results in the US.
Reports CNN Money on Oct. 1: “Dunkin’ Brands, the parent company of Dunkin’ Donuts and the Baskin-Robbins ice cream chain, announced Thursday that one of its franchisees plans is to close 100 Dunkin’ Donuts stores in the United States this year and next. The company did not provide a list of what stores would be closed, but said that they were all owned by the Speedway gas station and convenience store chain.”
Dunkin’ Donuts CEO Nigel Travis cited two factors contributing to a dip in revenues – an increase in the cost of eggs due to recent avian flu outbreaks, and the fact that the minimum wage for fast food workers is increasing.
Currently, all states pay under $10 per hour, with the exception of DC, which has a standard minimum wage of $10.50. However, six states are due to increase their minimum wages to double digit amounts within the next few years. New York State recently approved a $15 per hour phase-in for fast food workers. A number of western cities have followed suit – California, Oakland, San Francisco, Seattle and Los Angeles have all approved a $15 per hour hike for fast food employees.
Dunkin’ just can’t keep up in the intense battle for morning coffee and breakfast on the go commuters.
Travis lashed out at the notion of his employees making $15 per hour – or an annual salary that tops $30K – calling it “outrageous.” Although supporting “reasonable increases,” the CEO said the wage hike is “going to affect small businesses and franchises…I don’t want to sound threatening about that.”
The news of store closings had a drastic impact on Dunkin’ Donuts shares, which plummeted by 12 percent.
Adds CNN: “But Dunkin’ Brands also lowered its outlook for the third quarter – to just 1.1 percent same-store sales growth –as fewer customers came to the stores. And it issued earnings guidance for the year that was a bit below Wall Street’s consensus estimates.”
Dunkin’ Donuts has approximately 8,200 stores across the United States, according to Reuters News. All are owned and operated by franchisees. The US stores account for approximately three-quarters of the company’s aggregate annual revenue.