​Market Reaction To Dunkin Donuts Closing Stores

Author: John LesterBy:
Staff Reporter
Oct. 3, 2015

Dunkin Donuts is really closing stores, and there may be as many as 100 locations, at least by one franchisee. The Dunkin’ Donuts coffee shops to close are operated by convenience store chain Speedway LLC, according to CNN Money.

Dunkin Brands, the parent company of Dunkin Donuts and the Baskin-Robbins ice cream chain, announced Thursday that one of its franchisees it will be shutting 100 stores across the country in the next 15 months, reports Forbes.

The restaurants to be closed in 2015 and 2016. Speedway will continue to remain a franchisee of Dunkin’ Brands.

Dunkin Donuts closing stores at Speedway

Dunkin Donuts closing stores at Speedway

Dunkin Donuts is closing stores for a number of reasons, and one has to do with a spike in the cost of eggs due to the recent avian flu outbreak in the United States. In addition, the rise in minimum wage laws in cities across the country has been a concern.

Last month, New York became the first state to raise the minimum wage for fast-food workers to $15 an hour.

Speaking at an investor presentation in New York, Dunkin Donuts CEO Nigel Travis said that the wage hike would have far reaching implications.

“It’s going to affect small businesses and franchises,” and he noted that it might mean mass layoffs.

Despite the outlet closures, the company reiterated its 2015 plan to have 410 to 440 net new Dunkin Donuts restaurants in the U.S. and to build its “coffee culture” with hot coffee and iced coffee.

But competition is stiff as the retail sector continues to contract despite claims that the economy is doing better.

Just last week, Dunkin Donuts announced a new seasonal drink to compete against Starbucks’ popular Pumpkin Spice Latte-­called Pumpkin Macchiato-available both hot or iced. The chain also unveiled a new delivery system starting in 2016 where doughnut lovers can get their breakfast items right on their doorstep.

But if the end of 2015 is looking rather flat, the company has outlined some concrete strategies to keep America running on Dunkin Donuts into 2016. These include “differentiating thru product innovation,” and “leveraging technology to improve the brand experience.”

Presumably, Dunkin Donuts will also continue to focus on expanding its sales outside of traditional breakfast hours. Currently, a bit more than 60 percent of the chain’s sales occur between 4 a.m. and 11 a.m., another 30-ish percent between noon and 6 p.m., and less than 10 percent from 7 p.m. to close.

Dunkin Donuts, as well as several of its competitors, have made enticing the lunch and evening crowd a priority.

Speedway LLC

Other tidbits from the investor presentation: Dunkin’ Donuts plans to begin testing delivery in Dallas in the fourth quarter. It also has big improvements planned for its mobile app.

The company is launching a test of mobile ordering in Portland, Maine, this November and plans to roll it out nationally in 2016.

Earlier this year, Starbucks reported that 16 percent of total transactions were coming in through mobile. Just last week, it expanded its mobile order-ahead program to all of the U.S.

Besides being up against Starbucks in mobile, Dunkin Donuts is also taking on McDonald’s, which debuts all-day breakfast nationwide Oct. 6, plus fast-food breakfast competitors like Taco Bell. It’s the first time that Dunkin Donuts is closing stores of this magnitude.

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