A Dark Roast Day for Dunkin’: New England Mourns Store Closings
I grew up in Massachusetts and Rhode Island. This means I grew up on a lot of donuts, munchkins, egg and cheese croissants, and iced or hot coffees from Dunkin’ Donuts. Or as anti-fried deliciousness boring people now know it: Dunkin’.
Dunkin’ Announces the Closing of 800 Stores
Today Dunkin’ ($DNKN) announced it is closing “8% of the Dunkin’ U.S. total restaurant footprint”. This is approximately 800 stores in total. And another sign that the economy is crumbling despite guys like this thinking that stocks only go up.
Don’t get me wrong, nowadays I’d rather drink Starbucks with a added shot of Windex, than drink coffee from Dunkin’. That said, it is an unavoidable institution in New England. The trope of hardos with a Boston accent ordering their “extra lahge, extra cream, extra sugah” has been brought to us by everyone from Ben Affleck to Jimmy Fallon.
It’s no stretch to see a Dunkin’ every mile in Rhode Island. They are everywhere! And now 800 low performing stores will close across the country. These stores had “EBITDA margins well below the average for traditional Dunkin’ U.S. restaurants and the average weekly sales for the group is approximately 1/4 of the average weekly sales of our system”. Or in other words, they were bad at making money.
What was left out of the Q2 2020 earnings call was the number of employees who will have their lives rocked because they will lose their job. That sucks but isn’t surprising.
Economy in the Shitter
With commuters no longer making the morning stop at the local Dunkin’ Donuts, it’s no surprise these stores are closing. When the math doesn’t work businesses close. But maybe that is something that needs to change in America – there needs to be an honest valuation of the human life and the impact on society of corporate expense savings.
Workers across the country are treated as commodities in so many industries. Especially low paying service industries. The cost of closing these stores has absolutely no consideration of the socio-economic impact of the workers at these locations losing their jobs, how it will affect the communities which businesses operate, and the long term effects on the U.S. as a store of wealth.
This moment in our history requires us to think differently and to develop a rare technique in financial analysis called ’empathy’. Right now this country is lacking. And for businesses to succeed long term, maybe the best option is eating a little red to keep workers afloat for the greater good.
With 50 million out of work and cognitive dissonance destroying the art of conversation, shit seems close to getting real. While the broader stock market is holding up and 401Ks look good for many working from home, the service industry is almost 100 million workers deep and not feeling the love. Crowds aren’t returning anytime soon to restaurants, hotels, and bars. Now the government can’t even get $600 a week to these folks? Shameful.
This economy stinks. People struggling stinks. COVID stinks. Dunkin’s closing stinks. I’m going to eat a donut.
To read the full transcript of the $DNKN Q2 2020 earnings call here.