Dunkin’ Donuts Feeling the Pinch With Franchisee Bankruptcies

July 24, 2009

(ChattahBox)—Dunkin’ Donuts, the popular doughnut and coffee chain that is found on virtually every street corner in the Northeast, is facing problems in the tight economy, as it seeks to expand in other regions of the country.

The near freeze on financing and a recent rash of franchisee bankruptcies has curtailed expansion plans and cut into profits.

Dunkin’ Donuts was purchased in 2006 by a group of private equity firms, the Carlyle Group, THL Partners and Bain Capital. The group purchased the doughnut chain for $1.5 billion in a leveraged buyout deal financed by Lehman Brothers. The conditions attached to the deal specified that the new owners meet certain guidelines, such as a set number of new store openings.

The $1.5 billion debt becomes due in 2011 and the owners are hitting a snag with franchisee expansions, as financing is drying up. Additionally, four Dunkin’ Donuts franchise operators have declared bankruptcy since June. One of the franchise owners, Kainos Partners Holding Co., operates 56 shops.

Records from 2008, show that Dunkin’ Donuts has 8,835 franchised shops, but that number may decrease if the bankrupt franchisees enter liquidation and are forced to close stores.

For purposes of full disclosure, this writer is a big fan of Dunkin’ Donuts’ coffee, often hitting my nearby shop in the afternoon to recharge on a caramel iced latte. I do have one big complaint though, well two actually.

I am forced to shield my eyes, every time I walk into a shop at the multiple wall mounted televisions in every Dunkin’ Donuts’ shop tuned into Fox News 24/7.

Additionally, the doughnuts are shrinking. Like many businesses dealing with increased costs, instead of hitting the consumer with a price increase, they instead, shrink the product giving you less for your money.

Still, I am hooked on those lattes. Now, if Dunkin’ Donuts would just dispense with the assault to my intelligence and do away with its Fox News viewing policy, I would be one happy woman.

Source


Comments

One Response to “Dunkin’ Donuts Feeling the Pinch With Franchisee Bankruptcies”

  1. Richard Beckett on July 24th, 2009 12:34 pm

    You say Dunkin Donuts having on Fox News in their stores insults your intelligence. If you don’t like Fox News perhaps your not as intelligent as you thought! Good Day!

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