Dunkin Donuts could close over 1,000 locations as part of a “real estate portfolio rationalization.”
The company announced that 800 Dunkin’ U.S. locations may permanently close in 2020 along with 350 international locations as the fast food chain works with its franchisees to eliminate low-volume sales locations.
The news came as the Dunkin Brands Group announced its second quarter results and revealed the global coronavirus pandemic has sent profits down 23 percent from a year ago to $36.5 million as revenue fell to $287.4 million.
In a statement, the company said, “For many of these franchisees, closing these restaurants will enable them to invest in remodels, new restaurants, and potentially relocate some to higher-traffic areas, or to areas where they can add a drive-thru. So this will be ultimately a good thing for our guests as well as for our franchisees. Our focus is on quality, not quantity of Dunkin’ locations.”
As part of the real estate assessment, Dunkin said it will work with franchisees to permanently close off-strategy, low volume sales locations.
Earlier this year, it said it expected to close 450 Speedway self-serve kiosk locations during fiscal 2020, representing less than 0.5 percent of system-wide sales. These Speedway/Dunkin’ gas station locations are spread along the East Coast, primarily in Virginia, Pennsylvania and New York.
“If all 800 of these locations (Speedway plus 350 others) were to close, they would represent only around two percent of our system-wide sales. We are still working with our franchisees to assess these other locations in addition to the Speedway Dunkin’ kiosks, so don’t have any locations to share at this time,” said the chain.
Dunkin’ is the latest in a long list of retails being forced to rethink their operations or facing closure as a result of the coronavirus.
Since the start of the pandemic, high profile victims include gourmet food emporium Dean & Deluca and the CMX cinema chain.
Clothing retailers True Religion, J. Crew, Neiman Marcus and JC Penney have all filed for bankruptcy. Gold’s Gym chain and home goods specialist Pier 1 are also in trouble.
The COVID shelter in place order sent Hertz car rental company into bankruptcy in May.
“We are going through the great reset of the last decade,” said Adelaide Polsinelli, vice chairman at Compass who specialized in the retail investment sales sector.
“Those retailers who have a solid and flexible business strategy will adapt and reset their leases. Many will be in the market looking for new space in better locations, and at discounted rents.
“Sadly, this usually hurts landlords most as they must accept the harsh choice of a reduced rent or sit with vacant space.”