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Dunkin Donuts, Baskin Robbins to close in SA

Feb 15 2019 11:34

JSE-listed Grand Parade Investments announced on Friday its exit of poor-performing assets Dunkin Donuts and Baskin Robbins as part of its value-based strategy, which aims at improving the group's capital allocation.
 
Acting CEO Mohsin Tajbhai said in a statement that the businesses have negatively impacted the group's cash resources.

"Since June 2018 it became apparent that both brands would not meet their original, nor revised forecasts based on the poor performance of existing stores," said Tajbhai.
 
"We have been actively pursuing opportunities to exit these businesses in the most effective and efficient way since September 2018. We have engaged with several potential buyers over the second half of 2018 and have decided that voluntary liquidation of both businesses is the best possible option in the absence of any serious offers," says Tajbhai.
 
"While disappointed in our inability to gain traction in SA, Dunkin Brands International is aware of our decision to exit. The liquidation process will be managed in such a way that obligations to landlords and staff can be dealt with responsibly. Of the 120 staff impacted, we will aim to accommodate as many as possible in our other businesses or pay appropriate retrenchment compensation to those who cannot be offered alternative employment."

According to the statement, this process has no bearing on GPI's Burger King franchise, which currently operates 82 stores and are EBITDA positive at group level.

"Nevertheless, we are focusing on optimising the profitability of existing restaurants while ensuring that the new restaurants we are opening are all quality stores," said Tajbhai.
 
"While the closure of Dunkin Donuts and Baskin Robbins is a disappointment, this is the right decision for all stakeholders and we are now better positioned to focus our efforts on building on the current momentum at Burger King."

According to GPI, the closure of Dunkin Donuts and Baskin Robbins will allow GPI to free up capital which will assist in funding the growth of Burger King.  

"At this stage, we believe that the value of GPI lies in unlocking the potential we see in Burger King," said Tajbhai.

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