Dunkin’ Brands has announced the company will be shutting down 800 “low-volume sales” stores across the country permanently.
Following a 20% loss in revenue during the second quarter of 2020 due to the pandemic and consecutive lockdown, Dunkin’ has decided to permanently shut some 800 out of the total of 8,500 locations in the US.
According to the reports, the company will only shut down “low-volume sales” stores that allegedly represented just 2% of all sales in the US in 2019.
As a CNN Business report suggested, half of these under-performing locations that will be closed permanently are the ones that are operated at Speedway convenience stores.
Meanwhile, Dunkin’, who has more than 11,300 locations around the world, announced it is also closing some 350 stores located in foreign countries.
Following the company’s announcement on Thursday, Dunkin’ shares rapidly dropped by nearly 5%.
Dunkin’s announcement follows shortly after the biggest franchisee of Wendy’s and Pizza Hut stores in the United States has filed for bankruptcy due to massive debts accumulated during the coronavirus pandemic.
As Kansas-based NPC International announced, the company, which oversees 393 Wendy’s and 1,227 Pizza Hut outlets in the country, has debts amounting to nearly $1 billion.
According to the reports, the franchise stores operated by the company employ some 36,000 people and will remain open while negotiations with landlords and debt discussions are taking place.
As per the CNN Business report, the company has blamed the coronavirus pandemic along with “rising food and labor costs” for their bankruptcy.
In a statement released by the company’s CEO Jon Weber, NPC International confirmed they’re filing for Chapter 11 bankruptcy which companies typically opt for when the time to restructure debts is needed.
“NPC intends to use the Chapter 11 process to engage in further discussions with its brand partners, landlords and other creditors to achieve a consensual Chapter 11 plan of reorganization that will best position the company for long-term success in the current restaurant industry environment,” the company’s statement read.
As Mr. Weber added, challenges, which include “shifting consumer preferences and dining behavior” as well as “increased labor and commodities costs” have been made harder to handle due to the unexpected COVID-19 pandemic.
“We believe it is necessary to take proactive steps to strengthen our capital structure so we have the financial flexibility to continue to adapt to current industry trends,” the release added.
Replaced!