Coffee and doughnut restaurant chain operator Dunkin' Brands, also known as Dunkin' Donuts, announced plans of permanently closing around 800 of its stores in the United States. The announcement comes after the company reported a 20 percent decline in its overall revenue for its second quarter this year.
Dunkin' Brands blamed the decline in its revenues for the period on the significant reduction in its walk-in and take-out customers in its U.S. stores due to the coronavirus pandemic. The forced store closures and disruptions in its supply chain also affected the company's ability to generate profits for the quarter, leading to its decision to tighten its belt and reduce costs.
Which stores will be permanently closed will reportedly depend on the outcome of its evaluation, where it will be narrowing down its most productive outlets and pinpointing stores that are not performing as expected. Around 450 out of the 800 stores the company is expected to close will be those located in Speedway gas station. Dunkin' is targeting an 8 percent overall reduction in its U.S. footprint by the end of the year.
The company's chief executive officer, Dave Hoffman, mentioned in a press release that the Dunkin's same-store sale has improved "sequentially" through the past months. Hoffman credited the marginal improvements in its sales to the company's continued effort to adapt its operations and its menu to changing customer behavior and taste amid the pandemic. He explained that some menu items had to be changed as customers had been visiting their stores at much later hours than before.
For now, the company is still suspending the use of its dine-in areas given the recent spike in new coronavirus cases in the country. Dunkin' did report a surge in demand for its drive-thru service and most of its outlets that offer the service have since reopened.
For its latest quarter, Dunkin' had closed a total of 229 outlets globally for both its Dunkin' Donuts and Baskin-Robbins brands. For the period, same-store sales in the U.S. for its Dunkin' brand dropped by 18.7 percent, while its Baskin-Robbins stores reported a 6 percent decline.
For its second quarter ended June 27, the company reported a net income of $36.5 million, or 44 cents per share. This was a massive departure from the $59.6 million in profits it reported over the same period last year. Dunkin' managed to beat average analysts' revenue expectation of $277 million by generating $287.4 million for its second quarter.
Dunkin' share prices dropped by almost 5 percent on Thursday after it closed at $71.68 on Wednesday.
