According to the franchise owner, the decision was made following an unsuccessful effort to sell the unprofitable brand.
The Cape Town-based leisure company is also closing down its Baskin-Robbins ice cream stores, another Dunkin’ chain.
High hopes
GPI acquired the rights to represent the two American brands in South Africa in January 2016, with high hopes on developing 290 Dunkin’ Donuts stores in just a decade.
It also purchased the rights to expand the brand into Namibia, Botswana, Zambia and Mauritius.
However, in its 2018 financial year results – which reportedly were badly hurt by the introduction of sugar taxes and the rise of the VAT (value added tax) rate – GPI said it had only managed to open five stores for Dunkin’ Donuts, bringing the total to 11 stores, all based in the Cape Town area.
Did not meet forecasts
“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 Mohsin Tajbhai, GPI’s acting CEO.
“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.
“While disappointed in our inability to gain traction in SA, Dunkin Brands International is aware of our decision to exit,” he said, adding that GPI will absorb most of its 120 affected staff in its other businesses or pay the appropriate retrenchment compensation.
“The liquidation process will be managed in such a way that obligations to landlords and staff can be dealt with responsibly.”
Tajbhai added the move is also aligned to its strategy to direct funding towards the growth of its Burger King business.
“The decision is in line with the company’s value-based strategy, which aims at improving the group’s capital allocation by channelling capital to high-value potential assets, such as Burger King.”
GPI was founded in 1997 for the principle purpose of partnering with Sun International as its primary black economic empowerment partner in the Western Cape.
More recently, GPI diversified into the food sector and currently holds master franchise licences for Burger King and steakhouse franchise Spur Corporation in South Africa.