SOUTH AFRICA – Grand Parade Investments (GPI), the Southern African franchise owner of US fast food chains Dunkin’ Donuts and Baskin-Robbins, announced the closure of the two brands operated outlets after the businesses continued to record poor performance.
The group said it filed an application for voluntary liquidation of the two US chains after failing to sell them.
Mohsin Tajbhai, acting Chief Executive Officer at GPI, said that both fast food chains had continued to record underperformance whose effect had spilled over into 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 Mohsin Tajbhai.
Mohsin said that GPI had 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,” he said.
Mohsin assured the stakeholders and staff that the liquidation process would be managed with outmost considerations of its landlords and staff whereby the company will absorb most of its 120 affected staff into the groups remaining ventures.
“This process has no bearing on our Burger King franchise where we currently operate 82 stores and are EBITDA (earnings before interest, taxes, depreciation, and amortization) 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,” he added
GPI revealed that this was part of the groups value based strategy aimed at importing its capital allocation, reports Business Report.
The group had signalled negative implications of the introduction of sugar taxes and rise in the Value Added tax rate to its overall performance during release of its 2018 financial year results.
Grand Parade acquired the rights to represent Dunkin’ Donuts and Baskin-Robbins in SA, Namibia, Botswana, Zambia and Mauritius in January 2016.
At the time, Grand Parade said it intended developing more than 250 Dunkin’ Donuts restaurants and more than 70 Baskin-Robbins shops in SA.
Grand Parade, also the local franchiser of Burger King, said that the exit from Dunkin Donuts and Baskin Robbins would allow GPI to free up capital and assist in funding the growth of Burger King.