Local coffee shops are being forced out of business by the pandemic — and Dunkin' wants to cash in on their demise
Dunkin' executives said on Thursday that they see the closures of local coffeeshops during the coronavirus pandemic as an opportunity for the chain to expand.
- Dunkin' Brands CEO David Hoffmann said that Dunkin' is well-positioned compared to struggling independent coffee shops thanks in part due to its low prices and booming drive-thru business.
- Local coffee shop owners have struggled during the pandemic, as cafés that used to serve as community gathering spaces transitioned to a takeout only model or closed up shop.
Dunkin' is planning on cashing in on the demise of local coffee shops across America.
On Thursday, Dunkin' reported same-store sales were down by 18.7% in the most recent quarter. According to the company, sales had been recovering week-by-week since the beginning of the coronavirus pandemic, reaching single-digit declines in the week ending July 25.
Dunkin' also announced that it plans to close roughly 800 locations in the US in 2020.
Executives said that closing these locations will allow franchisees to invest in remodeling and opening new locations. As the industry struggles, Dunkin' sees the closures of local coffee shops as an opportunity for the chain to expand.
"I do think there are going to be some industry closures, especially from the independents," or local coffee shops that aren't part of a larger chain like Dunkin' or Starbucks, Dunkin' America president Scott Murphy said on a call with investors.
Dunkin' Brands CEO David Hoffmann said that Dunkin' is well-positioned compared to struggling independent coffee shops as a low-touch, affordable option that people visit regularly. The chain plans to remodel more locations into drive-thru stores, as locations with drive-thru performed four times better than those without drive-thrus during the pandemic.
Experts say chains are in a better position to survive the pandemic than independents. A June report commissioned by the Independent Restaurant Coalition found that 85% of independent restaurants could be forced to close by the end of the year.
Coffee shops have experienced their own unique set of struggles within the restaurant industry. Local coffee shop owners said that their shops used to serve as community gathering spaces. The loss of sit-down business has been both emotionally and financially devastating for many independent owners.
Foster Boop, who owns Stuart Coffee in Stuart, Florida, was forced to furlough all his staff due to the pandemic. Boop told Business Insider that before the pandemic, Stuart Coffee was a popular meeting and working spot. But while people have continued to come in for takeout, takeout alone won't sustain his business.
"We can't continue to have a business if this becomes the new norm," Boop said.
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