Cape Town was the wrong decision for Dunkin Donuts, Baskin Robbins – GPI CEO

Grand Parade Investments (GPI), a Southern African franchise group, has recently announced the liquidation of Dunkin Donuts and Baskin Robbins due to sustained losses. The decision to exit these brands was made about four months ago, as GPI had been running a due diligence process with potential buyers showing interest. However, with no serious offers received, the most efficient way forward was to volunteer liquidate the businesses. The businesses have been facing financial challenges, with a cash loss of about 42 million rand in the last year alone. Mohsin Tajbhai, the Acting CEO of GPI, highlighted that the cumulative loss incurred from these businesses amounts to approximately 150 million rand over the past three to four years. This move will impact around 120 staff members, with efforts being made to relocate some employees to other GPI businesses, especially Burger King. Unfortunately, not all staff will be accommodated, and the board has decided to provide proper retrenchment packages for those affected. One of the key challenges faced by GPI was underestimating the capital required to roll out these American brands in the South African market. Tajbhai acknowledged that they should have considered launching in a smaller format and possibly targeting a different location, such as China, instead of Cape Town. The decision to liquidate Dunkin Donuts and Baskin Robbins comes as a response to the market pressure and the negative impact these brands had on GPI's financial performance. While it is a difficult decision, the company believes it is a necessary step to cut losses and move forward. Despite the challenges and the impact on employees, GPI is focused on mitigating the effects of the liquidation and ensuring a smooth transition for the staff members affected. In conclusion, the liquidation of Dunkin Donuts and Baskin Robbins serves as a learning opportunity for GPI and highlights the importance of thorough market research and financial planning when introducing foreign brands into new markets. The experience gained from this venture will undoubtedly shape GPI's future decisions and strategies in the franchising business.