Monday, August 7, 2017

Dunkin Donuts in Germany Story

About a year ago, it was obvious that the American franchise operation....Dunkin Donuts....was going to attempt a big show in Germany.  At the time, I questioned the wisdom of this....donuts just aren't that big of a deal with Germans, and the coffee at DD's?'s decent coffee but you have a lot of decent coffee around bakeries in Germany these days.

Today came the announcement that 32 Dunkin Donut operations will shut down across Germany....involving the dismissal eventually of 260 employees (unless something occurs to change things).

What appears to be going on is two different franchise owners (companies)....simply didn't have the cash flow or show enough strength to continue on.

The locations generally affected?  Berlin, Leipzig and North Rhineland Westphalia.

What the two companies say as the basic explanation?  There was a move in the last two years to establish a minimum wage in they raised their rates, and the business expectations simply never came.

If you read through the material....there might be an over-saturation going on as well (twenty operations noted in Berlin).

There are two DD operations in Wiesbaden.  I've visited both, and will agree that they do have the same basic formula for donuts as in the difference.  Coffee is excellent, but you can stop at sixty bakeries in Wiesbaden and find the same quality of coffee for the same price.

If you went to a hundred working-class Germans....probably over half would tell you that they've never tried a true American donut....nor do they care for one (citing sugar or fat content).  From the rest, probably ten-percent will tell you as they transit near a DD operation in a normal year....they might stop once or twice to pick up donuts.  Looking for the German who stops three times a week at DD's?  There just isn't that type of character.  From the twenty times, I've stopped in the Wiesbaden train-station and bought a cup of coffee and a donut.....I've come to note that most all customers are in the 25-to-40 age one ever over the age of fifty.

There are a couple of American franchise operations which I give a fair chance to survive in Germany (McDonalds, Burger King, Subway, Pizza Hut, and Dominos).  Dominos got a step buying up the Joeys Pizza chain and consuming their empire.  Pizza Hut does a fair amount of business, but I think the bulk of their profits are the lunch-time specials and day-workers.

As for Starbucks?  The pricing scheme makes me question their long-term survival.  I can buy quality coffee for regular bakery operations.  This 3.25 Euro deal for a grande ice tee?  It's a joke.  I admit....I like the ice tea, but it's just not worth 3.25 Euro. Somewhere down the line....I expect a quarter of the Starbucks shops in Germany to shut down.   It might take four years.....maybe even eight.  But I just don't see Germans embracing Starbucks like Americans do.

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