Dunkin’ Donuts sees slowing franchise growth amid higher minimum wage

A higher minimum wage and the United States presidential election are reasons why Dunkin’ Brands franchisees are not opening new stories as much as they would like.

Speaking to Wall Street analysts last week, Dunkin’ Brands CEO Nigel Travis referenced a New York franchisee who was delaying his idea to open a new location because of the state’s efforts to raise the minimum wage to $15 an hour by 2019 in New York City and by 2021 in the rest of the state.

The coffee and doughnut chain opened up 61 stores in the third quarter, down from 91 a same time a year ago. It now expects to open just 430 stores for the entire year.

Here is what the CEO told analysts:

“You’re going to open one store this year, why don’t you open two? And their response was, uncertainty, regulation, we don’t know where the minimum wage is going,” he said.

“What is driving franchisees towards the lower end is several factors and I’ve described it, put it together as uncertainty, as uncertainty over the general election, Senate, obviously, the House and local elections.”

Can you blame them? You’re already seeing the negative effects in Seattle, where the first-year increase to the minimum wage was $11. Studies over the past several months have found that the minimum wage hike was prompting many businesses to slash employment levels and reduce hours.

Donald Trump has flip flopped on raising the minimum wage, while Hillary Clinton has also flip flopped (one moment she wants a $12 minimum wage and the next she wants a $15 minimum wage).

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Comments

  1. What a joke? What does the CEO of DDs make. Raise the cost of the Dnuts by 10 cents problem solved and then maybe their workers will be able to buy some Dnuts to take home. $15 per hour in NY city??? It should be $20 per hour. In 1975 I made $9.10 per hour loading trucks for Gallo Wine in Commerce, CA. It would have to be over $40 per hour today to have the same buying power. I am sick and tired of these fat cat CEOs complaining about the minimum wage, that they have never had to try and live on. Do we really need another 430 DDs anyway?

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