February 15, 2019 / 10:49 AM / 9 months ago

UPDATE 1-Grand Parade to close Dunkin', Baskin Robbins in South Africa

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JOHANNESBURG, Feb 15 (Reuters) - South Africa’s Grand Parade Investments (GPI) Ltd plans to close its loss-making Dunkin Donuts and Baskin Robbins franchises in the country after failing to find a buyer, and will focus on its Burger King outlets, GPI said on Friday.

GPI signed a franchise agreement with Dunkin’ Brands Group Inc, which owns Dunkin’ Donuts and ice cream company Baskin Robbins, in 2016, betting that South African demand for snacks and drinks from international chains would hold up, despite pressures on disposable incomes.

But a recession in 2018, elevated household debt, higher fuel prices, the introduction of sugar tax and an increase in value-added tax from 14 percent to 15 percent has squeezed consumer spending and hit earnings and margins at the chains.

“The decision to exit Dunkin Donuts and Baskin Robbins was made following sustained losses in these businesses and an unsuccessful process to dispose of these businesses,” GPI said in a brief statement.

It did not say how many stores would close or how many jobs might be affected. In its results for the year ended June 30, 2018, GPI said it had 11 Dunkin’ Donuts and five Baskin Robbins stores.

In that period, the Dunkin’ Donuts business made a loss before interest, tax, depreciation and amortization of 24.9 million rand ($1.8 million), while the Baskin Robbins business made a loss of 18.6 million rand on the same basis.

$1 = 14.0582 rand Reporting by Noor Zainab Hussain in Bengaluru and Nqobile Dludla in Johannesburg; Editing by Patrick Graham and Mark Potter

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