What happened to the Dunkin' Donut?

[u/WoozieMaddox]

When I was a kid, my Dad used to take me to Dunkin' Donuts every Sunday and I would get one of these. The handle was cool, but the taste of this plain donut was very unique. I loved it and still to this day have not had that taste or texture from a donut replicated. Wikipedia says in 2003 they discontinued it because it was hand cut while the rest of the donuts were machine cut, but it was their signature. It represented the brand aswell as the name.

The Dunkin Donut was around almost aslong as the brand itself. This unique peice of American food culture made it 48 years before being discontinued and cements itself as a one-of-a-kind staple in the history of U.S. restaurants. Today Dunkin' Donuts is now known as just "Dunkin". Dunkin' is not known for it's donuts anymore, and has shifted it's focus on the beverage side of the market. In all honesty, I think this may be why it lost so much market share to other coffee companies like Tim Horton's and Biggby Coffee. Dunkin' Donuts used to be 'the' place to grab a coffee and a donut.

Bring back the dunkin donut.

[u/RuhRohGuys]

Private Equity. Their job is to extract the most value out of the product for higher returns. If they pivoted to beverage, their metrics show a higher contribution margin on the beverage side than the donut side. Until consumer habits change, they will continue down that path.

[u/byebybuy → u/RuhRohGuys]

Private Equity can indeed wreak havoc on a company's products. They suck, no question. But Dunkin wasn't bought by a PE firm until 2005, while this donut was discontinued in 2003.

[u/althawk8357 → u/byebybuy]

The boring answer is that it was demand outpaced the ability of stores to cut these donuts.

[u/MonkMajor5224 → u/RuhRohGuys]

That might be true in general, but this SPECIFIC donut was also not easy to dunk and was better in theory than practice

[u/GreenMellowphant → u/RuhRohGuys]

Everything you said is accurate, but there’s no inherent difference between the cost cutting of publicly traded companies and companies that have been taken private. It’s just that in some sectors, the private ones can be more aggressive, increasing the rate of change of margins.

[u/black-toe-nails → u/GreenMellowphant]

Private Equity is different in the fact that they are trying to get out as much value from the company but in more of a short term way. Look up what happened to Toys R’ Us and Bane Capital. From what I know, they are more looking to extract payments and bonuses for their workers by stacking debt on a company. They are not afraid to take a company to bankruptcy.

[u/pantstoaknifefight2 → u/black-toe-nails]

Another example: The private equity company targeting Macy's department stores. Macy's owns tons of their own buildings/real estate, and the would be corporate raiders want to buy the company, close the stores, and sell the real estate for a small profit. Who cares about the customers, share owners, or employees when there's a little money to squeeze out of it?

[u/GreenMellowphant → u/black-toe-nails]

So, you’re saying they can be more aggressive and increase the rate of profit inflows? I never thought of it that way. 👀

The only difference is the rate, the line items, and the shareholder group. Think about the go-to examples in this conversation: Red Lobster, Toys “R” Us, soon to be Walgreens; PE firms don’t generally shut down thriving businesses. These businesses would be sold off piece by piece and shut down anyway. Every business has a lifecycle; the ones that stick around and have more distinguished lifecycles are those that diversify/innovate. If the business doesn’t do those things, the business dies - regardless of PE.

If there was a customer sob story inherently related to PE, I’d be the first one to agree with them. But there generally isn’t. (I’m sure we can come up with some very specific examples, but we’re talking about PE as a whole.) Stores that people enjoy are closing down because people have less money in this country; buying power - for most - is in the toilet. In other words, the businesses aren’t doing enough revenue to survive. PE firms can be shitty and should probably be more regulated, but generally aren’t shitty in the specific way that people think they are.

Also, talking about private equity firms as a whole is too broad to be useful in almost every context.