Donuts Blames Minimum Wage For Price Hikes And Dismal Sales

REUTERS/Mario Anzuoni

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Dunkin’ Brands Group is blaming recent minimum wage increases for higher prices which have resulted in sales that did not meet expectations, according to reports Friday.

Dunkin’ Brands is a major franchise company which includes Dunkin’ 
Donuts and Baskin-Robbins. The company missed its average analyst sales estimate of $219.9 million by a few million in the last financial quarter. Company President Nigel Travis notes that recent minimum wage increase forced their franchisees to raise prices which negatively impacted sales.

“We think that pricing got ahead of itself because (franchisees) saw the minimum wage going up, and the natural reaction is to increase prices,” Travis said, according to the Boston Herald. “It’s not always the best reaction. We’ve managed now to get price increases under control.”

Dunkin’ Donuts sales climbed by only 0.5 percent while Baskin-Robbins saw an increase of 0.6 percent. Dunkin’ Donuts accounts for 74 percent of the its total revenue. Travis also believes a slowdown in fast-food industry demand and McDonald’s deciding to serve breakfast all-day as contributing factors.

Lawmakers and activists have fought to increase the minimum wage as a way to address poverty. Some economist warn increasing the minimum wage might actually hurt the very people its meant to help while putting strain on the economy. They have found the policy could result in less employment opportunities and price increases.

Nevertheless supporters contend that job loss is limited at best and the economic benefits of less people living in poverty outweigh any possible negative outcomes. The Fight for $15 movement as led much of the minimum wage debate since it started in 2012. The movement has fought for local and national minimum wage increases of $15 an hour.

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