Monday, December 13, 2010

Mitt Dunkin

As a lover of coffee and coffee farmers as well as good food and supporting local businesses, I have found a lot not to like about Dunkin' Donuts. The Rachael Ray fiasco in 2008 was the last straw, pushing me to create the Coffee Hell page in honor of the company's religious intolerance.

 The purpose of this post, however, is to document some of the negative business practices of the company, to which I've referred only in passing in other posts. In 2005 Dunkin' Brands was purchased from the French company Pernot Ricard SA by a consortium of three venture-capital firms. The "our owners" page on DunkinBrands.com focuses exclusively on the size and financial power of these firms (except for a sidebar with a trivium about pralines and cream). 

Of the three owners, the largest by far is Bain Capital, which also owns substantial shares of Burger King, Domino's, Staples, and the presidential ambitions of its senior partner, Mitt Romney. I first became acquainted with Mitt when he decided to add the governorship of Massachusetts as a key purchase on the way to his bid for the U.S. presidency. Among his several home states, he chose to declare political residency here, where he could most effectively combat public servants and the poor.

Every cup lines these pockets!
In his presidential bid, Romney had a difficult task. Although clearly only interested in putting government in the service of the super-rich, he had to make some sort of a case that his experience in business would somehow benefit other people, because voters at his income level comprise a fairly small percentage of the electorate. He emphasized the creation of private-sector wealth, counting on voters to equate this with jobs. In some cases -- as with Staples -- his investments actually have created employment. This has never been a priority for Romney, however, as Robert Gavin explains in a 2008 Boston Globe article on Bain's job cuts.

Romney also famously campaigned against undocumented workers while repeatedly relying on them to keep landscaping costs low at his Belmont estate. They were employed through a contractor, of course, giving him both the financial benefit and plausible deniability. The vulnerability of undocumented workers at Dunkin' franchises was great prior to the Bain/Carlyle/Lee purchase, but can only be greater as Dunkin' Brands increases pressure on the franchise owners through nuisances lawsuits that have turned brand enforcement into a profit center. Dilution of the franchise value has also been a concern, as the corporation has pushed sales into the interstitial spaces among an already dense network of franchises.

In early 2010, DD franchisees in Massachusetts formed a political action committee to support "free enterprise" against "big labor," having identified government regulation as the main enemy of small business. Similarly, the Dunkin' Donuts Independent Franchise Owners Association appears to be more concerned about taxes and competitors than about any abuses by Dunkin' Brands. The (DDIFO) provides insight into the priorities of the operators; coffee quality does not seem to be a major concern.

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