Last week I wrote an essay called We Are All Doomed, about
the apparent inability of Americans to recognize the discrepancies between
their words and their actions or to see the connection between those actions
and predictable consequences causing them to make the same mistakes over and
over. It was a pretty pessimistic piece
of prose.
But that is not my usual tone. I really do try to hold out hope. So when I saw the partial headline: “DUNKIN' DONUTS: People aren't buying
doughnuts because…”, my first thought was very encouraging. Great, people are laying off the donuts due
to a rational concern for their health. They
are not obsessing about gluten or organics or artificial ingredients; they are
concerned about something real – donuts = calories! With so many Americans overweight, a downturn
in donut sales is good news. It shows
responsibility, a willingness to take some action to correct the situation, and
discipline, the ability to forego the temporary pleasures of today in return
for a healthier tomorrow. It also shows
some perspective, properly classifying drive-thru donuts and coffee as a
luxury.
With this in mind, I followed the link to read the full
story. The full headline on the Business
Insider website was, “DUNKIN' DONUTS: People aren't buying doughnuts because
they're worried about the election.”
That doesn’t make sense. You
would of think donuts as comfort food.
They should sell more if people feel under stress.
Upon further reading, I found that it was common these days
for CEOs to blame the election for financial shortfalls. In fact the news was not so bad for
Dunkin’. They reported profits and US
same-store sales higher than analysts’ expectations, but total revenue was lower. And they will not open as many new stores
this year as originally planned. More
donuts were sold, but not enough donuts to make management happy. This supports my comfort-food theory better
than the election excuse, but it’s not unusual for CEOs to take credit for good
news while blaming some outside force for falling short – looking good in a
strong economy and pointing fingers in a poor one, for example.
In this case, the CEO blamed “changes in gas prices, changes
in food stamp regulations, and…the presidential election." Taken one at a time:
First, this graph from the US Energy Information
Administration (EIA) shows gas prices lower this year than several prior years.
Second, it is hard to believe that such a significant
portion of their business came from food stamp recipients to affect their
overall results. But if new regulations
discouraged people who are having trouble feeding their families from buying
donuts, that’s not necessarily a bad thing.
Finally, “last year, researchers at Princeton and Chicago
found that election uncertainty affects consumers' outlook, but not their
immediate spending.”
That’s three strikes for the CEO, but unfortunately, not
much support for my original hope that responsibility, discipline and perspective
are making a comeback based on information from the quick-service donut business.
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