Doughnut Time’s retail empire crumbles — what went wrong?
Three years after its rapid rise, Doughnut Time's fortunes came crashing down on the weekend — dropping from an empire of 30 stores to just seven.
- Dozens of Doughnut Time workers have lost their jobs after most of the company's stores closed down
- Workers have have taken the company to Fair Work Australia, alleging unpaid wages and superannuation
- The CEO blames "high rents" and "high operational costs" for the financial misfortune
These remaining stores are located in Melbourne (Degraves, Fitzroy, Chapel Street), Brisbane (Clayfield and South Bank), the Gold Coast, and the Sydney suburb of Newtown.
At its peak, the company had more than 400 staff, but that number had dwindled to less than 100 before the weekend store closures.
Dozens of disgruntled workers, who lost their jobs following the store closures, have since taken action against the dessert chain at Fair Work Australia over unpaid wages (in the order of $70,000).
It is also alleged that Doughnut Time had never paid many of these workers any superannuation.
Many of them were shocked to learn about the store closures and job losses — among other revelations — in a staff email, sent on Sunday night by its new chief executive officer Dan Strachotta.
One was that Doughnut Time's founder Damian Griffiths had just sold his business to Mr Strachotta.
The other discovery was that most of the stores would be liquidated in an attempt to "turn the company around" — and "new employment contracts" would be issued to the remaining staff who get to keep their jobs.
Mr Strachotta wrote that the company's new strategy is to reduce operating costs, by focusing more on online sales and "be[ing] less reliant on physical stores".
He also said that the business had succumbed to pressure from "high rents" and "generally high operational costs for such a simple and small business".
The first inkling of money problems
Store manager Chris Boucher first realised something was wrong within three weeks of starting his new job at Doughnut Time's store in Manly.
He showed up to work one morning to discover that the landlord had "locked them out".
"I then found a letter on the door, from the landlord's solicitor, saying that Doughnut Time owed more than $10,000 in unpaid rent," he told the ABC.
Soon after, Mr Boucher noticed his wages were being paid "a few days late". As the months passed, his employer was a few weeks behind on wage payments.
"Doughnut Time now owes me five weeks of wages, totalling more than $2,200," he said.
But why did Mr Boucher and his colleagues continue to work for an employer that did not pay them for weeks on end?
Workers owed backpay
Mr Boucher alleged that Mr Strachotta had been promoting repeatedly all the backpay issues would be resolved by February — due to an upcoming "investment" in the company, which he did not elaborate on.
That "investment" turned out to be Mr Strachotta's decision to ultimately purchase the business.
"'Dan [Strachotta] lied to us for months. He kept stringing us along with his promises of, 'You'll be paid in full," Mr Boucher said.
"He wanted to shut us up, prevent us from striking, and doing anything that would damage the brand."
Several other Doughnut Time employees were similarly incensed about the situation.
Here are some of some of the workers' replies to Mr Strachotta in the group email:
- "So are we going to get paid for everything that you owe us, EVER?"
- "What about our money? Our back payments?"
- "Can you show us some respect? We have bills to pay and we're counting on these shifts."
- "F**ing disgusting. And when we tried to talk about it, I was told by management there was nothing wrong with the company."
Protest goes viral
In addition to the Fair Work proceedings, some of the company's ex-employees have taken their complaints to the streets and social media.
On Tuesday morning, three former Doughnut Time employees showed up at the Newtown store in Sydney — specifically to disrupt business, and explain to every passer-by how the company allegedly wronged them.
This led to the Newtown staff calling the police, who directed the protesters to move 5 metres away from the shopfront.
Furthermore, they also visited the company's abandoned Sydney shopfronts (at The Galeries (sic) Victoria and Queen Victoria Building) to stick up hand-written posters of protest, which have since gone viral on social media.
The posters reads: "Doughnut Time hasn't paid us in weeks!!! And now we all got fired."
It has been shared hundreds of times on Facebook, and attracted more than 1,200 comments.
It also contains the hashtag #itsnotalwaysagoodtime, which is an attack on the company's slogan: "It's always a good time!"
Mr Strachotta has been contacted for comment.
If you have information about unlawful workplace practices, you can contact us anonymously.
Or if you have concerns about your work conditions, you can contact the Fair Work Ombudsman.