Damian Griffiths has finalised the sale of his Doughnut Time empire to the company’s former CEO and managing director Dan Strachotta.
The deal saves the enormously popular doughnut brand from extinction, but also sees the closure of almost half its remaining stores with many staff losing their jobs. Melbourne will hang on to its Degraves Street, Fitzroy and Chapel Street outlets.
In Brisbane, where the company began, just South Bank and Clayfield will remain open. Further afield, the Gold Coast will retain just one store at Mermaid Beach; Sydney one in Newtown.
At one point Doughnut Time had more than 30 stores in Australia and the UK, employing over 500 people. Commenting by email to Broadsheet today, Griffiths said the Instagram-friendly chain grew too quickly and he ran out of money.
“I am accepting the blame, I expanded too quickly. I guess I had too many big ideas and dreams when I started the development of Limes Hotel, Alfred & Constance, and then expanded Doughnut Time around Australia,” Griffiths says referring to his Brisbane-based businesses.
The sale follows a disastrous run of legal action for Griffiths and leaves the former lawyer without any business interests. In late December he lost control of Brisbane venues Limes Hotel and Alfred & Constance (and A&C’s on-site restaurants, Alf’s Place and Kwan Bros) over unpaid debts. In February, his Bubbles Bar and Bistro company, also in Brisbane, went into liquidation, after earlier sellingLes Bubbles the restaurant as a going concern to Strachotta (Les Bubbles continues to trade under Strachotta’s ownership but Alfred & Constance has struggled in the hands of receivers, who have elected not to open Kwan Bros and Alf’s Place).
Later in February, as many as 35 Doughnut Time workers across 15 stores in various states decided to take the company to Fair Work, alleging they were collectively owed more than $70,000 in pay.
The latest blow for Griffiths is a $404,000 lawsuit filed in the Supreme Court by Frasers Property, landlords of Central Park Mall in the Sydney suburb of Chippendale. Frasers is claiming a breach of contract and chasing alleged unpaid rent after Doughnut Time walked away from its store at the centre.
“[It’s] the classic example: us taking a space in Central Park,” Griffiths says of the shopping centre site. “[There were] lots of promises only [for us] to find out that it was a ghost town.
“Costs to operate [in Australia] with shopping centre rents are amongst the highest in the world. Shopping centre landlords just want rent, they don’t get what you are doing [or] the bigger picture like smaller suburban landlords.”
Griffiths says he has “lost the energy to fight” and the best thing he could do was sell the remaining Doughnut Time stores. The former lawyer has now formally accepted an offer from a group headed by Strachotta to purchase seven Doughnut Time stores, with the remaining six to close. “Sadly it means job losses but I could no longer afford to pay,” Griffiths says.
Strachotta, a turnaround specialist with experience working with start-ups and growth businesses throughout Australia Europe and Asia, told the Brisbane Times he is taking on the stores that he thinks can recover from a “very tough retail market”. Strachotta will be shifting Doughnut Time’s business strategy towards a greater focus on online platforms and delivery partners.
“The sale price I am getting will go some way to cleaning up back pays,” Griffiths says. “I won’t get anything out of it.”
Griffiths says he accepts the blame for the Doughnut Time failure and that his experiences should serve as an example for other young food and beverage entrepreneurs. “I had a go and made lots of mistakes,” he says. “I’m not after anyone’s sympathy. I will accept the blame but there [are] lessons for others in the … food and beverage industry.
Griffiths describes the sale as “a pretty low point in my life”. “I can’t think about the future now,” he says. “[I’m] just trying to sort things out.”