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Sixteen staff at Muffin Break in Dunedin Hospital have been dealt a pre-Christmas blow with the loss of their jobs when the franchise closes next month.
Dunedin Hospital Muffin Break franchisee Keith Henderson said nine full-time staff and seven part-time staff would lose their jobs when the outlet closed on January 27.
The staff, who would not be receiving redundancies, were "extremely disappointed" about losing their jobs, Mr Henderson said.
"I just feel so sorry for them ... It's not good at any time of year but at this time of year, it's just twice as bad," he said.
The job losses came after Muffin Break lost a tendering process to be the hospital's food outlet.
The process began in October after Muffin Break's lease ran out.
The franchise had done its best to stay in the hospital and it was "absolutely gutting" not to win the tendering process, Mr Henderson said.
Muffin Break had been in the hospital for 10 years and some of the staff had worked there longer than the four and a-half years he had been franchise owner.
He said his staff were part of a "very good team" and would hopefully be able to find work elsewhere.
Wishbone, which won the tendering process, will be taking over as the hospital's food outlet around the time Muffin Break closes.
Wishbone general manager Samantha Lacoua said its new premises in the hospital would open in February and would start off employing "probably around five or six" staff.
Ms Lacoua said she had been in contact with Mr Henderson, and staff who had lost jobs at Muffin Break would be given "first dibs" on jobs at the new outlet.
There would be fewer jobs at Wishbone than there were at Muffin Break because Wishbone outlets did not make food on site, she said.
Southern District Health Board (DHB) Chief Operating Officer Vivian Blake said the DHB put out a request for proposals from food service providers after Muffin Break's contract expired in September.
A panel of Southern DHB representatives including Healthy Eating Healthy Action (HEHA) evaluated the proposals received against a number of criteria after which Wishbone was selected as the preferred provider, Ms Blake said.
The space currently occupied by Muffin Break will be converted for clinical use as an Emergency Department observation unit and a new a new space in the hospital foyer for Wishbone will be developed in the psychiatric services building.