Sandwiches, iced coffee sales rise at Dunkin'

by Eric Schroeder
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Dunkin' Donuts breakfast sandwich with bacon and eggs
Dunkin’ Donuts breakfast sandwich sales increased behind value messaging.
 

CANTON, Mass. — System-wide sales at Dunkin’ Brands Group Inc. in the first quarter grew nearly 5 percent in the United States, primarily through new store growth, but comparable store sales were flat as ticket growth was offset by traffic declines.

In a May 4 conference call with analysts, David L. Hoffmann, president of Donuts US and Canada at Dunkin’, said breakfast sandwich sales increased behind value messaging, while iced coffee sales rose on the strength of the company’s Cold Brew platform.

“We are excited about our Fruited Iced Teas, which are available nationwide today as well as our unique Dunkin’ Energy Punch powered by Monster Energy, currently being offered across the Northeast and Miami,” Hoffmann said. “Dunkin’ Punch is an innovation that came directly from our franchisees and crew that we believe will especially appeal to our millennial customers.

“We’re also thrilled about the launch of our new frozen coffee. It’s the magic of our best-in-class iced coffee but now frozen. It’s an amazing product.”

Dunkin' Donuts frozen coffee
Dunkin’ Donuts recently launched frozen coffee.
 

Segment profit at Dunkin’ Donuts US in the first quarter ended April 1 was $107,974,000, up 7.5 percent from $100,444,000 in the same period a year ago. Total revenues increased 2.3 percent to $141,962,000 from $138,813,000.

Hoffmann said Dunkin’ has dedicated significant effort to streamlining its menu. The company began a 300-store streamline test in February and plans to roll it out to 800 additional restaurants later this year.

“Obviously menu simplification does involve the elimination of some of our slower moving products — that’s why we are taking our time to test the impact of this SKU rationalization — but we believe the benefits in the long run will help drive top-line sales and improve restaurant level margin,” he said. “This will continue to be a cultural mindset for our organization as menu simplification broadens into overall restaurant simplification.”

Overall, adjusted net income at Dunkin’ Brands Group in the first quarter was $50.7 million, equal to $0.52 per share on the common stock, up 25 percent from $40.7 million, or $0.41 per share, in the same period a year ago. Revenues increased 0.5 percent to $190.7 million from $189.8 million.

“In the first quarter of 2017, we achieved mid-single digit operating income growth and double-digit earnings per share growth,” said Nigel Travis, chairman and CEO. “I believe these results demonstrate the beauty and consistency of our asset-light 100 percent franchise business model. Our first-quarter results were delivered in an increasingly challenging environment for retail and restaurants. But despite this, our franchisees continued to invest in our brands. In fact, over the past two years, they have invested more than $1 billion into growing their Dunkin’ Donuts and Baskin-Robbins businesses.”

Dunkin’ said its Baskin-Robbins US unit posted segment profit of $7,337,000 in the first quarter, up 0.5 percent from $7,300,000 in the same period a year ago. Total revenues, meanwhile, fell 0.1 percent to $10,547,000 from $10,561,000.

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