Net income slipped 0.9 percent to $52,246,000, equal to $0.58 per share on the common stock, which compared with $52,712,000, or $0.58 per share, in the previous year’s third quarter. The decrease came primarily because of an increase in income tax expense. Revenues increased 8.2 percent to $224,168,000 from $207,099,000, primarily because of increased franchise fees and increased royalty income.
|Nigel Travis, chairman and CEO of Dunkin' Brands|
“We had a turbulent quarter from a weather standpoint although the impact to our earnings was muted due to our asset-light model,” said Nigel Travis, chairman and CEO of Dunkin’ Brands, in an Oct. 26 earnings call.
Hurricane Harvey in the quarter hit the Houston area, where the company has 42 Baskin-Robbins locations and 28 Dunkin’ Donuts locations. All the locations now are back open, Travis said. More than 1,000 restaurants, primarily Dunkin’ Donuts, closed when Hurricane Irma swept through Florida, but all are back open. Hurricane Maria devastated Puerto Rico, which has 21 Baskin-Robbins locations. Ten remain closed.
Dunkin’ Donuts US had segment profit of $129,719,000 in the third quarter, which was up 8.6 percent from the previous year’s third quarter, and total revenues of $165,106,000, up 8.3 percent. Systemwide sales were $2,166,300,000, up 4.4 percent. Weather, primarily the hurricanes in the United States, had a negative impact of about 50 basis points to comparable stores sales, which still were up 0.6 percent in the quarter driven by an increased average ticket.
Value messaging around wake-up wraps drove an increase in breakfast sales. Increases in hot coffee and espresso drove gains in beverage sales.
|David Hoffman, president of Dunkin' Donuts US and Canada|
“The 2-for-$2 egg and cheese wake-up wrap offer drove record breakfast sandwich sales in Q3 as we sold over 1,000 breakfast sandwiches per restaurant, per week during the quarter, another milestone for us,” said David L. Hoffman, president of Dunkin’ Donuts US and Canada, in the Oct. 26 call. “In fact, the average ticket for the offer was greater than $7 versus our average ticket of about $5, demonstrating the power of our value strategy of having a food offer to drive beverage attachment, and in its early stages, we’re also optimistic of the performance of our current national value offer, the 2-for-$5 bacon, egg and cheese croissant.”
Dunkin’ has offered on-the-go mobile ordering for more than a year. Internal data show it has a retrial rate of more than 70 percent, Hoffman said.
In consumer packaged goods, third-party data showed Dunkin’ packaged coffee and K-Cups achieved more than $600 million in retail sales over the past year. The company’s total portfolio of consumer packaged goods generated more than $800 million in retail sales over one year, Hoffman said.
Dunkin’ Donuts International reported segment profit of $1,439,000, which was more than double the $705,000 in the previous year’s third quarter. Revenues were $5,157,000, up 16 percent, and systemwide sales were $189,300,000, up 6.7 percent.
Companywide in the nine months ended Sept. 30, Dunkin’ Brands posted net income of $155,417,000, or $1.71 per share, which was up 3.3 percent from $139,456,000, or $1.52 per share, during the same time of the previous year. Total nine-month revenues were $633,362,000, up 11 percent from $613,184,000.