Dunkin’ Brands Group Inc. raised its revenue outlook for the year Thursday, after reporting a strong first quarter, despite severe winter weather in core markets across the Northeast.
Revenue for the first quarter ended March 28 increased 8.1 percent, to $185.9 million, fueled by a 2.7-percent same-store sales increase at Dunkin’ Donuts in the U.S., as well as an 8-percent increase for domestic Baskin-Robbins locations.
For the year, the company now expects revenue growth of between 6 percent and 8 percent, compared with earlier projections of 5 percent to 7 percent. The company maintained its projections of same-store sales growth for the year of between 1 percent to 3 percent, respectively, for both Dunkin’ Donuts U.S. and Baskin-Robbins U.S.
Dunkin’ Brands CEO Nigel Travis credited the strong start to the year to new products and limited-time offers, like the Croissant Donut, the addition of steak to the breakfast sandwich menu and heart-shaped limited-time offers for Valentine’s Day, as well as marketing. Iced coffees and Dark Roast coffee led beverage sales, along with hot and iced espresso drinks.
“By all measures, the weather was horrible,” Travis said, and office closures during the quarter disrupted morning routines. “Despite this, we had positive traffic growth and a stronger overall comp-growth performance than people may have expected.”
Travis called Baskin-Robbins’ “unbelievable” 8-percent same-store sales increase “a real turnaround success story.”
At Baskin-Robbins U.S., sales were boosted by Flavor of the Month promotions and cake sales, which were stimulated by the availability of online ordering.
Travis said more than 12 million people have downloaded Dunkin’ Donuts’ mobile app, and the DDPerks loyalty club has grown to 2.8 million members. Later this year, Baskin-Robbins will also launch mobile ordering and a loyalty program that will include many of the same features as DDPerks.
Same-store sales for Dunkin’ Donuts’ International swung positive, with a 1.7-percent increase, compared with a decline of 2.4 percent a year ago. Baskin-Robbins International grew same-store sales by 0.3 percent.
The company’s net income increased 11.7 percent, to $25.6 million, or 25 cents per share, compared with $23 million, or 21 cents per share, a year ago. The increase was primarily a result of a $14.6 million increase in operating income that was offset by losses on debt extinguishment and the cost of refinancing, along with increased interest expenses.
Dunkin’ Brands said about 410 to 440 new Dunkin’ Donuts units will open across the U.S. in fiscal 2015, along with five to 10 new Baskin-Robbins locations. Internationally, 200 to 300 net new restaurants are expected to open between the two brands.
The company also said that John Costello, president, global marketing and innovation, will retire in mid 2016. On May 1, he will transition to a new, more strategic role focused on the evolution of the company’s brands, with special emphasis on international.
Costello’s responsibilities will be picked up by two members of the marketing team:
• Scott Hudler, vice president of global consumer engagement, will lead Dunkin’ Donuts U.S. advertising and media strategy and in-store merchandising. He will also continue to be responsible for the chain’s domestic and international advertising and digital media, along with Baskin-Robbins International.
• Chris Fuqua was named vice president, Dunkin’ Donuts brand marketing & global consumer insights and product innovation. In addition to overseeing marketing for Dunkin’ Donuts in the U.S., he will take on the brand’s field marketing, product innovation and consumer insights for both brands globally.
Canton, Mass.-based Dunkin’ Brands franchises more than 11,300 Dunkin’ Donuts units and 7,500 Baskin-Robbins locations in nearly 60 countries.
Contact Lisa Jennings at [email protected].
Follow her on Twitter: @livetodineout
