Dunkin’ Donuts doubles down on beverage positioningDunkin’ Donuts doubles down on beverage positioning

After a mixed third quarter, Dunkin’ Donuts officials pledged to double down on the chain’s focus on beverages.

Dunkin’ Donuts domestic same-store sales increased 2 percent during the Sept. 24-ended quarter, but sister brand Baskin-Robbins’ domestic same-store sales dropped 0.9 percent. International same-store sales declined 1.4 percent for Dunkin’ Donuts and 2.9 percent for Baskin-Robbins.

Nigel Travis, Dunkin’ Brands Group Inc.’s CEO, said traffic accelerated in the U.S. for Dunkin’ Donuts during the quarter but remains a challenge.

Domestic same-store sales gains were driven mostly by increases in average check, with double-digit growth in espresso and iced coffee platforms, along with record-breaking sales of breakfast sandwiches, especially the maple sausage and Belgian waffles sandwiches, said Travis.

But it’s the beverage focus that is paying off for Dunkin’, he noted. As a result, the food side of the menu will gradually be streamlined to focus operations on drinks.

“On an incremental sales basis, cold brew has been the most successful product launch this century and it’s helping to drive our coffee credibility,” said Travis. “Very simply, beverages are what we do best and they offer us the greatest growth opportunity in future.”

Mobile ordering, the Dunkin’ Donuts loyalty program and delivery will also help drive traffic, Travis said. The DD Perks loyalty program members grew to 5.4 million during the quarter and the national launch of On-the-Go mobile ordering in June is expected to boost sales as guests catch on to the convenience factor, he said.

Revenues for the quarter declined by 1.3 percent to $207.1 million, in part because of a decrease in company-operated restaurants as the company moved to an all-franchised business.

Net income increased 14 percent to $52.7 million, or 57 cents per share, compared with $46.2 million, or 48 cents per share, a year ago.

For the year, Dunkin’ expects same-store sales growth between 0 to 2 percent for Dunkin’ Donuts domestically. The company expects Baskin-Robbins’ domestic same-store sales to be slightly positive, a downgrade from earlier projections of 1 percent to 3 percent growth.

The company added 115 net new units worldwide during the quarter for a total of about 12,000 Dunkin’ Donuts and more than 7,700 Baskin-Robbins globally.

For the year the company expects net U.S. development for Dunkin’ Donuts to be at the low range of 430 to 460 new units, and Baskin-Robbins is expected to add between five to 10 new units. Internationally, about 200 new units are expected to open between the two brands.

Contact Lisa Jennings at [email protected]
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