Dunkin' Donuts same-store sells fell flat in the first quarter ended April 1 due to slower traffic that was buoyed by higher ticket sales.
Chairman and CEO Nigel Travis said that rising inflation in the face of dipping unemployment was undercutting clientele’s disposable income and thus putting more pressure on brands to win business.
“The consumer is demanding higher quality products more quickly and at lower prices,” said Travis, citing the “Amazon effect.”
Dunkin’ plans to continue to invest in new technology to build customer convenience.
David Hoffman, president of Dunkin’ Donuts U.S. and Canada, pointed to the 6.5 million DD Perks members who were now using the mobile rewards program to generate more than 10 percent of the brand’s sales.
Though quite bullish on what modern platforms can do to improve the guest experience, Travis highlighted the brand’s low-tech initiatives to avoid customer inconvenience.
“The average labor turnover rate in our industry is greater than 150 percent,” said Travis.
In February, 300 Dunkin’ Donuts stores took part in streamlined menu tests. The results were a positive experience for franchisees who felt the prototype made it easier to train personnel and thus project it will also be easier to retain them.
By potentially simplifying team member’s jobs in the future, Dunkin' is optimistic that the in store experience would advance beyond what competitors offer.
“I personally visited two of the test markets and in my conversations with restaurant mangers they expressed their enthusiasm for the simplified menu,” Travis said.
Iced coffee interest doesn’t cool
Dunkin’ Donuts cold brew coffee was a standout and the chain launched its first ready-to-drink line of coffee in the first quarter that will be sold in Dunkin’ Donuts units as well as in supermarkets, c-stores and drug stores.
“Our entry into the RTD category means more people are drinking Dunkin’ Donuts coffee everyday,” said Travis. “We estimate we will sell through the various channels nearly 5 billion cups of coffee globally this year.”
The ready-to-drink line was developed in bottling partnership with Coca-Cola. Four flavors are available including Original, Mocha, Espresso, and French Vanilla.
The coffee chain also saw strong sales of its breakfast sandwiches, which the chain attributes to its value messaging.
Dunkin’ Brands Group Inc.’s other arm, Baskin-Robbins trended backwards with comparable store sales declining by 2.4%.
Profit for the Canton, Mass.-based Dunkin’ Brands climbed from last year’s $37.2 million to $47.5 million.
Dunkin’ Donuts gained 56 new locations during the first quarter of 2017. The new restaurants join more 12,200 Dunkin’ Donuts locations. Baskin Robbins currently has 7,800 units.
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