Commodity costs drive price hikes at Dunkin’

Commodity costs drive price hikes at Dunkin’

Dunkin’ Donuts and Baskin-Robbins are increasing prices in response to the rising costs of coffee and milk, Nigel Travis, chief executive of Dunkin’ Brands Inc., the chains’ parent company, said in a conference call on second quarter earnings.

The company, which began trading publicly last week, reported a dip in income [3] to $17.2 million compared with $17.3 million for the year-ago period, due partly to higher charges and expenses, including increased commodity prices, the company said.

Revenue was up 4.4 percent to $157 million in the period ended June 25, compared with $150.4 million in the second quarter of 2010.

U.S. same-store sales increased 3.2 percent systemwide — 3.8 percent at Dunkin’ Donuts and 2.8 percent at Baskin-Robbins.

Some Dunkin’ Donuts franchisees raised prices in the second quarter due to high coffee prices, Travis said, but the increases were “on our more differentiated products,” such as iced beverages and breakfast sandwiches.

Baskin-Robbins would likely hike prices in the third quarter, while its parent company would work to lower costs by using different suppliers and negotiating new contracts, Travis said.

Interest charges were expected to be lower going forward due to last week’s initial public offering [4], which raised $423 million that the company said was used to pay senior debt.

Dunkin’ shares fell on news of the second quarter results, which were announced before the market opened on Wednesday. They dropped below $26 from an opening price of $27.50 and ended the day 3.3 percent lower at $26.59.

Contact Bret Thorn at [email protected] [5].
Follow him on Twitter: @foodwriterdiary [6]