Despite a “choppy” performance in the most recent quarter, Dunkin’ Brands chairman and CEO Nigel Travis said he remained confident in the company’s three-year plan to make Dunkin’ Donuts the leading “beverage-led on-the-go brand,” he said during the company’s first-quarter earnings call Thursday.
Although later Travis added, “I have been accused of being overconfident in the past.”
Travis cited Dunkin’ Donuts new simplified menu as a bright spot for the quarter. The menu, which the company finished installing this quarter, would ultimately pay off, Travis said.
But for this quarter, it slowed growth.
“Menu simplification, combined with winter storms were the biggest headwinds to comp sales and traffic in the first quarter,” David Hoffman, Dunkin’s president of U.S., during the company’s earnings call.
Dunkin' saw net income rise to $50.2 million, beating expectations, but same-store sales slipped 0.5 percent. Total revenue increased 1.7 percent to $301.3 million, which was lower than expected.
“Today, the simplified menu is in 100 percent of the Dunkin' U.S. system,” said Hoffman. “We expect to see an impact to comparable store sales of about 100 basis points in the months following the launch, similar to what we experienced in the test markets. We continue to believe that over the long run, the simplified menu is an investment in a better environment for our people by taking complexity out of the restaurants. This, in turn, will enable the crew to deliver a better guest experience, improve order accuracy, drive franchisee profitability, and ultimately, increase restaurant level margins.”
Dunkin’ is also testing out fries and other snack items are being tested at select Boston locations. These are not part of the simplified menu.
This quarter was helped by beverage sales from the Girl Scout Cookie coffee promotion, and record-setting breakfast sandwich sales, Hoffman said. And donut sales on Valentine’s Day were the highest daily donut sales on record.
Dunkin’ also opened two of their next generation concept stores this quarter which feature a modern design, new uniforms, an expanded grab and go section, and a focus on mobile ordering. And Dunkin’ touted its branded CPG products during the call, which saw more than 10 percent in growth over the quarter.
Dunkin’ Brands also owns Baskin-Robbins which saw comparable store sales decline of 1 percent.
“Average ticket was up for the quarter, but traffic declined largely as a result of the cold, wet, weather across the country,” Travis said. “Despite the negative comp growth, we are optimistic about the strength of our beverage and dessert categories.”
In the U.S. this quarter, Dunkin' Donuts added 56 net new locations, six net new Baskin-Robbins locations, and added five net new Baskin-Robbins international locations and four net new Dunkin' Donuts international locations.
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