“We expect that the new Dunkin' U.S. restaurants opened during 2019 will contribute greater than $130 million to systemwide sales in fiscal 2019,” Dunkin’ chief financial officer Kate Jaspon said.
In order for the next-gen stores to succeed, Dunkin’ closed some non-traditional and first-generation stores in 2018. This trend will continue as Dunkin’ optimizes its footprint.
“The types of restaurants we are closing include self-serve and other non-traditional locations that don't provide the full Dunkin' experience. While non-traditional sites will continue to play an important strategic role for Dunkin', we are going to be more selective in the types of units we pursue,” Hoffmann said.
“We're thrilled about next-gen,” Hoffmann added. “We like what we're seeing out of that with the customers responding to the front-forward bakery cases, the tap systems, the efficient mobile order pickup. So, all of that has been really tremendous for us.”
Hoffmann said Dunkin’ is taking its time with remodels to get cost engineering right so franchisees can get a quick return.
“I can tell you the system is solidly behind this, but we don't want to rush anything out and have to do a reset on that,” he said. “I think you'll see here shortly that we're going to release this to the entire system, but that's what plays into that overall factor.”
“We're thrilled with the numerator in there. We're just making sure the denominator is right before we release that to the full system,” Hoffmann said.
Espresso and afternoon drive the future
Dunkin’s espresso rollout created a stir toward the backend of the year. So far, the move is paying dividends, Hoffmann said. The investment was heavy. Dunkin’ installed new espresso machines in more than 9,000 restaurants and trained upward of 100,000 employees.
“Since launching in late November, espresso has driven incremental rooftop sales and traffic and grown 200 basis points as a percent of overall sales mix,” Hoffmann said. “Espresso drives a premium basket compared to drip coffee transactions and skews toward younger consumers.”
Espresso marked a new phase for Dunkin’. But one the company had to invest in, Hoffmann said, especially as millennials and Gen Z alter coffee preferences. The launch may have impacted short-term sales, but will become a big driver for Dunkin’ over the next few years.