Industry News | October 26, 2017 | By Alex Dixon | QSR Exclusive Brief

Dunkin' Donuts' Morning Focus Is Paying Off

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Dunkin’ Donuts’ multi-year plan to transform to a beverage-led, on-the-go brand is beginning to positively affect the company’s financials, executives reported Thursday.

The brand posted U.S. same-store sales growth of 0.6 percent and a revenue increase of 8.3 percent during the third quarter. While the severe hurricanes in recent months negatively impacted sales, CEO Nigel Travis said in a conference call the company is encouraged by the fact that morning sales grew at a greater rate than other dayparts. About 60 percent of sales at Dunkin’ Donuts take place before 11 a.m.

Dunkin’ has started to test a new drive-thru store design while simplifying menus across system restaurants, removing items such as afternoon sandwich selections and bakery items like danish and cookies, in an effort to reduce operational complexities.

“Simplification will continue to be a cultural mindset for our system,” Dunkin’ Donuts U.S. and Canada president David Hoffman said in a conference call.

Dunkin’ ran its first national Sip.Peel.Win on-cup promotion, which drove an increase in hot coffee sales, and increased its Perks Loyalty program membership by 40 percent over-the-year. Value messaging around the bacon, egg, and cheese croissant and wake-up wraps drove an increase in breakfast sandwich sales. Frozen beverage sales declined during the quarter.

Dunkin’ Donuts profit increased $10.3 million over the year to $129.7 million, and its comparable sales growth was driven by increased average ticket price offset by a decline in traffic. During the quarter, Dunkin’ opened 137 new restaurants around the world, including 67 locations in the U.S. Dunkin launched its mobile ordering platform one year ago, and it now comprises about three percent of all transactions.

At Baskin-Robbins, U.S. same-store sales declined 0.4 percent while profit declined 5.6 percent to $10.5 million. Sales of sundaes, desserts, and beverages decreased during the third quarter, offset by increases in take home sales.