Dunkin' Donuts gets an afternoon daypart bump, plans pretzel roll launch

July 29, 2013 | by Alicia Kelso

Dunkin' Brands' reported 5.9 percent revenue growth during Q2, driven by comp store sales and net unit development, as well as marketing and product news.

According to CEO Nigel Travis, the company's flagship Dunkin' Donuts U.S. system delivered a 4 percent comp store sales increase, which marked the eight consecutive quarter of two-year comps at 8 percent or above.

The brand experienced gains in traffic and ticket, as well as the number of units per transaction and price per unit. Despite increased competition, economic uncertainty and regulatory challenges, Travis said he feels good about the consumer environment.

"If you took our results, you would have to say the consumers are in a better place than they were. I think the consumers actually faired pretty well when you think of all the sequestration issues (and) the fact that we had a lot of tax increases," he said.

Product news

Dunkin' Donuts was buoyed by growth in both the morning and afternoon dayparts, as the brand expanded its menu offerings.

Beverage sales increases were driven by Dunkin's cold drink platform, such as iced coffee, Frozen Colatta and iced tea. Also, the introduction of Baskin-Robbins-inspired coffee and espresso flavors generated new and incremental traffic, Travis said.

Breakfast sandwiches continued to be a boon for the company, helped by the expansion of the turkey sausage option, which has been "tremendously successful." Additionally, Dunkin' expanded its afternoon offerings in both snack and sandwich categories.

"The introduction of the Chicken Salad and Tuna Salad Wraps and the launch of the new chicken sandwiches both exceeded our expectations and are further examples for growing outside of the morning daypart with products that build on our bakery heritage," Travis said, adding that the brand will launch the pretzel roll bakery sandwich this week.

These results fit Dunkin's strategy to "migrate to an all-day business."

Mobile, social initiatives

Also during the quarter, Dunkin' surpassed the 10 million-Facebook fan mark and launched its first Vine promotion. The company updated its mobile app to include content in both English and Spanish. The app has generated more than 3 million downloads since it was introduced in August.

"With the national rollout of our Spanish language option, it really gives us an opportunity to build an even deeper relationship with the fastest-growing segment of the population, which is Latin consumer," said John Costello, president of Global Marketing and Innovation.

Costello added there are multiple benefits to the company's mobile strategy, including improving the guest experience and the ability to target customers and build loyalty.

"It actually is faster and more convenient to pay with mobile. That will not only help drive speed of service but also make it easier for our customer," he said. "We're doing a combination of national and local offers on mobile so we can use it to launch new products (and) tailor messages by DMA. What mobile will be is a continuing driver of sales rather than the big bang; the more we learn, the more powerful it will get. We're very encouraged about how quickly mobile is ramping up and the very positive consumer reaction that we're getting from it."

He expects the same amount of success with Dunkin's loyalty program, which will begin testing by the end of this year.

Digital menu boards

The company also continues to accelerate its digital menu board installation as more restaurants undergo reimaging. As of now, digital menu boards are installed in more than 600 U.S. restaurants, divided between new restaurants and remodels and franchisees who opted in prior to their remodeling agreement.

"We have many franchisees also planning to add them, demonstrating that they feel there is a very strong business case for digital menu boards versus the traditional static version," Travis said.

Dunkin' Brands is also beginning to add digital menu boards throughout its Baskin-Robbins' system. Internationally, digital menu boards are the standard for the brand.

Read more about marketing and branding.

Topics: Digital Signage , Food & Beverage , Marketing / Branding / Promotion , Menu Boards , Online / Mobile / Social

Alicia Kelso / Alicia has been a professional journalist for 15 years. Her work with FastCasual.com, QSRweb.com and PizzaMarketplace.com has been featured in publications around the world, including NPR, Good Morning America, Voice of Russia radio, Consumerist.com and Franchise Asia magazine.
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