News

Dunkin' Brands' guest satisfaction at highest level in 'recent history'

April 26, 2013

Dunkin' Brands reported its first quarter 2013 results Thursday, which included comparable store sales growth of 1.7 percent at the company's flagship Dunkin' Donuts U.S. business.

Additionally, Dunkin' Brand's adjusted operating income was up 12.2 percent, and adjusted operating income margin expanded 240 basis points, to 43.7 percent.

The Dunkin' Donuts brand added 108 net new restaurants worldwide in Q1, including 78 in the U.S. The 78 net new restaurants marks the highest number of openings during this fiscal quarter in the past five years.

CEO Nigel Travis said these results were strong despite a significant impact from inclement weather during Q1, particularly in the company's core Northeast U.S. market.

"Our U.S. restaurant operations have never been better, and our guest satisfaction survey results are the highest in recent brand history. We're encouraged by our momentum as we enter the second quarter and look forward to the start of key warmer weather selling seasons for both of our brands," Travis said.

Dunkin' Donuts U.S. sales in Q1 were driven by increased average ticket resulting from guests purchasing more units per transaction, including add-on items such as hash browns and Turbo Shots, and positive mix as guests purchased more premium-priced limited time offer breakfast sandwiches and beverages, such as the Turkey Sausage Breakfast Sandwich, the Angus Steak Breakfast Sandwich, Dark Hot Chocolate and Irish Creme flavors.

Donut and K-Cup sales were strong in the quarter, driven by the Brownie Batter Heart Shaped Donuts, the Irish Creme Donut and the launch of Dunkin' Donuts Caramel K-Cups. Traffic growth in the quarter was significantly impacted by weather. Overall, transactions ended the quarter nearly flat. Weather is estimated to have negatively impacted comparable store sales by approximately 120 basis points versus the prior year.

Other businesses

Also during the quarter:

Baskin-Robbins' U.S. comp store sales were down 4.4 percent compared to a 9.4 percent increase a year ago. Baskin-Robbins' U.S. sales drop was primarily a result of weather, which is estimated to have been negatively impacted by 600 basis points versus the prior year when it was unseasonably warm. Western markets, which were not impacted by weather, did experience comparable store sales growth during the quarter driven by sales of sundaes, take-home quarts, and a Valentine's Day custom Conversation Heart Cake promotion.

Dunkin' Donuts Internationalsystemwide sales increased 4.7 percent from the prior year, driven by sales growth in South Korea and Southeast Asia. On a constant currency basis, systemwide sales increased by approximately 2 percent.

Dunkin' Donuts International revenues increased 17.1 percent from the prior year to $4.6 million, primarily resulting from an increase in franchise fees driven by franchise renewals, as well as an increase in other revenues driven by incremental transfer fee income.

Baskin-Robbins Internationalsystemwide sales increased 8.3 percent from the prior year driven by sales growth in South Korea and the Middle East, partially offset by sales declines in Japan. On a constant currency basis, systemwide sales increased by approximately 13 percent.

Baskin-Robbins International revenues increased 4.9 percent year-over-year to $25.4 million primarily from an increase in sales of ice cream to the Middle East, as well as an increase in royalty income driven by the increase in systemwide sales.

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