Dunkin' Brands Q2: Gains in US as growth initiatives put in place

July 27, 2017

Dunkin' Brands, parent of Dunkin' Donuts and Baskin-Robbins, will pay a 32 cent quarterly dividend in Q2, based largely on Dunkin' Donuts gains in comparable store sales, and leadership says the brand will continue its growth initiatives to ensure future success, a news release said. 

Dunkin' Donuts Q2 highlights: 

  • U.S. segment profit grew $6.5 million to $122.5 million;
  • U.S. comparable store sales grew 0.8 percent;
  • international revenues fell 13.9 percent to $4.5 million; and 
  • international systemwide sales dropped 3.2 percent.

Baskin-Robbins Q2 highlights: 

  • U.S. comparable store sales fell 0.9 percent;
  • U.S. revenues rose 1 percent;
  • international revenues dropped 2.5 percent; and
  • international segment profit rose 12.8 percent. 

"We are excited about the progress we have made on our multiyear plan to transform Dunkin' Donuts U.S. into a beverage-led, on-the-go brand." Dunkin' Brands chair and CEO Nigel Travis said in the release. "As evidence of our progress, we will be expanding our menu simplification test to 1,000 locations by October of this year."

Dunkin' Donuts U.S. revenues grew 2.2 percent in Q2, attributed mostly to royalty income increases that drove systemwide sales growth, and more rental income from more franchised location leases. Likewise, franchise fees increased due mostly to more renewal income, though offset by fewer gross openings. 

Higher average ticket amounts drove stateside Q2 sales growth, but a drop in customer counts offset this to some degree, the company said. Iced coffee, breakfast sandwiches, fruited iced teas and frozen coffee helped push up the bottom line.

Meanwhile, U.S. Baskin-Robbins comparable store sales fell into negative numbers due to a reduction in traffic, but were helped slightly by a higher average ticket. Take-home sales grew, but not enough to offset a drop in cup, cone, dessert and beverage sales during the quarter. 

"Our Dunkin' Donuts U.S. franchisees have invested more than $1 billion into their restaurants over the past two years and have exceeded our expectations for renewal fees year-to-date," Dunkin' Brands CFO Kate Jaspon said in the release. "This demonstrates a commitment to and confidence in the Dunkin' Donuts brand, but with a new store model on the horizon, a large number of restaurant remodels due, and more investment required in equipment and technology, we are working with our franchisees to plan the most effective use of their capital expenditures so that we strike the right balance between driving smart growth and ensuring the current store base meets consumers' changing needs.  

"As such, while we are not changing 2017 guidance for revenue, operating income or earnings-per-share, we now expect Dunkin' Donuts U.S. franchisees to open between 330 to 350 net new restaurants this year.  We still expect to finish the year as one of the fastest growing brands in the U.S. restaurant industry both in terms of net store growth and increase in systemwide sales."

Baskin-Robbins U.S. second quarter revenues increased 4.4 percent to $14.3 million. Segment profit for Baskin-Robbins U.S.grew 2.2 percent to $11.0 million in the second quarter due to an increase in revenues, partially offset by an increase in the cost of ice cream and other products and an increase in general and administrative expenses.

Baskin-Robbins International systemwide sales increased 3 percent with sales growth in South Korea and Japan, offset by declines in Europe and the Middle East.


Topics: Business Strategy and Profitability, Financial News, Financing and capital improvements

Companies: Dunkin' Donuts


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