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Dunkin' Brands say espresso fueled highest Q4 comp sales in 6 years

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February 6, 2020

Dunkin' Brands credited that human accelerator of espresso for also helping to accelerate its Q4 comp store sales at Dunkin' U.S. by 2.8%, which it said is the highest quarterly growth in six years. The company also said its cold brew and Beyond Sausage sandwich menu items helped to sustain it in the quarter and year nationally, in its quarterly and annual earnings report for 2019. 

Other FY19 highlights include: 

• 2.1% Dunkin' U.S. comparable store sales growth.
• 0.8% Baskin-Robbins U.S. comparable store sales growth.
• 3.7% revenue increase.
• 6.6% diluted EPS increase to $2.89.
• 9.3% diluted adjusted EPS increase to $3.17.
• 385 net new Dunkin' and Baskin-Robbins locations globally, including 211 U.S. Dunkin' locations.

Fourth quarter highlights for the period that ended Dec. 28, 2019 include:

• Dunkin' U.S. comparable store sales growth of 2.8%.
• Baskin-Robbins U.S. comparable store sales growth of 4.1%.
• Revenues increased 5.1%.
• Diluted EPS increased by 7.8% to 69 cents.
• Diluted adjusted EPS increased by 7.4% to 73 cents. 
• Added 146 net new Dunkin' and Baskin-Robbins locations, including 76 net new U.S. Dunkin' locations. 

"All business segments delivered positive comparable store sales growth in the fourth quarter and for the fiscal year, reflecting broad-based momentum across the system. …" Dunkin' Brands CEO Dave Hoffmann said in the release. "Better quality food and beverage enabled by better equipment is a cornerstone of the Dunkin' Blueprint for Growth, which is the reason we are investing $60 million in high-volume brewers for our franchisees' restaurants in 2020 as part of our commitment to beverage leadership."

The company's CFO Kate Jaspon added that it is ending its agreement with Speedway gas and convenience stores this year and will be closing all locations in 2020. 

"We will be exiting 450 limited-menu Dunkin' Speedway owned and operated locations throughout 2020, closing under a termination agreement entered into with Speedway," Jaspon said in the report. "These limited-menu locations are lower volume units, in total representing less than 0.5% of Dunkin' U.S. annual systemwide sales.  

"By exiting these sites, with minimal financial impact, we're confident we'll be better positioned to serve many of these trade areas in the coming years with new Dunkin' NextGen restaurants that offer a broader menu."

Dunkin' U.S. fourth quarter revenues of $163.4 million represented an increase of 7.3% compared to the prior year period. The increase was primarily a result of an increase in royalty income driven by systemwide sales growth, as well as an increase in rental income, the company said. 

Dunkin' U.S. segment profit in the fourth quarter increased to $124.3 million, an increase of $4.5 million over the prior year period. Baskin-Robbins U.S. fourth quarter revenues increased 1.3% from the prior year period to $9.2 million due primarily to an increase in royalty income driven by systemwide sales growth, the report said. 

However, segment profit for Baskin-Robbins U.S. fell 2.5% to $3.8 million in the fourth quarter, attributed to increased general and administrative expenses. This year the company said it expects low-to-mid single digit percent revenue growth, while ice cream margin dollars are expected to be flat compared to 2019.