Dunkin’ Brands Group Inc. has reported that its focus on beverages through its subsidiary, Dunkin’ Donuts’ has finally started paying off. The company cited iced coffee and the frozen Dunkin’ coffee as the primary drivers of the recently realized same-store sales gains.
The Canton-based company says that it’s looking for ways of backing up its morning-focused success strategy with an all-day plan aimed at increasing traffic and pushing its sales further forward.
A statement from the company’s CEO, Nigel Travis, said that morning comparable store-sales rose every quarter and the highest quarterly comparable sales of the financial year came in the 4th and final quarter of last year. The company expects to boost the comparable-store sales even further when they launch the all-day strategy.
Travis also reported that the company’s focus on early morning sales resulted in a high and much-improved number of client counts during the second, third, and fourth quarters of the past financial year.
He also emphasized that the company is currently working on a strategy to attract the afternoon and evening traffic through various beverages and food. Dunkin’ Donuts’ also hopes to leverage on the all-day value offers that started in January.
Significant Increase in Sales
The final performance report of the company indicates that the fourth quarter of the year which elapsed on December 30th, 2017 saw the same-store sales of the local enterprise rise by 0.8% matching its expectations.
However, the same-store sales at the international Dunkin’ Donuts’ rose by at least 1.6% during the same period. Its sister brand, the Baskin-Robbins recorded a domestic same-store sales rise of about 5.1% and 35 at the international restaurants.
The company’s net income per quarter tripled to $195.50 million which translates to approximately $2.130 per share. Its quarterly revenue shot up by 5.30% to reach $227.10 million which beat most of the financial analysts’ expectations.
The domestic same-store sales for the full year grew by at least 0.6% for Dunkin’ Donuts’ but its sister, Baskin-Robbins, didn’t record any growth in the United States.
The annual net-income stood at $350.9 million translating to approximately $3.80 per share while its annual revenue shot to $860.50 million.
2018 Is a Year for Laying a Strong Foundation
David Hoffman, the company’s president in the United States, says that 2017 was their year to reclaim their rightful market position. He further states that 2018 will be a year of laying a strong foundation for the future.
The restaurant aims at simplifying its menu and improving its overall client experience. The company also expects to roll out superior backend office management system and focus more on innovation.
However, Hoffman acknowledges that company has been facing a myriad of challenges in 2018 including a cold January and increased competition for top talent. He recognizes the fact that the lowering of the corporate tax rate from 38.7% in 2017 to 28.0% in 2018 will play a critical role in increasing the company revenue.
Analysts are quick to point to the fact that it will not be easy for Dunkin’ Donuts’ to move forward citing the fierce competition in the beverage industry.
Mark Kalinowski, the Nomura analyst, was quoted saying that the intense competition in the beverage industry remains the most significant challenge that Dunkin’ Donuts’ will face in its quest to become a giant brand.
He also notes that several chain stores have improved their beverage offering in the recent past specifically when it comes to coffee which makes it hard for Dunkin to dominate the US market.
At the end of December 2017, Dunkin had more than 12,000 Dunkin’ Donuts’ restaurants and almost 8,000 Baskin-Robbins establishments.