Dunkin’ Donuts’ $100 million recast into a beverage-focused concept called Dunkin’ paid off for parent Dunkin’ Brands during the first quarter, yielding the brand’s highest sales gains in four years, according to Dunkin’ Brands CEO Dave Hoffmann.
On the strength of a 30% jump in sales of espresso-based drinks, same-store sales for the all-franchised Dunkin’ chain rose 2.4%, buoying systemwide sales by 5.5%, the franchisor announced.
Officials stressed to investors that Dunkin’ is still committed to doughnut and food sales, but all but declared that beverages are the key business drivers. For instance, executives noted that 75% of orders off Dunkin’s Go2 value menu—a roster of sandwiches sold two at a time for $2, $3 or $5, depending on the pairings—were accompanied by the order of a drink, which jacked the average ticket to $8.
With Dunkin’ seemingly on track, Hoffmann indicated that Dunkin’ Brands will intensify its focus on the 12,900-unit chain’s little sister, the 8,020-outlet Baskin-Robbins ice cream brand. “Baskin-Robbins U.S. is in the early stages of the brand transformation as we shift our stores to offer a premium experience,” he said.
Baskin-Robbins is the weaker of its parent’s two brands, with comp sales declining 2.8%, on top of a decrease of 1% in the year-ago quarter.
Hoffmann revealed few specifics of the recast, but noted that the venerable brand is currently pursuing “strategic closures” of domestic stores. Only 2,547 of Baskin-Robbins’ units are located in the U.S. Numbers provided by the company indicate that 15 units of the ice cream chain were shuttered in Q1, when 12 were opened.
Dunkin’s domestic operation, currently at 9,453 stores, continues to expand at a rapid clip. Sixty-nine stores were opened in Q1.
Overall, Dunkin’ Brands generated a net income for Q1 of $52.3 million, a 4.3% year-over-year increase, on revenues of $319.1 million, up 5.9%.