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Dunkin’ Donuts pays a price for trimming the menu

A flurry of sales-boosting initiatives at the chain failed to offset the traffic impact of product streamlining.

A flurry of sales-boosting initiatives at Dunkin’ Donuts failed to offset the traffic impact of cutting the menu, with same-store sales slipping half a percentage point in the first quarter.

Dunkin’ had revealed in January that a 10% trim of the chain’s menu was reducing transactions by about 15 per week per store. It warned investors at that time that sales would likely dip by a point until a batch of new deals were introduced to bolster afternoon traffic, a key strategic goal of the brand.

The chainwide menu streamlining was completed during Q1, executives of parent company Dunkin’ Brands revealed in posting financial results this morning. The move is intended to bolster throughput during peak times and slow employee turnover by making orders simpler to fulfill.

The menu pruning and a push for more afternoon traffic are part of what management describes as a transformation of Dunkin’ Donuts into a beverage-first, on-the-go brand. Brand President Dave Hoffmann noted that a number of those steps were undertaken during Q1. 

"Not only did we complete the national rollout of menu simplification, which should improve customer service and franchisees' profitability, but we also had record-breaking breakfast sandwich sales, saw an improvement in our afternoon traffic as a result of our p.m. beverage break offers, conducted successful value menu tests leading to a national launch in April, and drove flavored coffee and espresso sales with our innovative Girl Scout partnership,"  Hoffmann said in a statement.

In the tie-in with scouting, Dunkin’ offered a series of beverages based on popular Girl Scout cookies.

Going forward we believe we have the right plans in place, as well as the full alignment of our franchisees, to position ourselves for growth both now and for the long term," Dunkin’ Brands CEO Nigel Travis said in the statement.

Travis attributed Dunkin’ Donuts slip in comps to the streamlined menu.

Dunkin’ Donuts’ sister brand, Baskin-Robbins, posted a 1% decline in same-store sales.

Travis noted that a bright spot for the quarter was the $220 million generated by the sale of Dunkin’ and Baskin-Robbins-branded grocery products, a 10% year-over-year increase.

Overall, Dunkin’ Brands’ net income rose 13.2%, to $50.2 million, on a 1.7% rise in revenues, to $301.3 million.

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