Dunkin’ Brands sees positive growth for Q4 2016

By Gill Hyslop

- Last updated on GMT

Dunkin' Donuts announced total sales in Q4 2016 rose almost 6%.
Dunkin' Donuts announced total sales in Q4 2016 rose almost 6%.

Related tags: Dunkin' donuts, Coffee

Dunkin’ Brands has reported better-than-expected quarterly profits.

The owner of the Dunkin’ Donuts and Baskin-Robbins brands, which is repositioning itself to feature more strongly as a to-go, coffee beverage brand, announced a net income of $56.1m for Q4 2016, after reporting a loss of $8.9m for the same period a year earlier.

According to Nigel Travis, Dunkin’s Brands chairman and CEO, the company’s total sales rose almost 6% to $215.7m in the fourth quarter and will continue on its upward trend.

Outlet growth positive

Growth was primarily attributable to the increase of 1.9% sales at established Dunkin’ Donuts outlets, which contribute about three-fourths of the company’s revenue.

Travis said the company expected consumers to drink nearly five billion cups of Dunkin’ Donuts coffee globally in 2017.

Travis said, during the company’s earnings call, that growth was driven by beverage sales, led by Cold Brew; breakfast sandwich sales, led by the Sweet Black Pepper Bacon breakfast sandwich; as well as donut sales.

The financial statement reported that the company now has more than six million Perks members, has rolled out the On-The-Go ordering system nationally, has grown mobile payments by nearly 70%, and had nearly $1bn in systemwide sales on the Dunkin’ Gift Cards.

In Q4, operating income increased by 161.9% to $70.4m, while adjusted operating income grew by 14.8% to $15.3m from the prior year period, primarily as a result of the increases in royalty income and franchisee fees.

Dunkin’ Brands franchisees and licensees opened 296 new restaurants around the globe in the last quarter of the financial year. This included 250 new Dunkin’ Donut international locations (including 199 in the US) and 46 new Baskin-Robbins International locations (five in the US).

Increase in share earnings

Dunkin’ has forecasted adjusted earnings per share of $2.34 to $2.37 for 2017.

“We’re proud to have exceeded our earnings per share target for the fiscal year 2016,”​ said Paul Carbone, Dunkin’ Brands CFO.

“We’re also pleased to announce that the Board of Directors increased its quarterly dividend by 7.5% over the prior quarter.”

Future potential

For 2017, Travis said Dunkin’ was “focused on building a portfolio of category-leading beverages along with complementary and craveable food and bakery offerings while, of course, improving the guest experience.

“Yet as we continue to innovate, we are simultaneously focusing on simplifying our menu by removing some of the complexities that have built up over the years. We want to get a little leaner to run faster.

“Later this month, we will begin testing a streamlined menu particularly on the food side in 300 stores across a variety of markets.”

Roll out of iced coffee

In January, Dunkin' bottled iced coffee began arriving at grocery chains, gas, drug and convenience stores nationally, and Dunkin' Donuts restaurants.

“Not only does our entry into the ready-to-drink category advance our goal of being a more beverage-focused brand, it will result in more people drinking Dunkin' Donuts' coffee every day,”​ Travis said. 

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