CANTON, Mass., Feb. 8,
2018 /PRNewswire/ -- Dunkin' Brands Group, Inc.
(NASDAQ: DNKN), the parent company of Dunkin' Donuts (DD) and
Baskin-Robbins (BR), will host its 2018 Investor & Analyst Day
today and present its three-year strategic plan to grow revenue by
low-to-mid single digit percentages and operating income by
mid-to-high single digit percentages. The Company intends to
achieve these targets by positioning its core Dunkin' Donuts U.S.
brand to compete even more effectively in the coffee and beverage
segment, driving profitable sales growth, and further expanding
westward across the country. Dunkin' Brands announced plans to add
approximately 1,000 net new Dunkin' Donuts locations in the U.S. by
the end of 2020 and expects that more than 90 percent will be built
outside of the Northeast. Lastly, the Company reaffirmed its
intention to eventually have more than 18,000 Dunkin' Donuts
restaurants in the U.S.
"Since our initial public offering in July 2011, Dunkin' Brands systemwide sales have
grown by greater than 40 percent and total global points of
distribution have grown by more than 4,100 units. In that time, we
have also returned $2 billion in
capital to shareholders through share repurchases and dividends. We
are proud of these accomplishments but also realize that if we are
to compete even more effectively within the coffee and breakfast
segment, we must make further progress against the execution of our
multi-year Blueprint for Growth plan, which is designed to
transform Dunkin' Donuts U.S. into the most-loved beverage-led,
on-the-go brand," said Nigel Travis,
Dunkin' Brands Chairman & CEO. "The continued execution of our
Blueprint combined with our key value drivers – a tremendous
asset-light model with low capital intensity; a history of
returning capital to shareholders; and an ability to significantly
expand our Dunkin' Donuts U.S. footprint – should fuel strong
growth and shareholder value creation for Dunkin' Brands for many
years to come."
DUNKIN' DONUTS U.S. BLUEPRINT FOR GROWTH
"Dunkin' Donuts U.S. is well on its way to becoming America's
most-loved beverage-led, on-the-go brand. Our Blueprint for Growth,
which is rooted in extensive consumer research, is focused on five
main areas that we believe will collectively grow top- and
bottom-line franchisee profitability: menu innovation; unparalleled
convenience driven by digital leadership; broad accessibility to
our brand through restaurant growth and new channels for our
branded packaged goods; restaurant excellence; and brand
evolution," said David Hoffmann,
President of Dunkin' Donuts U.S. "Very importantly, collaboration
with our franchisees has never been stronger. Together with them,
we are laser-focused on bringing about transformative change at
Dunkin' that both builds on our heritage yet also updates our
offerings and in-store experience to keep our brand modern,
relevant, and positioned for long-term growth."
Menu Innovation
The Company is focused on maintaining and increasing Dunkin'
Donuts U.S.' share of the morning daypart before 11 a.m., which accounts for approximately 60
percent of its systemwide sales, as well as unlocking afternoon
growth opportunities through menu innovation and national value
offers. As a strong sign of progress with its morning daypart goal,
the Company was encouraged by the morning sales performance for
Dunkin' Donuts U.S., which comped positively year-over-year and
increased sequentially each quarter in 2017. Other notable
highlights include:
- New Beverages: Dunkin' Donuts is focusing its innovation
efforts on beverage items, including a continued focus on Cold
Brew, Iced Coffee and Frozen Dunkin' Coffee, which resulted in its
highest quarterly beverage comparable sales of the year in the
fourth quarter of 2017. The Company also plans to extend its
premium tea and frozen beverage lines and introduce more espresso
products.
- New Breakfast Sandwiches: Coming off a record year for
breakfast sandwich sales in 2017, Dunkin' Donuts is once again
emphasizing morning sandwiches, both new and returning favorites,
like the January reintroduction of the Sweet Black Pepper Bacon
Breakfast Sandwich, and offering additional flavored bacon on
sandwiches throughout the year.
- Craveable Donuts: As the country's largest retailer of
donuts, Dunkin' Donuts has an annual calendar full of seasonal
donut offerings ready-to-go, leveraging key holidays, like
Valentine's Day and Halloween, while ensuring that its Dunkin'
Dozen – the brand's twelve best-selling donuts – are available in
each restaurant.
- Removal of Artificial Dyes from Donuts: As part of the
Company's ongoing efforts to offer cleaner menu labels, Dunkin'
Donuts U.S. introduced donuts without artificial dyes in January.
The Company is committed to eliminating synthetic dyes from its
national food and beverage menu in the U.S. by the end of 2018.
- Value Offers: The Company launched Dunkin' Deals, a
series of value offers that are expected to be available at
participating restaurants throughout the year. The first Dunkin'
Deal of the year, running January 8 through
February 25, includes two Egg and Cheese Wake-up Wrap®
sandwiches for $2 and, to drive p.m.
traffic, a Medium Hot or Iced Latte for $2 from 2 p.m. to 6
p.m.
Unparalleled Convenience
Dunkin' Donuts holds one of the fastest speed-of-service records
in the QSR industry and is committed to constantly making itself
even-more convenient for its guests. Additional initiatives
include:
- DD Perks® Loyalty: During 2017, Dunkin' Donuts
added more than 2 million members to its DD Perks® Loyalty program
bringing total membership to approximately 8 million members.
Additionally, On-the-Go Mobile Ordering (OTG), a benefit available only to
DD Perks members, is proving very popular and had a retrial rate of
80 percent.
- Tender Agnostic Test: In the second half of 2018,
Dunkin' Donuts plans to test "tender agnostic" participation in its
DD Perks Loyalty program, meaning members will be able to earn
points using all forms of tender, including their DD Card, credit,
debit or cash. The Company expects that being tender agnostic will
allow it to better connect and serve a wider audience of its most
loyal guests.
- Delivery and Catering: In 2018, Dunkin' Donuts is
testing a newly-built digital catering platform in several key
markets. Dunkin' Donuts also continues to test and expand
third-party delivery options with the goal of creating a combined
catering/delivery platform in 2019.
- Innovative Drive-Thru Technology: Dunkin' Donuts expects
that more than 75 percent of new restaurants moving forward will
have a drive-thru lane. Additionally, with its new NextGen
restaurant design (discussed below), Dunkin' Donuts is the first
QSR in the U.S. to feature a dedicated mobile order drive-thru
lane. On average, a restaurant with a drive-thru boasts 40 percent
higher sales volume than a non-drive-thru location.
Broad Accessibility
A critical element of the Dunkin' Donuts U.S. Blueprint for
Growth is giving consumers increased accessibility to Dunkin'
through new restaurants and branded Dunkin' products sold through
new channels, including:
- Growing the Dunkin' Donuts U.S. Restaurant Footprint at an
Approximate 3 Percent Annual
Rate: The Company expects to add a total of 1,000 net new
Dunkin' Donuts restaurants in the U.S. by the end of 2020,
representing an approximate 3 percent annual growth rate, and that
more than 90 percent of these net openings will be built outside of
the Northeast. For 2018, it expects Dunkin' Donuts franchisees will
build more than 275 net new locations in the U.S. It expects that
new units opened in 2018 will contribute between $140 million and $150
million in systemwide sales this year.
- NextGen Store: The Company recently opened the first
iteration of its NextGen restaurant in Quincy, Mass. Designed to cater to the
on-the-go customer, the new Dunkin' Donuts restaurant features
innovative in-store technologies and design elements and is 25
percent more energy efficient than previous design. New technology includes a beverage
bar tap system serving premium pours of cold beverages such as
Nitro Coffee. The store also features grab-and-go snacks and a
double drive-thru with preview boards and order confirmation
screens. The crew members in the restaurant wear new uniforms and
headwear designed in partnership with lifestyle brand Life is
Good®. Dunkin' Donuts plans to have up to 50 NextGen restaurants by
the end of the year.
- Consumer Packaged Goods (CPG): Dunkin' Donuts is also
committed to growing accessibility to its brand outside of its
restaurants, and in just three years, has expanded its Dunkin'
Donuts branded CPG business from approximately $400 million in retail sales in 2014 to nearly
$900 million by the end of 2017. In
2017, according to IRI data, retail sales of Dunkin' ready-to-drink
(RTD) bottled Iced Coffee exceeded $150
million within the first year of launching.
Restaurant Excellence
Key to increasing Dunkin' Donuts' share of market and comparable
store sales is the in-restaurant experience. The Company is
undertaking numerous initiatives including menu simplification
designed to better serve the on-the-go customer. Additional
initiatives include:
- Menu Simplification: In 2017, Dunkin' Donuts tested a
simplified menu in nearly 1,000 restaurants across multiple markets
to make room for new menu items and to improve franchisee
profitability as well as the guest experience with faster, more
accurate service. The Company began rolling out the simplified menu
to additional restaurants in January and expects to have it in
place across the entire system by the end of the first quarter of
2017. Based on its test markets, Dunkin' Donuts believes the
simplified menu will ultimately benefit the
top-and-bottom-line.
- OTG Mobile Ordering Platform: Dunkin' Donuts is
continuing to evolve its mobile ordering platform by optimizing
speed in drive-thru locations. With an estimated 30 percent of crew
member time spent taking orders, Dunkin' Donuts expects On-the-Go
Mobile Ordering will not only improve order
accuracy and speed-of-service, but will also free up crew members'
time, enabling them to focus on other operational aspects,
including store appearance.
- Upgraded Point-of-Sale (POS) and Back-Office Software
Systems: The upgraded POS and back-office systems, which
require less crew training time than the previous systems, are
expected to improve order accuracy and speed of service.
- New Employee Training Tools: Dunkin' Donuts continues to
enhance its training with a focus on shorter, more interactive, and
more video-based materials designed to appeal to a new generation
of employees. This is intended to improve employee retention and
customer service.
Baskin-Robbins U.S.
Coming off an improving comparable sales performance in the
fourth quarter of 2017, Baskin-Robbins U.S. plans to maintain the
positive momentum in 2018 through a focus on consumer convenience
and modernizing its stores and menu.
- Consumer Convenience: Baskin-Robbins plan to continue to
expand delivery options with almost half of all Baskin-Robbins
locations in the U.S. now offering delivery through DoorDash.
- Improved BR App and On-line Ordering: Early in the
second quarter of 2018, Baskin-Robbins plans to launch an improved
app and on-line ordering system. This is expected to improve the
guest experience, especially on mobile devices.
- New Store Image: Late in the fourth quarter of
2018, Baskin-Robbins U.S. plans to unveil a new store look
designed to appeal to guests of all ages.
- Product Innovation: The brand is expanding its focus on
beverages in 2018, including an increased emphasis on milkshakes,
as well as focusing on ice cream cakes.
INTERNATIONAL
Dunkin' Brands continues its work to stabilize its international
businesses and, along with its franchisees, is focused on driving
traffic through value offerings, product innovation, and making the
brands more easily accessible through digital technologies.
Dunkin' Donuts International is encouraged by the early results
of its new restaurant design, which positions the brand as a
coffee-focused chain. With 40 of the newly-designed International
restaurants located in eight different markets outside the U.S.,
the stores are experiencing an increase in overall average weekly
sales and, importantly, an increase in beverage units.
Baskin-Robbins International is focused on ice cream gallon
consumption across the business: through stores, delivery, and
consumer packaged goods. Sales outside of the restaurants have
expanded the brand's touchpoints, making Baskin' more accessible
and driving incremental ice cream sales throughout the year.
Delivery continues to be an opportunity for both brands, and the
Company is working with its partners to roll-out delivery programs
in as many markets as possible based on the success that its
Middle East and Asia franchisees are experiencing.
FINANCIAL GUIDANCE AND REPORTING UPDATES
"In January, we announced an approximately five percent
reduction in our general and administrative expense target in 2018
which would place our G&A at approximately two percent of
systemwide sales while also ensuring that we have the resources
necessary to achieve our financial goals. These include growing
Dunkin' Donuts U.S. comparable store sales, supporting franchise
development of Dunkin' Donuts restaurants across the U.S., and
expanding our consumer packaged goods business," said Kate Jaspon, Dunkin' Brands Chief Financial
Officer. "Looking ahead and given the rapidly changing retail
environment, we are updating our long-term guidance targets, many
of which have been in place since our IPO in 2011. We are now
providing a three-year outlook for our expected financial growth
through the year 2020."
Below are the Company's long-term (2020) and 2018 targets as
well as updates as to how Dunkin' Brands will report its financials
moving forward. The 2018 guidance does not include any impact from
the $100 million investment in the
Blueprint for Dunkin' Donuts U.S. Growth that the Company
previously announced.
2020
- Low-single digit percent Dunkin' Donuts U.S. comparable store
sales growth accelerating to upwards of 3 percent by 2020
- Addition of approximately 1,000 net new Dunkin' Donuts
locations in the U.S. by end of 2020, with more than 90 percent of
net openings built in markets outside of the Northeast
-
- 75 percent of traditional restaurants expected to be drive-thru
locations
- Targeting 500-plus DD Green Achievement certified
restaurants
- Approximately 1,000 NextGen restaurants per year, inclusive of
new and remodeled stores, once the new image is released
- High-single digit percent growth of Other Revenue driven by
consumer packaged goods
- Low-single digit percent Baskin-Robbins comparable store sales
growth
- Zero to 10 net new Baskin-Robbins locations each year
- Low to mid-single digit percent revenue growth
- Mid to high-single digit percent operating income and adjusted
operating income growth
2018
- Approximately 1 percent Dunkin' Donuts U.S. comparable store
sales growth
- Greater than 275 net new locations in the U.S.
-
- Approximately 50 NextGen restaurants, including both new and
remodeled stores
- High-single digit percent Other Revenue growth driven by
consumer packaged goods
- Ice cream margin dollars flat compared to 2017 from a profit
dollar standpoint
- Low to mid-single digit percent revenue growth
- 5 percent reduction to G&A expense
- Mid to high-single digit percent operating and adjusted
operating income growth
- $2.20 to $2.29 in earnings per share and $2.40 to $2.45 in
adjusted earnings per share (inclusive only of share repurchases to
offset option dilution)
- Effective tax rate of approximately 28 percent
- Total shares outstanding of approximately 92 million
Reporting and Guidance Updates
- The Company will no longer guide on international net store
openings
- The Company will no longer report Baskin-Robbins International
comparable store sales and will focus on the sale of ice cream and
other products
- First quarter 2018 will be the first quarter that the Company
will report results reflecting the
new accounting standards regarding revenue recognition
The foregoing non-GAAP forward-looking financial measures are
reconciled from the respective measures determined under GAAP in
the attached tables "Dunkin' Brands Group, Inc. and Subsidiaries
Non-GAAP Reconciliations."
About Dunkin' Brands Group, Inc.
With more than 20,500 points of distribution in more than 60
countries worldwide, Dunkin' Brands Group, Inc. (Nasdaq: DNKN) is
one of the world's leading franchisors of quick service restaurants
(QSR) serving hot and cold coffee and baked goods, as well as
hard-serve ice cream. At the end of the fourth quarter 2017,
Dunkin' Brands' 100 percent franchised business model included more
than 12,500 Dunkin' Donuts restaurants and nearly 8,000
Baskin-Robbins restaurants. Dunkin' Brands Group, Inc. is
headquartered in Canton, Mass.
Investor & Analyst Day
A live video webcast of today's investor and analyst day,
including slide presentations, will be accessible via the Company's
website at: http://investor.dunkinbrands.com under
"Events & Presentations". The conference is scheduled to begin
at 9:00 AM Eastern Time and will continue until
approximately 3:00 PM Eastern Time.
A replay of the webcast, along with slide presentations, will
remain accessible on the Company's website through March 9,
2018.
Forward-Looking Statements
Certain statements contained herein, including those under the
headline "Financial Guidance and Reporting Updates," are not based
on historical fact and are "forward-looking statements" within the
meaning of the applicable securities laws and regulations.
Generally, these statements can be identified by the use of words
such as "anticipate," "believe," "could," "estimate," "expect,"
"feel," "forecast," "intend," "may," "plan," "potential,"
"project," "should," or "would," and similar expressions intended
to identify forward-looking statements, although not all
forward-looking statements contain these identifying words.
By their nature, forward-looking statements involve risks and
uncertainties because they relate to events and depend on
circumstances that may or may not occur in the future. These risk
and uncertainties include, but are not limited to: the ongoing
level of profitability of franchisees and licensees; our
franchisees' and licensees' ability to sustain same store sales
growth; our ability to execute on our Blueprint for Growth plan or
achieve the financial results contemplated thereby; changes in
working relationships with our franchisees and licensees and the
actions of our franchisees and licensees; our master franchisees'
relationships with sub-franchisees; the strength of our brand in
the markets in which we compete; changes in competition within the
quick-service restaurant segment of the food industry; changes in
consumer behavior resulting from changes in technologies or
alternative methods of delivery; economic and political conditions
in the countries where we operate; our substantial indebtedness;
our ability to protect our intellectual property rights; consumer
preferences, spending patterns and demographic trends; the impact
of seasonal changes, including weather effects, on our business;
the success of our growth strategy and international development;
changes in commodity and food prices, particularly coffee, dairy
products and sugar, and other operating costs; shortages of coffee;
failure of our network and information technology systems;
interruptions or shortages in the supply of products to our
franchisees and licensees; the impact of food borne-illness or food
safety issues or adverse public or media opinions regarding the
health effects of consuming our products; our ability to collect
royalty payments from our franchisees and licensees; the ability of
our franchisees and licensees to open new restaurants and keep
existing restaurants in operation; our ability to retain key
personnel; any inability to protect consumer credit card data and
catastrophic events.
Forward-looking statements reflect management's analysis as of
the date of this press release. Important factors that could cause
actual results to differ materially from our expectations are more
fully described in our other filings with the Securities and
Exchange Commission, including under the section headed "Risk
Factors" in our most recent annual report on Form 10-K. Except as
required by applicable law, we do not undertake to publicly update
or revise any of these forward-looking statements, whether as a
result of new information, future events or otherwise.
DUNKIN' BRANDS
GROUP, INC. AND SUBSIDIARIES
|
Non-GAAP
Reconciliation
|
(Unaudited)
|
|
|
|
Fiscal year
ended
December 29,
2018
|
|
|
Low
|
|
High
|
Diluted earnings per
share
|
|
$
|
2.20
|
|
|
2.29
|
|
Adjustments:
|
|
|
|
|
Amortization of other
intangible
assets
|
|
0.24
|
|
|
0.23
|
|
Long-lived asset
impairment charges
|
|
0.04
|
|
|
—
|
|
Tax impact of
adjustments(a)
|
|
(0.08)
|
|
|
(0.07)
|
|
Diluted adjusted
earnings per share
|
|
$
|
2.40
|
|
|
2.45
|
|
|
|
|
|
|
(a) Tax
impact of adjustments calculated at a 28% effective tax
rate.
|
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