Dunkin' targeting millennials with menu tweaks

by Monica Watrous
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Dunkin' Donuts breakfast sandwich with bacon and eggs
Dunkin’ Donuts plans to upgrade its eggs, bacon and other components on its menu.

CANTON, MASS. — Dunkin’ Brands Group, Inc. announced plans to upgrade its eggs, bacon and other components on its menu in an effort to appeal to more millennial consumers.

Nigel Travis, Dunkin' Brands
Nigel Travis, chairman and c.e.o. of Dunkin’ Brands

“One of the key findings in our consumer research indicates that great-tasting, authentic products matter more than ever, especially to younger consumers,” said Nigel Travis, chairman and chief executive officer of Dunkin’ Brands Group, during a July 21 earnings call with financial analysts. “As a result, our menu will continue to evolve in the months and years ahead to offer the best-quality, best-tasting products in each of our core categories.”

Improvements will include “higher-quality better-tasting eggs that will roll into the system in this quarter, a reformulated bagel that we will likely put into test by the end of the year, and we are revamping our bacon with a focus on a better-tasting, more robust product,” he added.

Also on the way is cold brew coffee, which debuted in select markets in June and will roll out nationally by the end of the summer. Mr. Travis called the beverage one of the “most important products we have introduced in the past decade.”

Dunkin' Donuts cold brew coffee
Cold brew coffee is slated to roll out nationally to Dunkin' Donuts restaurants by the end of the summer.

“Dunkin’ Cold Brew is a handcrafted product made daily at our stores in small batches,” he said. “The longer brewing process extracts the flavors differently from our famous iced coffee and provides guests with a rich, smooth coffee with an inherently sweeter favor. Cold Brew really appeals to the millennial customer, and early results suggest that sales of this product are incremental to sales of our regular iced coffee.”

Net income attributable to Dunkin’ Brands in the second quarter ended June 25 was $49,590,000, equal to 54c per share on the common stock, up 17% from $42,449,000, or 44c per share, in the prior-year period. Revenues totaled $216,309,000, up 2.3% from $211,424,000.

Comparable store sales rose 0.5% at Dunkin’ Donuts U.S. and 0.6% at Baskin-Robbins U.S. during the quarter.

“While we are disappointed with our top-line revenue growth in the second quarter, we are pleased that we were able to grow both operating income and earnings per share at a significantly faster rate than revenue,” Mr. Travis said.

Dunkin' Donuts K-cups
Dunkin' K-Cup coffee pods were a key contributor to the company's growth.

A key contributor to growth in the quarter were sales of Dunkin’ K-Cup coffee pods in grocery stores.

“This week we made the exciting announcement that in the first year since Dunkin’ K-Cup pods began being sold at retail outlets nationwide, through our partners J.M. Smucker Co. and Keurig Green Mountain, consumers have purchased more than 300 million of our K-Cups, with retail sales totaling nearly $220 million,” Mr. Travis said. “Now, to put that in perspective, according to I.R.I., a market research company focused on the consumer packaged goods industry, over 10,000 new C.P.G. products hit retail shelves every year, with generally less than 10 new products capturing more than 100 million in their first year of sales…

“Our presence in grocery stores is further strengthening Dunkin’ Donuts’ position as a powerhouse coffee brand in the U.S. And with the number of single-cup households expected to continue to grow, we believe there is considerable long-term upside to our channel business.”

In the six months ended June 25, net income attributable to Dunkin’ Brands was $86,744,000, or 95c per share on the common stock, up from $67,949,000, or 69c, in the same period of the previous year. Revenues for the six months totaled $406,085,000, up from $397,329,000. 
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