Dunkin' Donuts to trim menu items in test markets

by Monica Watrous
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Dunkin' Donuts beverages
Dunkin' Donuts is positioning itself as a “beverage-led, on-the-go brand."

CANTON, MASS. — Dunkin’ Donuts will begin testing a streamlined food menu in 300 U.S. stores later this month in an effort to simplify operations as the company positions itself as a “beverage-led, on-the-go brand,” said Nigel Travis, chairman and chief executive officer of parent company Dunkin’ Brands Group, Inc.

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

“We want to get a little leaner to run faster,” Mr. Travis said during a Feb. 9 earnings call with financial analysts. The company said it will eliminate less popular items to improve order accuracy and throughput in the restaurants.

In the recent quarter, sales of breakfast sandwiches and donuts increased, “proving that by leading with beverages, our guests will buy food once they are in the restaurant,” Mr. Travis said.

“For 2017 and beyond, we’re 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,” he said.

Dunkin' Donuts ready-to-drink iced coffee
Dunkin' expects to sell nearly 5 billion cups of coffee, including its new ready-to-drink beverages.

By the end of the year, the company expects to sell a total of nearly 5 billion cups of coffee, including the coffee beverages served in its restaurants and the ready-to-drink, bagged and K-Cup formats available in grocery stores.

Companywide, net income attributable to Dunkin’ Brands in the year ended Dec. 31, 2016, was $195,576,000, equal to $2.14 per share on the common stock, up from $105,227,000, or $1.10 per share, in the previous fiscal year. Revenues totaled $828,889,000, up 2.2% from $810,933,000 the year before.

“2016 was a year of significant achievements,” Mr. Travis said, adding the company has yet to tap the full potential of Dunkin’ Donuts in the United States.

“We know our brand can deliver more growth,” he said. “Our consumer research clearly indicates that if we focus our efforts, we’re capable of being the most beloved beverage-led, on-the-go brand in the country.”

Dunkin' Donuts donuts
Dunkin’ Donuts U.S. comparable sales grew 1.6% for the year.

Fourth-quarter net income was $56,120,000, or 61c per share, which compared with a loss of $8,938,000 in the prior-year period. Revenues totaled $215,705,000, up 5.8% from $203,797,000.

Dunkin’ Donuts U.S. comparable sales grew 1.6% for the year and 1.9% in the fourth quarter. The company’s Baskin-Robbins brand in the United States saw comparable store sales increase 0.7% for the year and decline 0.9% in the quarter. Dunkin’ Donuts International comparable store sales declined 1.9% for the year and 1% in the quarter. Baskin-Robbins International comparable sales decreased 4.2% for the year and increased 0.7% in the quarter.

For the year ahead, the company expects low-single-digit comparable store sales growth for Dunkin’ Donuts U.S. and Baskin-Robbins U.S. and low-to-mid-single-digit revenue growth and mid-to-high-single-digit operating income growth.
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