CANTON, MASS. — Fiscal 2018 was both a “foundational” and “transformational” year for Dunkin’ Brands Group, Inc., said David L. Hoffman, chief executive officer of Dunkin’ Brands.
“We achieved many significant milestones that will unlock healthy growth and modernize our brands for the next generation of consumers,” Mr. Hoffman said in a Feb 7. earnings call. “While our journey toward transformation is all about deliberate sequencing of key initiatives, we had an incredibly productive 2018 and I remain confident in our ability to deliver long-term growth.”
The bulk of the transformation occurred within the company’s Dunkin’ U.S. business. In 2018, Dunkin’ was focused on its “blueprint for growth,” which is built on four key pillars: menu innovation, restaurant excellence, brand relevance and unparalleled convenience.
Progress during the year included a comprehensive menu simplification, new next-generation restaurant designs, the brand’s first foray into national value with the launch of the Dunkin’ Go2s platform and unveiling a new brand identity. But the biggest undertaking, Mr. Hoffman said, was relaunching the Dunkin’ espresso platform.
Dunkin’ installed new espresso machines in more than 9,000 restaurants and trained more than 100,000 employees on the new equipment and the new beverage builds. The company also developed a marketing plan covering everything from new recipes to cup design.
“Let me be extremely clear: The launch of new Handcrafted Espresso Beverages in Dunkin' was critical enough to the success of the blueprint to warrant nearly all of our attention in Q4,” Mr. Hoffman said. “We believe having a compelling espresso offering sets us up for long-term success by strengthening our beverage portfolio. Espresso is a cornerstone of the blueprint for growth, and focusing whole heartedly on it Q4 was a deliberate investment in our future as the beverage-led on-the-go brand. This strategy may have impacted short-term sales, but we knew it was the right thing to do for our franchisees, crews and our customers. Introducing quality products like espresso is the key element of the Dunkin' U.S. blueprint for growth.”
Moving into 2019, Dunkin’ plans to build on the foundation laid out in 2018, which includes a continued focus on simplifying restaurant operations, implementing more value programs and opening more next-generation restaurants.
“2018 was clearly our foundational year for the implementation of our blueprint for growth,” Mr. Hoffman said. “2019 will be about building on this foundation to modernize the Dunkin’ experience and deliver great coffee fast to consumers everywhere. But this is a journey with our franchisees, and this is a 5-year plan to transform a 70-year-old brand into a beverage-led on-the-go brand. So this isn’t going to happen overnight. We like what we have planted in 2018, and we are excited about what that’s going to produce in 2019 and beyond.”
Net income at Dunkin’ Brands Group in the year ended Dec. 29, 2018, was $229,900,000, equal to $2.75 per share on the common stock, down 15% from $271,200,000 or $2.99, in the prior fiscal year. Revenues increased 3.6% to $1,321,600,000 from $1,275,600,000.
Fourth-quarter net income was $53,200,000, or 64c per share on the common stock, down 61% from $134,700,000, or $1.49, in the year-ago period. Revenues totaled $319,600,000, up 1.5% from $314,900,000.
For the full year, Dunkin’ U.S. comparable store sales grew 0.6% and Baskin-Robbins U.S. comparable store sales dipped 0.6%, while Dunkin’ International sales rose 2.2% and Baskin-Robbins International sales grew 3.8%. In the fourth quarter, Dunkin’ U.S. comparable store sales were flat, Baskin-Robbins U.S. comparable store sales fell 2.7%, and Dunkin’ International and Baskin-Robbins International were up 1.1% and 1.5%, respectively.