CANTON, MASS. — Espressos injected a shot of sales growth into the second-quarter results of Dunkin’ Brands, Inc. Sales of espresso, introduced in Dunkin’ restaurants last year, rose more than 40% when compared with the previous year’s second quarter.
“We’re especially pleased with the sustained performance of espresso in Q2,” said David L. Hoffman, chief executive officer of Dunkin’ Brands, in an Aug. 1 earnings call. “When we made a decision in 2018 to double down on this category, we did it for two reasons: First, to expand our menu sweet spot beyond hot and iced drip coffee, and second, we believe there was a significant market for quality espresso at an affordable price, of course, delivered at the speed of Dunkin’. It’s now been more than six months since we relaunched the category, and our 2018 investment continues to pay major dividends.”
Last year, “NextGen” Dunkin’ restaurants began featuring espresso machines along with other equipment such as tap systems, high-volume brewers and label printers. Then in November 2018, Dunkin’ rolled out its new espresso system across its U.S. restaurants, said Tony Weisman, chief marketing officer for Dunkin’ U.S. Both current customers and new customers are ordering the espressos, he said.
“So it’s been both a trade-off from current customers who are getting into espresso and learning whether they like latte or cappuccino on hot nights, etc., as well as the number of people in the world who already know these beverages but have come to appreciate that we’ve got a world-class espresso product at a good value served at the speed of Dunkin’,” he said.
Canton-based Dunkin’ Brands posted net income of $59.6 million, or 72c per share on the common stock, in the second quarter ended June 29, which was down 1.4% from $60.5 million, or 73c per share, in the previous year’s second quarter. A $13.1 million loss on debt extinguishment affected net income negatively. Second-quarter revenues of $359.3 million were up 2.5% from $350.6 million.
Dunkin’ U.S. had comparable store sales growth of 1.7% in the second quarter. An increase in average ticket was offset partially by a decrease in traffic. Pricing increases and a favorable mix shift to premium priced espresso and cold-brew beverages drove the increase in average ticket. Segment profit in Dunkin’ U.S. rose 6.3% to $127.1 million from $119.6 million in the previous year’s second quarter. Total revenues increased 5.8% to $166.6 million from $157.4 million.
Mr. Hoffman said a Power Breakfast Sandwich, introduced in January, and Dunkin’ Bowls, which featured 14 grams of protein thanks to the inclusion of egg whites, boosted Dunkin’ results in the quarter. The egg bowls, which were offered for a limited time, may return to the menu, Mr. Weisman said.
“I think what we did in the 60 days that we had the bowls in is that we demonstrated to both consumers and to our own system that bowls is a form factor that we can do easily, quickly and doesn’t get in the way of your get-in, get-out, get-on-your-way approach to great coffee fast,” he said.
Dunkin’ International had comparable store sales growth of 5.6% in the second quarter. Segment profit of $5.5 million was up 57% from $3.5 million. Total revenues climbed 42% to $7.5 million from $5.3 million.
Comparable store sales slipped 1.4% for Baskin Robbins U.S. Segment profit in the second quarter fell 5% to $10.1 million from $10.6 million. Total revenues of $14.3 million were up 1.3% from $14.1 million.
Comparable store sales climbed 3.2% for Baskin Robbins International in the second quarter. Segment profit increased 4.9% to $12.1 million from $11.5 million while total revenues dropped 3.9% to $32.7 million from $34 million.
Dunkin’ Brands systemwide over the six-month period ended June 29 registered net income of $111.9 million, or $1.35 per share on the common stock, which was up 1.1% from $110.7 million, or $1.31 per share. Six-month total revenues of $678.4 million were up 4% from $652 million.