Dunkin’ Brands’ Q2 FY’16 Earnings Preview: Product And Digital Innovation To Support Earnings
Key Trends:
1) Focus on new geographies and product lines
- Store expansion in the U.S. by signing new store development agreements with franchisees in New Orleans, Indiana, Texas, Oklahoma, Arkansas, California, and Hawaii.
- Plans to expand its footprint in the emerging international markets, by adding roughly 3,000 stores by 2017.
- Expected strength in the sale of Dunkin’ Original Blend K-Cups, which was the number one selling product in its category in Q1’16.
- To take advantage of the coffee craze in the world, Dunkin’ has decided to introduce a line of cold brewed coffee, thus, following Starbucks footsteps.
- Growth in espresso-based beverage to help capture a younger demographic.
- Introduction of products such as GranDDe Burrito and the Chicken Apple Sausage, the breakfast sandwich, to compete with McDonald’s All Day Breakfast.
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2) Leveraging the Perks (loyalty) program
- Leveraging off the dissatisfaction among customers regarding changed Starbucks loyalty program by highlighting its own Dunkin’ Donuts Perks program.
- Dunkin’s Perks Program offers five points for every dollar the consumer spends and gives away a free any-type beverage once they accrue 200 points.
- One-to-one marketing: exclusive, personalized special offers to earn bonus points for food and beverage purchases, targeted to the individual customer’s purchasing profile.
3) Developments in the digital arena
- Introduction of On-the-Go Ordering, which enables guests to use Dunkin’s new mobile app to place orders, to pay in advance, and to skip the line in the store.
- Since On-the-Go Ordering mandates a Perks membership, Dunkin’s loyalty program may receive an impetus in the near future, thus, ushering in incremental revenues.
4) Change in the federal minimum wage
- Higher wages across different cities in the U.S. may adversely affect the bottom line and the franchisees’ pace of future development.
Have more questions on Dunkin’ Brands (DNKN)? See the links below.
- What Is Dunkin’ Brands’ Revenue & EBITDA Breakdown?
- By What Percentage Have Dunkin’ Brands’ Revenues And EBITDA Grown Over The Last Five Years?
- How Has Dunkin’ Brands’ Revenue And EBITDA Composition Changed Over 2011-2015?
- Where Will Dunkin’ Brands’ Revenue And EBITDA Growth Come From Over The Next Three Years?
- Dunkin’ Brands’ FY 2015 Earnings Review: Dunkin’ Donuts US & K-Cups Drive Revenue Growth, Baskin-Robbins International Struggles
- Dunkin’ Brands’ Q1 FY’16 Earnings Preview: All Eyes On Comp Sales Growth Of International Segments
- What’s Dunkin’ Brands’ Fundamental Value Based On Expected 2016 Results? (Updated After Q1 2016 )
Notes:
1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Dunkin’ Brands
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