What To Expect From Dunkin’ Brands Q1 2017 Earnings

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DNKN: Dunkin' Brands Group logo
DNKN
Dunkin' Brands Group

Dunkin’ Brands (NASDAQ:DNKN) is scheduled to announce its Q1 2017 results on May 4th 2017 and the expectation for revenue and EPS growth for the company is not very strong.  The first three quarters of 2016 were lukewarm for the company and while in Q4 2016 the company registered strong revenue growth, the weakness in the restaurant industry is likely to impact its top line in the current quarter.

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Source: Yahoo Finance

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The consensus estimate is in line with our forecast of moderate revenue growth for the company over our forecast period:

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Dunkin’ Brands has been struggling to grow comparable store sales over the past few quarters. While its international segment performed better in Q4 2016, a slowdown in comp growth was visible throughout 2016.

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The company’s guidance for comparable sales growth for the financial year 2017 is a less than 5% growth for both its U.S. segments. Overall weakness in the restaurant industry and competitive pressures from other players is impacting Dunkin’ Brands. Recently the company missed an opportunity to be taken over by the JAB group, a deal which could have strengthened its growth prospects. (Read Here’s How Panera’s Acquisition By JAB Can Impact Starbucks, Dunkin’ Brands).

According to insights from Black Box intelligence which are based on weekly sales data from over 145 restaurant brands, the first quarter of 2017 has not been very encouraging for the restaurant industry. Comparable sales and traffic have declined year on year in both February and March, with January being the only exception, reporting flat comp growth year on year. Weakest restaurant segments in Q1 2017 are family dining and fast casual and this industry trend is likely to impact Dunkin’ Brands revenue growth.

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Key Trends:

  • In order to build a competitive edge and attract the younger consumers who are more health conscious, Dunkin’ Brands is targeting to remove artificial colors from its products in the U.S. by 2018. (Read Dunkin’ Brands Looking To Target Millennials With Its “Healthier” Pitch). Adapting to the needs of the new generation is critical for the company’s revenue growth.
  • The company is continuing with its expansion plans and in the beginning of 2017 it partnered with its existing franchisee Vik Patel to develop 69 new Dunkin’ Donuts restaurants in several locations in the U.S.
  • Dunkin’ Brands is working on a simplified menu and testing a streamlined menu in 300 stores in the U.S. to improve its operations. This strategy can work well for the company as it is nearly 100% franchised and a complex menu can impact franchisee operations negatively.

For more details See full analysis for Dunkin’ Brands

 

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