Here’s What To Watch For In Dunkin’ Brands’ Q3 2017 Earnings
Dunkin’ Brands (NASDAQ:DNKN) will announce its Q3 2017 results on October 26th 2017 and after disappointing revenue growth and comparable sales in the previous quarter, expectations for this quarter are not very high. Below is a summary of the consensus revenue and EPS estimates for Dunkin’ Brands for Q3 2017:
Source: Yahoo Finance
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Strong Initiatives To Build Competitive Edge That Can Drive Sales
While the industry environment remains challenging, Dunkin’ Brands is working on several measures to develop a competitive edge. Studies suggest that innovative menus with bold and new flavors are likely to drive sales for restaurant companies going forward and Dunkin’ Brands is marching forward in the right direction with its initiatives as follows:
Appointment Of A Culinary Innovation Leader: Recently Dunkin’ Brands appointed a new Vice President-Culinary Innovation who will lead the company’s efforts towards development of new and enhanced menu choices. (Read Here’s How Dunkin’ Brands Is Increasing Focus On Product Innovation).
Appointment Of A Chief Marketing Officer: Dunkin’ Brands started testing new signage (for its Dunkin’ Donuts segment) in a few locations which dropped the word Donuts from its name and branded itself as just “Dunkin’.” The company is focusing on the beverage market and positioning itself as coffee house and not a food establishment. It also appointed a new Chief Marketing Officer last month to focus on brand building strategies. (Read Here’s How Dunkin’ Donuts Could Benefit From Its Chief Marketing Officer).
Focus on Technology, Door Delivery and Efficiency: In its Q2 2017 earnings call Dunkin’ Brands emphasized that it is looking to offer “unparalleled convenience to its customers” by expanding its door delivery program, offering curbside delivery and a range of payment options to its customers. (Read Here’s Why Dunkin’ Brands’ “On- The- Go” Strategy Can Give It A Competitive Edge).
Challenging Industry Environment, Hurricane Impact Can Drag Sales Down
After a minor recovery in June, the restaurant industry remained challenging in Q3 2017 with comparable sales and comp traffic declining in all three months of the quarter, according to data published by TDn2K.
While quick service and fast casual restaurants are performing better than other formats, the two major hurricanes in the U.S. are likely to impact sales negatively. In the last week of August comparable sales in Texas declined by 15% due to the impact of Hurricane Harvey. The impact of Hurricane Irma is likely to be higher for Dunkin’ Brands since it operates nearly 800 restaurants in Florida. Same store sales in Florida declined by 6.2% in September due to the impact of the storm. While consumer spending has increased after the hurricanes towards rebuilding efforts, this will not have a positive impact on restaurants.
While Dunkin’ Brands has taken several measures in the last quarter to build a competitive edge and attract customers, we believe the impact of the two severe hurricanes will be negative on its Q3 2017 results and the company could report numbers lower than analyst expectations.
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