Q4 discussion: What went well for Dunkin’ Brands

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Key Highlights: Dunkin' Brands Q4 2013 Earnings Report (Part 3 of 5)

(Continued from Part 2)

Dunkin’ Brands executives were ecstatic to report that system-wide franchisees generated the highest EBITDA dollars and EBITDA margin on record for Dunkin’ Donuts restaurants. This figure is significant because over 70% of Dunkin’ Revenues are generated from Dunkin’ Donuts U.S. segment franchise fees. Management’s fourth quarter earnings call does a superb job analyzing how improving the consumers’ experience benefited the company margins.

Sustenance meets speed

The first driver for the company’s enhanced performance is the dynamic food and beverage offerings. Specifically, Dunkin’ Donuts introduced over 40 seasonal food and drink offerings this year alone. Plus, executives believe a driving force behind revenue growth is a continued ticket service speed via the utilization of drive-thru locations. Roughly two-thirds of all Dunkin’ Donuts have a drive thru, which caters to consumers in a hurry. This is one of the many elementary ways Dunkin’ Brands remains a speed leader among quick-service restaurants given increased ticket volume and menu complexity.

Dunkin’ Donuts card sales

Since 2012, Dunkin’ Donuts has experienced sales growth attributable to a rechargeable, personalized card. It contributed strong sales during both quarter four and the fiscal year. Card activation saw double digit growth toward the tail end of the fiscal quarter. It will serve as a continued source of sales growth, especially after the roll-out of the Dunkin’ Donuts loyalty and rewards program at the end of January 2014.

Fresh brew design

Dunkin’ Donuts franchises are in the process of overhauling restaurant décor. The shift has come as a result of management’s wish to service what they describe in the quarterly report as “the sip and sit crowd.” Over 100 restaurants boast new features such as soft seating areas, as well as high and low tables and stools. Likewise, these changes come with new themes and color schemes. Dunkin’ Donuts will be outfit with earthy colors, contemporary lights and coffee-house themed artwork. Plus, the restaurants will offer free Wi-Fi, power outlets, flat panel televisions, digital menus, all built with sustainable materials.

Continue to Part 4

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