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Edited Transcript of DNKN earnings conference call or presentation 31-Oct-19 12:00pm GMT

Q3 2019 Dunkin' Brands Group Inc Earnings Call

Canton Nov 4, 2019 (Thomson StreetEvents) -- Edited Transcript of Dunkin' Brands Group Inc earnings conference call or presentation Thursday, October 31, 2019 at 12:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* David L. Hoffmann

Dunkin' Brands Group, Inc. - CEO & Director

* Katherine D. Jaspon

Dunkin' Brands Group, Inc. - CFO

* Scott Murphy

Dunkin' Brands Group, Inc. - Senior VP & COO of Dunkin' U.S.

* Stacey Caravella

Dunkin' Brands Group, Inc. - Senior Director of IR & Competitive Intelligence

* Stephanie Meltzer-Paul

Dunkin' Donuts USA, Inc. - VP of Digital and Loyalty Marketing

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Conference Call Participants

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* Andrew Strelzik

BMO Capital Markets Equity Research - Restaurants Analyst

* Andrew Michael Charles

Cowen and Company, LLC, Research Division - Director

* Brian John Bittner

Oppenheimer & Co. Inc., Research Division - MD and Senior Analyst

* David E. Tarantino

Robert W. Baird & Co. Incorporated, Research Division - Co-Director of Research and Senior Research Analyst

* David Sterling Palmer

Evercore ISI Institutional Equities, Research Division - Senior MD & Fundamental Research Analyst

* Dennis Geiger

UBS Investment Bank, Research Division - Director and Equity Research Analyst of Restaurants

* Eric Andrew Gonzalez

KeyBanc Capital Markets Inc., Research Division - Restaurants Analyst

* Gregory Ryan Francfort

BofA Merrill Lynch, Research Division - Associate

* Jeffrey Andrew Bernstein

Barclays Bank PLC, Research Division - Director & Senior Equity Research Analyst

* John Stephenson Glass

Morgan Stanley, Research Division - MD

* John William Ivankoe

JP Morgan Chase & Co, Research Division - Senior Restaurant Analyst

* Katherine Irene Fogertey

Goldman Sachs Group Inc., Research Division - VP & Derivatives Research Strategist

* Matthew James DiFrisco

Guggenheim Securities, LLC, Research Division - Director and Senior Equity Analyst

* Nicole Miller Regan

Piper Jaffray Companies, Research Division - MD & Senior Research Analyst

* Peter Mokhlis Saleh

BTIG, LLC, Research Division - MD and Senior Restaurant Analyst

* Stephen Anderson

Maxim Group LLC, Research Division - Senior VP & Senior Equity Research Analyst

* William Everett Slabaugh

Stephens Inc., Research Division - MD

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Presentation

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Operator [1]

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Ladies and gentlemen, thank you for standing by, and welcome to the Dunkin' Brands Third Quarter 2019 Earnings Call. (Operator Instructions) As a reminder, today's program may be recorded.

And now I'd like to introduce your host for today's program, Stacey Caravella, Senior Director of Investor Relations. Please go ahead.

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Stacey Caravella, Dunkin' Brands Group, Inc. - Senior Director of IR & Competitive Intelligence [2]

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Thank you, Jonathan, and good morning, everyone. Speaking on today's call will be Dunkin' Brands Chief Executive Officer, Dave Hoffmann; and Dunkin' Brands Chief Financial Officer, Kate Jaspon. Additionally, Scott Murphy, Chief Operating Officer for Dunkin' U.S., is here and will be available for questions during the Q&A session at the end of the call. Today's call is being webcast live and recorded for replay.

Before I turn the call over to Dave, I'd like to remind everyone that the language on forward-looking statements included in our earnings release also applies to our comments made during this call. Our release can be found on our website, investor.dunkinbrands.com, along with any reconciliation of non-GAAP financial measures mentioned on the call with their corresponding GAAP measures.

Now I'll turn the call over to Dave Hoffmann.

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David L. Hoffmann, Dunkin' Brands Group, Inc. - CEO & Director [3]

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Thanks, Stacey. Hi, everyone.

And just to begin, we delivered a strong third quarter with global system-wide sales growth of 4.7%, global development of 122 net new units and positive same-store sales growth across all of our business segments.

Around the world, our focus was consistent, delivering a more modern guest experience through operational excellence, everyday value and relevant new menu innovation.

Okay. Starting with Dunkin' U.S., highlights of the quarter included 4.4% system-wide sales growth and 1.5% same-store sales growth. Performance was driven by premium beverages such as espresso and cold brew as well as our national value platform Go2s. We were pleased to see beverages drive sequential comp improvement in the third quarter. Espresso sales grew more than 40% year-over-year, led by the strong performance of new innovation on our Signature Lattes line. And most importantly, we've maintained our operational speed while growing the espresso category. In fact, Dunkin' was recently named the brand with the fastest speed of service by QSR Magazine in its 2019 Drive-Thru Performance Study. Espresso obviously has not slowed us down. Great coffee fast is what we do best and what we will continue to drive.

It's been nearly 12 months since we relaunched espresso in a big way with new recipes, equipment, training and marketing. And notably, the quality improvements are driving our results. But we also know that we can do more. We are a beverage-led brand, and espresso is a big part of our future. However, we will also fight hard to protect our leadership in drip coffee, both hot and iced, which has experienced increasing competition in recent years.

Better quality enabled by better equipment is a cornerstone of the Blueprint for Growth. Over the past few months, we've been out in the field and selling new iced coffee brewers nationwide. We are a leader in iced coffee and are taking meaningful steps to grow our market share.

Our next-generation restaurant is, in fact, built around showcasing that leadership with the addition of an 8-headed tap system, a true symbol of not only our iced beverage credibility but the bar tender culture we're creating in our restaurants as well: Quality drinks served in the clean and friendly environment, made right and, of course, with a smile. It's what you love about your favorite place and what we're aiming for in our NextGen locations as well.

We also know it's critical to offer compelling food value that will drive beverage attachment. Go2s, our national value platform, is doing exactly that. Approximately 75% of Go2s transactions also include a full-priced beverage with an average total ticket of nearly $9.

Innovation on premium food also contributed to our Q3 comp performance with the launch of the barbecue bacon breakfast sandwich and our line-up of new breakfast bowls. And finally, we are excited to be the first nationwide U.S. restaurant brand to serve beyond breakfast sausage beginning on November 6. So look forward to that.

I believe Dunkin' is a brand that can democratize trends. We did it with espresso, and we believe there is an opportunity to do more when it comes to giving consumers great-tasting, on-trend innovation like plant-based proteins at an affordable price. This is exactly how we want to use our platform.

Now as for our digital initiatives, this is another area where we made smart investments last year and where we are beginning to see some positive green shoots. In September, we announced 2 major enhancements to our digital offering. First, we made the DD Perks loyalty program more flexible by expanding multi-tender to members nationwide. DD Perks members now can earn reward points anyway they pay, including cash, credit, debit or with an enrolled Dunkin' card. Test results have shown that multi-tender is driving incremental active enrollment with no material impact to margin. We believe multi-tender will be a true unlock to grow the DD Perks program both by expanding membership and by enabling more targeted marketing. We ended the third quarter with more than 12 million loyalty members, contributing approximately 13% of rooftop sales. Also in the third quarter, we announced the addition of guest ordering for Mobile On-The-Go. This new feature allows any customer, not just Perks members, to place a mobile order through the Dunkin' app. Guest checkout is just one more way customers can experience the speed of Dunkin' exactly the way they want it. We processed over 18 million On-the-Go Mobile orders in the third quarter, which is a 25% increase versus prior year. By giving guests even broader access to mobile ordering, we believe we can build this base and fuel further growth in our digital ecosystem. There is tremendous runway ahead of us when it comes to growing our digital platform. These latest advances, multi-tender and guest checkout, along with the recent expansion of Dunkin' Delivers are all designed to make the Dunkin' experience as frictionless as possible.

The strategic investments we made in the business last year, included into our beverage and digital platforms, are enabling us to drive top line results and deliver a better guest experience. While staying true to our asset-light model, we will continue to evaluate opportunities for strategic investments in the Dunkin' U.S. business with the goal of driving balanced long-term growth, system-wide sales expansion, strong unit-level economics and, of course, franchisee profitability. To date, we are very pleased with the returns from our investments that we made last year.

All right. Moving on to development. During the quarter, we topped 13,000 Dunkin' restaurants globally, including the addition of 55 net new units in the U.S. And on October 14, our 400th NextGen restaurant opened in Pennsylvania.

Our franchisees continue to be pleased with the results from the NextGen image. Key elements of the new design are driving double-digit category increases, with sales and traffic growth coming from core iced beverages delivered through the tap system, bakery performance from the front-facing glass case and increased mobile order and pay from the enhanced pickup area.

The NextGen store transformation is also driving noticeable change for our customers. Guests love the modern appearance. As proof of that, guest satisfaction scores in NextGen restaurants are trending higher than in other Dunkin' locations. NextGen is the embodiment of the Blueprint for Growth and underscores our commitment to serving great coffee fast. We are on pace to have 500 NextGen restaurants opened by year-end between new builds and remodels, and we will address our 2020 remodel pace when we provide guidance in conjunction with Q4 2019 earnings.

All right. Now to Baskin. In the third quarter, Baskin-Robbins U.S. same-store sales grew 3.6%. Growth was driven by strong performance of cups and cones, the take-home category as well as a successful partnership with Netflix hit show Stranger Things.

Great-tasting products that speak to modern and relevant moments in pop culture. It's a proven formula that resonates around the world and is at the heart of Baskin-Robbins.

In the third quarter, we also introduced 2 dairy-free vegan flavors nationwide. Our entrance into the plant-based dessert category recognizes the changing lifestyle and dietary needs of customers, gives customers new options without sacrificing the high quality guests have come to expect from Baskin-Robbins ice cream and another great way we can use our platform to scale these great products.

All right. Moving on to international. Q3 was a terrific quarter for both brands abroad with Dunkin' and Baskin-Robbins posting same-store sales growth of 7.3% and 3%, respectively. Q3 marks the ninth consecutive quarter of positive comp store sales growth for Dunkin' International. Results are reflective of the progress we're making on our international strategy, which is focused on enhancing the in-store experience, establishing a strong delivery infrastructure and growing nontraditional sales channels. We are very pleased with the progress we're making on delivery. We now have third-party options available in the majority of our international markets. And some of our most successful markets are seeing a double-digit lift in restaurant sales from delivery. This is a major unlock to future growth, and we're ready to capitalize on it and boomerang our learnings back to the U.S.

So around the world, we're committed to transformation by staying true to the brand heritage of Dunkin' and Baskin while also staying nimble to meet the unique needs of our local markets.

And with that, I'll now turn it over to Kate.

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Katherine D. Jaspon, Dunkin' Brands Group, Inc. - CFO [4]

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Thanks, Dave.

Q3 revenues increased $5.9 million or 1.7% compared to the prior year period due primarily to an increase in royalty income as a result of Dunkin' U.S. system-wide sales growth and an increase in rental income offset by decreases in advertising fees and franchise fees. As we've discussed in previous quarters, the increase in rental income resulted from the adoption of the new lease accounting standard in the first quarter of fiscal 2019, which requires gross presentation of certain lease costs that we pass through to franchisees. The decrease in advertising fees and related income was due primarily to a decrease in gift card program service fees offset by an increase in advertising fees as a result of the system-wide sales growth. The decrease in franchise fees was primarily the result of franchisee incentives, including investments to support the Dunkin' U.S. Blueprint for Growth that are being recognized over the remaining term of each respective franchise agreement.

Operating income and adjusted operating income for the third quarter increased $9.8 million or 8.7% and $9.1 million or 7.8%, respectively, compared to the prior year period. The increase was primarily a result of the growth in royalty income, a decrease in G&A expenses and an increase in net income from our South Korean joint venture offset by the decrease in franchise fees.

Net income and adjusted net income for the third quarter increased by $6.3 million or 9.5% and $5.8 million or 8.3%, respectively, compared to the prior year period primarily as a result of the increases in operating income and adjusted operating income as well as an increase in interest income earned on our cash balances offset by an increase in income tax expense.

The increase in income tax expense was driven primarily by excess tax benefits from share-based compensation of $1.8 million compared to $7.4 million in the prior year period and the increase in pretax income in the current period. This was offset by a tax benefit of $2 million related to the ability to utilize additional foreign tax credit carryforwards.

Diluted earnings per share and diluted adjusted earnings per share for the third quarter increased by 8.9% to $0.86 and 8.4% to $0.90, respectively, compared to the prior year period as a result of the increases in net income and adjusted net income, respectively. Excluding the impact of recognized excess tax benefits, both diluted earnings per share and diluted adjusted earnings per share would have been lower by approximately $0.02 and $0.09 for the third quarter of fiscal 2019 and 2018, respectively.

At the end of the third quarter, we had a debt-to-adjusted EBITDA ratio of 5:1. During the quarter, we generated approximately $75 million in free cash flow. We ended the quarter with $617 million in cash and short-term restricted cash on our balance sheet. Of that $617 million, $179 million represents cash associated with our gift card and marketing fund balances. We returned $46 million in cash to shareholders during the quarter, including $31 million in dividends and $15 million through open market share repurchases.

In our press release this morning, we reiterated the majority of our targets with the exception of the following. We now expect ice cream margin dollars to be approximately $16 million. Previously, we expected margin would be flat compared to 2018's ice cream margin of $17.8 million. We now expect our full year effective tax rate to be approximately 25%. Previously, we expected 27%. This revised tax rate guidance reflects realized excess tax benefits through the third quarter as well as the $2 million tax benefit from foreign tax credits recorded in the third quarter. This tax guidance excludes any potential future impact from material excess tax benefits that may be recorded in the fourth quarter of fiscal 2019. We now expect GAAP diluted earnings per share of $2.80 to $2.85. Previously, we expected $2.71 to $2.78. And expect diluted adjusted earnings per share of $3.10 to $3.12. Previously, we expected $3.02 to $3.05. This updated guidance reflects the realized tax benefits in Q3 as well as the tightening of our range as we head into our fourth quarter.

And with that, I will hand it over to the operator for questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question comes from the line of John Ivankoe from JPMorgan.

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John William Ivankoe, JP Morgan Chase & Co, Research Division - Senior Restaurant Analyst [2]

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Obviously, as a significantly free cash flow generative company, having a balance sheet kind of in the midpoint in your range and kind of to finance for a while now and a lot of unrestricted cash, the question that I'm going to ask is, how you kind of think about future franchise investments, whether directly on an operating cost basis, perhaps on a capital cost basis that we've really -- you learned anything over the last couple of years especially in terms of espresso modernization as we think about the 2021 type of plans, if we should begin to kind of think about, you may be getting more involved in the franchise system as you see the returns and the benefits to both the franchisees and the system overall.

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David L. Hoffmann, Dunkin' Brands Group, Inc. - CEO & Director [3]

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Yes, John, thanks for the question. And look, the way I would -- if we just look back, we're pleased with the investments, as I said, in my opening that we made the $100 million that we invested back in the business, espresso doing very well for us. We're starting to see the green shoots of the investments that we made in digital. And Stephanie Meltzer-Paul is in the room here to talk about all of those. So we're very bullish on that. As I said, at the end of Q2, all options are on the table in terms of evaluating what's the best place to use the cash right now. We're comfortable having it sit there on the balance sheet. Kate can go through that a bit more. But look, any good -- we look at the economy as well. We think the consumer is very healthy, but it's also prudent for us to make plans and, again, continue to have good cost controls, hold some cash back to be opportunistic if the economy turns on us, but we feel very good about where the consumer is. And like I said, we're still working through the first $100 million, and we'll keep everything on the table in terms of that option.

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John William Ivankoe, JP Morgan Chase & Co, Research Division - Senior Restaurant Analyst [4]

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And I guess, as you look at the number of remodels, which you're disclosing in the third quarter, a year ago, are you at the pace that you thought you would be? And is there still some fine-tuning or franchisees still waiting to see something from you, whether just more experience across the system, whether it's kind of looking at the cost or understanding the sales benefit or maybe some operational changes that they want to be convinced of to increase the rate of remodels, which is still relatively small versus the size of your system?

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Scott Murphy, Dunkin' Brands Group, Inc. - Senior VP & COO of Dunkin' U.S. [5]

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John, it's Scott. And I'd say, you're right, we're still -- the number is still small so far, but we're very excited about where we are with the remodel package. Franchisees are on board. We'll give our actual guidance next year when we give our Q4 earnings. If you remember, we released the final remodel design image on July 1. So that is our official design release. Now we continue to iterate small things as we see more of them out there in the wild, and we get improvements that we start making changes on because we're getting great feedback from the operators and from customers, and we'll continue to tweak, but we feel really good about it right now.

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Operator [6]

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Our next question comes from the line of Jeffrey Bernstein from Barclays.

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Jeffrey Andrew Bernstein, Barclays Bank PLC, Research Division - Director & Senior Equity Research Analyst [7]

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Great. Two as well. Just first one on breakfast, just wondering your thoughts on the category as a whole with one of the big burger players getting into the breakfast daypart with a national launch in a few months and maybe the implications for a more competitive daypart from all your peers. Just wondering whether there's any change in your posture around the daypart or how you would think about that or whether it's business as usual with just ongoing competition. And then I had one follow-up.

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David L. Hoffmann, Dunkin' Brands Group, Inc. - CEO & Director [8]

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Yes. Jeff, yes, thanks for that. You're going to hear me continue to say this all the time. Every day, we fight a battle on all fronts. Everyone wants to get into our space. We've always come out strong. So one new competitor won't change that. I think it's all the more reason why we're very maniacally focused on what we do best, which is great coffee fast. We're doubling down on quality value, exciting new menu innovation, and that's a big part of the focus going forward. But one new competitor doesn't change that, and we'll keep doing what we do best.

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Jeffrey Andrew Bernstein, Barclays Bank PLC, Research Division - Director & Senior Equity Research Analyst [9]

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Got you. And then just a follow-up on the U.S. comp for Dunkin'. Just wondering if you can offer up any maybe sequential trends through the quarter or into this quarter. I know you mentioned higher ticket, lower traffic. I'm just trying to kind of size up the magnitude of that. Or if you don't want to give the specifics on that, maybe the directional change in those 2 metrics relative to earlier in the year, is traffic getting better or worse? Or will the dayparts still comping positive?

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Katherine D. Jaspon, Dunkin' Brands Group, Inc. - CFO [10]

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Yes, this is Kate. Thanks. Well, we don't want to get into a ticket too far. I will say that quarter -- sequentially, quarter-to-quarter, we were relatively consistent from the breakdown within our comp. But coming out of the quarter, we actually accelerated through the months out of the quarter from a comp perspective and continue to see similar performance in both the AM and PM as to the previous quarter.

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Operator [11]

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Our next question comes from the line of Andrew Charles from Cowen and Company.

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Andrew Michael Charles, Cowen and Company, LLC, Research Division - Director [12]

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Great. I was wondering if you guys could talk about what you saw in the Beyond Sausage test in Manhattan, particularly if sales of the product ramped or if they honeymooned as awareness grew. And also, how do you extrapolate the test experience as you roll out nationally recognizing that Manhattan is likely to show a higher mix of sales of Beyond relative to the rest of the system?

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David L. Hoffmann, Dunkin' Brands Group, Inc. - CEO & Director [13]

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Yes, that's a good insight there. We were very pleased with how it performed in Manhattan. Obviously, that's a key market. We also had it tested in other parts of America that resemble more of a coast-to-coast play. We loved -- obviously, we love the awareness that we got out of it but also the retrial as well. And so versus the initial launch, it fell off just slightly but held steady all the way up to today. So we're very excited about this. We love the opportunity to be able to lead in this, use our platform to bring this to America. You've heard me say, my line is Dunkin' democratizes trends in America. We absolutely believe that. And we're just happy to be at the forefront of this great innovation. And so it just gives us an opportunity to use our platform to give consumers more options and choice. But again, November 6, be ready. It's going live across the country.

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Andrew Michael Charles, Cowen and Company, LLC, Research Division - Director [14]

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Makes sense. And then my other question was just on 2019 guidance, reiterating the low end of the Dunkin' U.S. openings. Openings were a little bit better than the industry were expecting. And if I'm doing the math right, it looks like 65 implied Dunkin' U.S. net openings in 4Q. But for every 4Q for between -- since you've been a public company, we've seen over 100-plus openings. And so just curious about the guidance. Is there something in the fourth quarter that's one-off? Or is it really just conservatism?

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Katherine D. Jaspon, Dunkin' Brands Group, Inc. - CFO [15]

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Yes, this is Kate. It's not conservatism. We're performing where we thought. Obviously, we continue to be back-end loaded, so the majority of our openings will come in Q4. A lot of those happening at the end of the quarter and stem around things like getting approvals from towns for permitting and some weather built in there. So nothing unusual.

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Operator [16]

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Our next question comes from the line of David Tarantino from Baird.

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David E. Tarantino, Robert W. Baird & Co. Incorporated, Research Division - Co-Director of Research and Senior Research Analyst [17]

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I wanted to ask about the DD Perks engagement initiatives. And I guess I've noticed a pretty significant uptick in the amount of activity in the program. And just wondering if you could talk about the strategy there, where you are, where you're going and what type of impact that's having on the business.

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David L. Hoffmann, Dunkin' Brands Group, Inc. - CEO & Director [18]

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Yes, David, I'm going to turn it over to Stephanie Meltzer-Paul, who's our Head of Digital here. And she's in the room and is doing a fabulous job and has been with us probably about 1.5 years now and really doing a great job with this. So I'll just let her take it from here.

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Stephanie Meltzer-Paul, Dunkin' Donuts USA, Inc. - VP of Digital and Loyalty Marketing [19]

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David, it's Stephanie. Thanks so much for the question. We are very excited about our road map for DD Perks. The multi-tender unlock we think is going to give us tremendous upside. We just launched that in the last month nationally, but based on the pilot that we ran earlier in the year, we know that's really going to unlock the program and open it up to a lot more members, allowing them to pay anyway. And that is just one of our major big enhancements in terms of investment in the DD Perks program as we go into 2020.

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David L. Hoffmann, Dunkin' Brands Group, Inc. - CEO & Director [20]

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Yes. And David, just to add, if I could talk for Stephanie as well in terms of how she's -- when she came in, she thought there was a lot of handcuffs maybe on our loyalty program and the way we've constricted the top of the funnel. And so a big part of what she's done is just try to open that funnel. You see that with multi-tender. You see that with guest checkout. And again, she's got a really good plan on how we're going to market that and drive new usage in there in 2020.

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David E. Tarantino, Robert W. Baird & Co. Incorporated, Research Division - Co-Director of Research and Senior Research Analyst [21]

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Great. And maybe a follow-up. I think Kate mentioned an acceleration in trends at the end of the quarter. And was this part of that? I guess that's when we noticed the uptick in activity. Or was it something else?

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David L. Hoffmann, Dunkin' Brands Group, Inc. - CEO & Director [22]

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Yes. Too early to say on the digital. We're excited about it, but too early to say that. It's just that, really, as I mentioned upfront, David, it's been a lot around. We're a tough out when we have our one-two punch working for us in terms of innovation like Signature Lattes, at compelling value like the Go2s. So it was really more along those lines, but we're excited about what Stephanie is doing. And the investments, like I said, around the Blueprint that we did in digital are starting to bear some fruits in terms of being able for her to come in and drive further demand to the app.

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Operator [23]

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Our next question comes from the line of John Glass from Morgan Stanley.

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John Stephenson Glass, Morgan Stanley, Research Division - MD [24]

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I wanted to go back to the Dunkin' U.S. comps. And your cross-country rivals last night reported very robust sales and traffic in their core business. And it was beverage-led. And so looking at Dunkin', how is your core beverage business? I understand the espresso business has done well, but it's on a very small base. And the food attachment is all good. But can you just talk about the core drip coffee business, the core iced coffee business, which I still think is the majority of your sales, and where the trends have been and if there's been stabilization or if that's still one of the biggest pressures on your traffic? And how do you go about defending that business, given there may be some pressure there?

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David L. Hoffmann, Dunkin' Brands Group, Inc. - CEO & Director [25]

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Yes. John, as you know and I have talked before, a big part of the Blueprint was expanding our sweet spot. Drip coffee and doughnuts was very core to who we are. We will continue to drive that. And again, you'll see more news about the -- what we're doing around drip coffee in 2020, and we're excited about that. But again, it was also about getting into new categories such as espresso, new for us, where we can go after that in a big way. So our iced coffee, we're the biggest player in the market in terms of iced coffee. And look, we are still very much -- and this may sound a bit repetitive and boring. We have a 5-year Blueprint plan. We're working that long-term plan rather than managing to a quarter. We know where our peers are. What we're delivering is exactly what we guided to. We are also, as you know, better than others. We're 100% franchised. We've got what we believe is the best partnership and relationship in the industry, and bringing the franchisees along with us on this journey has been critical to what we believe is the long-term success. So I'm proud of the balance that we delivered on the quarter. We -- especially what we did across both brands domestically and internationally. But clearly, we all know that we can do more.

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John Stephenson Glass, Morgan Stanley, Research Division - MD [26]

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Okay. And then looking at the remodel, remodeling is sort of the key piece of bringing the blueprint to life, and you talked about how you're going to give some guidance in 2020. Do you think at that point, you'll have a multiyear plan? Can you talk about how this is going to get financed? So if there is a corporate contribution, you'll be able to lay out for us how that plays out? Or do you -- does that take more time to really assess how you might -- if you were involved in the funding of it, how you might be involved in it?

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David L. Hoffmann, Dunkin' Brands Group, Inc. - CEO & Director [27]

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Yes, John, we'll be very transparent on all that. So that's all part of our thinking. And again, we'll be very transparent as we get to -- when we release Q4 earnings and talk about it then.

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Operator [28]

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Our next question comes from the line of Gregory Francfort from Bank of America.

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Gregory Ryan Francfort, BofA Merrill Lynch, Research Division - Associate [29]

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I just had 2. The first was on remodels. And any help in terms of what the sales lift has been so far or the returns that you're experiencing? I know you only plan to have 500 by the end of the year, but any early reads there?

And then the other question I had was just on drive-through speeds. I think you called it out in the call is I think you guys are the fastest drive-through in America. Can you maybe address if that's changed at all? I think a few of your larger peers have been able to change that and kind of tilt it back down pretty materially. And I'm wondering if you guys have been able to see the same or even seeing the same.

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Scott Murphy, Dunkin' Brands Group, Inc. - Senior VP & COO of Dunkin' U.S. [30]

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Yes, Greg, it's Scott. Here's what I would say. On the remodel piece, we're not releasing the numbers. It's still a relatively small set on the remodel performance, but we are very happy with it, as our franchisees. So we're seeing a nice growth out of the 3 core components of the front counter bakery, obviously, the tap system and then the On-The-Go Mobile order pickup, so very happy with it. Franchisees are happy with the returns we're seeing. So we'll give more details on that next year when we get to scale.

On your second piece on drive-through, obviously, the Blueprint comes to life with great coffee fast. And so especially through the drive-through, it's where a lot of our focus is. And whether it's small tactical things like high-def audio, digital headsets, car counters, even the queue and the positioning of the menu boards, we're making a lot of small changes out there. We're also doing some bigger things around digital that you'll hear about in the future. But for right now, it's brass tacks, and we're seeing some nice improvements especially in the AM daypart on our speed, and it was really nice to get recognized by the QSR Magazine.

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Gregory Ryan Francfort, BofA Merrill Lynch, Research Division - Associate [31]

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And maybe just to follow up there, when were you able to see that change? I think a lot of other players in the industry have kind of seen the last 6 months an improvement there. Is that kind of also the time frame for when Dunkin' has seen a change on that front?

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Scott Murphy, Dunkin' Brands Group, Inc. - Senior VP & COO of Dunkin' U.S. [32]

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So I'd actually go back a little further. I think it started with menu simplification. When we did that initiative and got some of the slower-moving SKUs out of there. So the pickup we saw was even a little bit before that. This summer was actually a nice time for us, though, with the beverage focus, especially on iced espresso, really helped us with our speed during that season.

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David L. Hoffmann, Dunkin' Brands Group, Inc. - CEO & Director [33]

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And the other thing I would add on that one is -- and this is -- all the credit goes in the world to Scott and his team. But the espresso rollout was really a challenge from us internally, but all of you were saying, okay, this is going to slow down ops. And we've put that out to the system and rallied around that. And so there is a big tailwind around that piece as well. So just pretty much rolling up your bootstraps and getting after it, and that's what Scott and the team and the franchisees have done.

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Operator [34]

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Our next question comes from the line of David Palmer from Evercore ISI.

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David Sterling Palmer, Evercore ISI Institutional Equities, Research Division - Senior MD & Fundamental Research Analyst [35]

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Just a question on reimaging. And I guess I'm wondering -- or I guess I'm slightly nervous that you're going to talk about a sizable contribution to help coax the reimaging pace up. I mean, reimaging, it's more than just an espresso machine, it's -- and these are big box here. And I guess my hope would be that you would value engineer the reimage itself in terms of the cost to make it stand on its own in terms of an ROI for the franchisee since the amount of money you could spend as the brand owner would be relatively limited. So any thought on how you're thinking about that and making that pace accelerate in the future would be helpful.

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Katherine D. Jaspon, Dunkin' Brands Group, Inc. - CFO [36]

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Yes, this is Kate. And I apologize if we set off any alarms. I think what we're trying to say is that we're always evaluating the best use of cash. And given our investment last year and the return through digital and espresso, that all thoughts are on the table but, obviously, have not committed to anything substantial like you're referring to from backing our franchisees and accelerating the remodel. I think any investment that we would make would be something similar to espresso, as you saw, where we were trying to get the system to do something collectively and could accelerate something. It's certainly not into doing something that the franchisees would not do on their own. So they're excited. Please don't read into that. They're excited about the NextGen image. We're just working with them right now. Scott's team is in the field working with them to figure out the rate and pace and which ones to do at what time. So I apologize if that came off incorrectly.

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David Sterling Palmer, Evercore ISI Institutional Equities, Research Division - Senior MD & Fundamental Research Analyst [37]

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All right. And I guess the other like general thought was on value. It seems like value and much of fast food, obviously, Starbucks actually had positive traffic and what they reported yesterday. But traffic's been missing from a lot of fast food lately. And combos like with Go2s have been helpful in portraying value, but it's often showed up in check. It feels like there's going to be a little bit more of a traffic focus and breakfast value focus out there and certainly with the new entrant coming in. I guess what my curiosity is what is your ability, do you think, to really defend on traffic? And do you feel like you have some tools that maybe new ones are being created through digital to really make traffic happen or at least sustain the traffic you got?

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David L. Hoffmann, Dunkin' Brands Group, Inc. - CEO & Director [38]

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Yes, David. Look, I know value is a big part of how you've always talked and thought about the business. Look, we've had the best traffic year-to-date since 2015. It's not where we want to be. Like I said, we're working a long-term plan with the Blueprint. We're succeeding in categories that have traditionally been outside of our core hot drip coffee offerings such as espresso, cold brew Signature Lattes. We need to do more in those areas. NextGen quietly has been one of our single best traffic drivers and continues to be so as we add more units. So we're pleased about that. But that's also a part of the long game. But our opportunities are present but also very much within our control. So you just heard from Stephanie, expanding our digital platform as the new customer convenience is going to be key. Expanding new revenue streams, such as delivery, but more importantly, catering is going to be key. And innovation to market has to be sharper, faster and more relevant. And these are all the things that we're efforting against as part of the Blueprint.

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Operator [39]

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Our next question comes from the line of Eric Gonzalez from KeyBanc.

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Eric Andrew Gonzalez, KeyBanc Capital Markets Inc., Research Division - Restaurants Analyst [40]

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Just a question on International. I know it's a small part of your business, but it doesn't get mentioned that often. You put together, I think, 4 quarters of accelerating comp growth in Dunkin' International. And even Baskin International, looks like it's on firmer footing. So I was just wondering how you think about the opportunity to accelerate development by either entering new markets or existing markets now that you've got the comp growth momentum.

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David L. Hoffmann, Dunkin' Brands Group, Inc. - CEO & Director [41]

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Yes, thanks for that question. It's something out there, nothing that we wanted to get into right now in terms of new market entries. I think for us, it's really been a focus on being better and getting better in the current market. So minimizing any surprises that we often dealt with in the past has been a big part of this. Paying more attention to our interest in the JVs and adding some external talent that we've brought in to help with that, and you're seeing that pay off there. And look, it's all about working the international Blueprint as well, better customer experience, unlocking delivery, pursuing new channels through CPG. That's been the formula. We're happy with sort of the stability and balance that we have now. We've exited some markets. And we like the portfolio that we've got, and we like what we're doing around both brands. But look, I've opened a lot of markets in my 25 years as well. So where we think there's opportunities, we will pursue that again. It's just not part of the immediate plan.

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Operator [42]

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Our next question comes from the line of Nicole Miller from Piper Jaffray.

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Nicole Miller Regan, Piper Jaffray Companies, Research Division - MD & Senior Research Analyst [43]

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Just a little bit more on the international market, actually. Especially given the outsized comps for -- I think it's 4, 5, 6, 7 quarters, how does that customer use you the same or differently than a Dunkin' Donuts U.S. customer?

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David L. Hoffmann, Dunkin' Brands Group, Inc. - CEO & Director [44]

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I think the -- one of the things that John Varghese and the International team have done well is pivoting. And again, this is from my history as well. Anytime you just export a U.S. model and you don't adapt it locally, it tends to get stale in that work. I think over the last several years, John has done a really good job of adapting to local taste. So if you -- too much to cover in one single answer. But if you look at our offering in the Philippines, to Malaysia, to Saudi Arabia and to what we're doing in Europe with putting in better franchisees, this isn't -- yes, there's a customer piece to this, but it's also just understanding the business model and how to bring that to market. And again, like I said, it sounds kind of boring, but just being better at what you do, and that formula has paid off right now. And look, I could go all the way across. And you guys know I've got a lot of experience in these areas, but pleasantly pleased with what we're doing in Europe, across the Middle East and even in Southeast Asia and the JVs now. So yes, I think John -- again, don't over-ramp on your models there, but John is doing a nice job of some steady leadership, John and his team.

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Nicole Miller Regan, Piper Jaffray Companies, Research Division - MD & Senior Research Analyst [45]

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And that just lends itself to talk a little bit about best practices. I mean you can leverage a lot of scale and have benefits there. So is there something you learned internationally at Dunkin'? Or is there something you learn at Dunkin' U.S. in terms of investments and maybe marketing and loyalty that you bring back to Baskin-Robbins? Just maybe as a final question from me, how do you do that internally and get those benefits of scale of both brands, frankly, between domestic or international and/or between Dunkin' and Baskin?

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David L. Hoffmann, Dunkin' Brands Group, Inc. - CEO & Director [46]

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Yes, we're getting much tighter on sharing those best practices across the pond. So the CPG business, as you know, is very developed in the U.S. for us. And so we're -- that team is partnering with the International team to figure out how to pursue new channels. Conversely, our team and Stephanie's team is partnering with International. They're way ahead of us on the U.S. side in terms of delivery and what's going on there. And then I also would say strategic partnerships. We're getting a bit smarter on how we leverage strategic relationships both on the Baskin and the Dunkin' side in terms of tying up promotional opportunities, whether it's -- they did Nutella over there or whether it's movie properties, things like that. So again, more to come on that, but we're definitely seeing some synergies, and we're definitely trying to boomerang best practices around the globe. I was just over recently and saw a great idea out of the Philippines. Don't want to share it, but it will end up on our calendar in Dunkin' U.S. because I think it's a really clever idea. So there's things like that, that we're starting to get much smarter about.

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Operator [47]

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Our next question comes from the line of Matt DiFrisco from Guggenheim Securities.

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Matthew James DiFrisco, Guggenheim Securities, LLC, Research Division - Director and Senior Equity Analyst [48]

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There's been some reference to the call last night also from one of your competitors there. Just with respect to one of their drivers was a little bit of redeployment of labor. I'm just curious if you could comment sort of on how the model that you have with the franchise side. Could some of the more modest type of comp growth, is it reflective of maybe a little tighter labor scheduling or labor management? Do you have an ability to monitor that? And maybe is there a way to incentivize or, I guess, direct the franchisees to redeploying labor maybe more effectively or not cutting back on labor as a knee-jerk reactions of some of the recent wage increases, so perhaps they could see maybe better flow-through or better comp that over -- at the end of the day, results in better profits?

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Scott Murphy, Dunkin' Brands Group, Inc. - Senior VP & COO of Dunkin' U.S. [49]

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Yes, Matt, it's Scott. And I'd say you've hit on one of the biggest focus areas for us and our franchisees. It's what we spend a lot of our time working on those brass tacks in terms of labor scheduling, deployment. And I'd point to a couple interesting things we're doing that give me optimism for the future. One is, obviously, everything Stephanie talked about on digital. And when we see the growth in On-The-Go Mobile ordering and we take that whole process and move it outside of the restaurant, so the ordering, the tendering, all of that -- most of that transaction happens on the customers' time outside the restaurant, which is just the most efficient and accurate and high-quality transaction for our restaurants. So we love that in the box.

The second thing I'd say is the NextGen new image. And so we love to talk about what it looks like from the outside of the building. We love to talk about the inside and the tap system and the fit and finish and how it has a modern atmosphere. What we probably don't do enough talking about and what the franchisees love is the true change in the operating model behind the counter. So we've got a much more efficient coffee line. We've got high-volume equipment in there that the crew absolutely loves. And we're seeing efficiencies not just in how they make the products, but we've got a new technology system that we're starting to roll out that will help with that labor scheduling and the management of staff. And I think there is some room to be optimistic for that in the future.

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Matthew James DiFrisco, Guggenheim Securities, LLC, Research Division - Director and Senior Equity Analyst [50]

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So the labor scheduling is part of the NextGen? Or is that an element that will be parallel to it but not necessarily essential to the next -- to having a NextGen store?

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Scott Murphy, Dunkin' Brands Group, Inc. - Senior VP & COO of Dunkin' U.S. [51]

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So we're going to roll it out in conjunction with the NextGen image. So it goes with it, and that's our new technology platform for back office, yes.

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Matthew James DiFrisco, Guggenheim Securities, LLC, Research Division - Director and Senior Equity Analyst [52]

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And did you say what mobile order and pay -- I think it was 3% last year. What is mobile order and pay now?

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David L. Hoffmann, Dunkin' Brands Group, Inc. - CEO & Director [53]

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4%.

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Operator [54]

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Our next question comes from the line of Will Slabaugh from Stephens Inc.

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William Everett Slabaugh, Stephens Inc., Research Division - MD [55]

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You mentioned the success of allowing customers to order on mobile that aren't Perks members. And I'm curious what that conversion story to Perks looks like if that's successful in converting those customers and how that customer behaves compared to a typical Perks member as they're ordering.

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Stephanie Meltzer-Paul, Dunkin' Donuts USA, Inc. - VP of Digital and Loyalty Marketing [56]

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It's Stephanie. Thanks for the question. We just rolled out guest ordering about a month ago, so it's very, very early, but we are pleased. So far we're seeing around 25% of guest orders convert over to Perks within the first few days after they place the guest order. One is because we promote that within the mobile app after the guest order, and then we follow up with direct marketing over e-mail. So we're actually really pleased with those numbers very early on. That is the goal for guest ordering is to give them the option that -- to join Perks or not. But ultimately, we do want to get them over to our Perks program for an even bigger unlock.

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William Everett Slabaugh, Stephens Inc., Research Division - MD [57]

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Got it. And just a quick follow-up on value, if I could, in the Go2s in particular. Can you speak broadly to how those mixed in the quarter or performed versus previous quarters?

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David L. Hoffmann, Dunkin' Brands Group, Inc. - CEO & Director [58]

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I don't know off the top of my head right now. I have to get back to you on that one. But look, it was a big part of delivering against the quarter, but there was the combination of that with the Signature Lattes. So we are very pleased with both of those and how it performed. It still has a lot of legs for us. So it was a key driver for Q3, but we'll have to -- maybe on the side calls, we'll follow up and get you more details on that.

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Katherine D. Jaspon, Dunkin' Brands Group, Inc. - CFO [59]

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Yes. And just -- this is Kate, sorry. Just to add on from a year-over-year perspective, we certainly saw our mix increase. So you may recall that this quarter last year, we had come off the national Go2s, and we're actually testing several of the regional offers. So this year, we've had a consistent, sustained messaging on value. And so we've seen an increase in our mix within our ticket year-over-year.

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Operator [60]

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Our next question comes from the line of Dennis Geiger from UBS.

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Dennis Geiger, UBS Investment Bank, Research Division - Director and Equity Research Analyst of Restaurants [61]

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Dave, you touched a whole bunch of sales initiatives in place across a variety of buckets, I guess, across technology, innovation, remodels, ops, et cetera, some of them that are established and others that are new or just launching. But I guess if you could kind of help frame the contribution potential as you layer some of the new technology developments on beyond going national, some of the other innovation for 2020, can some of these newer drivers be close to as significant, I guess, as some of the drivers for the business this year as you look to '20?

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David L. Hoffmann, Dunkin' Brands Group, Inc. - CEO & Director [62]

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Yes, Dennis, a good question. And look, going forward, menu innovation, our focus on speed and our digital platform as the new convenience tool is going to be key for us. A big part of the strategy, as I mentioned before, is expanding our sweet spot, love drip coffee, but espresso has showed us we can get into other areas that speak to these coffee adventurers, so espresso, cold brew, our Signature Lattes. There's a lot there that our R&D team is working on, not only around hot, but we've got some of the best credentials in the industry around iced. So continue to see us be very heavily focused on beverage innovation.

And again, a key element to that where I think we have some opportunity is around attachment. Go2s is one piece of the attachment, but there's other opportunities for us to have better attachment with those beverages. And then just on the digital platform, again, what Stephanie is doing is unlocking a lot of the -- I guess, you said the handcuffs around usage and accessing our app and our loyalty program, so she's been efforting against that. And we want to market against that next year, more in-app offers and things along those lines that we think is going to be incremental and additive.

And then finally, strategic partnerships. We love the partnership with Beyond. My relationship with Ethan Brown over there, we like that. There's other opportunities for us. And we're already talking to folks to lead in certain areas and use our platform for the greater good. So there's a lot there under menu innovation that we like under digital. And then, of course, always elevating the customer experience, that's Scott's job 24/7 and does an amazing job at it.

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Operator [63]

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Our next question comes from the line of Brian Bittner from Oppenheimer.

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Brian John Bittner, Oppenheimer & Co. Inc., Research Division - MD and Senior Analyst [64]

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Two questions. First is following up on the app usage and On-The-Go ordering. I realize it's 4% of sales for the system, but I also understand it's a way above that in certain markets. So in the stores or markets where it is way above, do you actually see better sales trends than the overall system in those markets?

And my second question is just an update on espresso. So how is it performing relative to last quarter? Is the impact directly after rollout bigger than it is today? Or are you seeing a sustained or even accelerated lift from espresso?

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David L. Hoffmann, Dunkin' Brands Group, Inc. - CEO & Director [65]

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Yes, Brian, I'll answer the first one, and Scott will do the second one on espresso. In terms of -- as we've mentioned to you, urban areas and especially where you guys are located, we are seeing a much better throughput and is translating into that. What we're also designing now is, obviously, our NextGen restaurants and, again, continue to work on this but not designing a mobile order and pay that's 5%, but that's significantly greater, 3, 4x that, which is where we think the trends will go in the future not just for us but for the industry as a whole. So again, it's building the restaurant with that in mind first. But we're very pleased. We get up to 20%, 25% in the areas that you guys are located on and we're seeing much better throughput. And you've seen -- we're able to get into -- a Dunkin' into a lot of nooks and crannies, as you know. And so moving beyond just traditional ordering and into this type of pickup has been key for our throughput. So yes, it's a big part of our strategy. And yes, we're seeing success with it.

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Scott Murphy, Dunkin' Brands Group, Inc. - Senior VP & COO of Dunkin' U.S. [66]

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And Brian, we couldn't be any more excited about espresso, and it continues to sustain that 40% growth that we talked about earlier, really continues month in, month out. We've got some nice innovation, especially with the Signature Lattes and the flavors, and we're really excited about the holiday season as well for this platform. And I think it goes to a couple of things. One, all the training that we mentioned for the crews who were executing espresso at the speed of Dunkin', which is a great value proposition for the consumer. The PM break that we've done in the afternoon is driving great traffic to the restaurant for that offer. And we're seeing that espresso has a nice attachment, obviously, with doughnuts and other savory items. And it skews a little younger, a little more female and a little more towards our target growth areas for the future. So very excited about espresso, and I think there's even more to come.

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Operator [67]

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Our next question comes from the line of Katherine Fogertey from Goldman Sachs.

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Katherine Irene Fogertey, Goldman Sachs Group Inc., Research Division - VP & Derivatives Research Strategist [68]

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So one of my questions is just going back on the espresso point. You guys had previously disclosed the percentage of sales that were coming from espresso. I think last quarter, it was -- it grew from 6% of sales to 10%. So just curious on where that is tracking right now. And I have a follow-up.

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Scott Murphy, Dunkin' Brands Group, Inc. - Senior VP & COO of Dunkin' U.S. [69]

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Yes. So it's tracking at about 10% mix right now.

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Katherine Irene Fogertey, Goldman Sachs Group Inc., Research Division - VP & Derivatives Research Strategist [70]

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Okay. Great. And then on the unit additions in the U.S. this quarter, was there anything or did you see any units kind of pull forward that maybe would have been opened in 4Q that were opened in 3Q? Was there anything kind of special about this quarter? I ask this because we've been kind of tracking kind of down 40%, down 30% on the units on a year-over-year basis. And as somebody else on the call alluded to, this quarter was up 6% year-on-year. I'm just wondering if there's any kind of choppiness there that we should think about when thinking about the cadence of units going forward.

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Katherine D. Jaspon, Dunkin' Brands Group, Inc. - CFO [71]

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Yes, great question. Thanks, Katherine. There was nothing unusual this quarter. Maybe a few stores that pulled forward that we were expecting in Q4 into Q3, but nothing unusual and still expecting on the lower end of the 200 to 250.

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Operator [72]

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Our next question comes from the line of Andrew Strelzik from BMO Capital Markets.

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Andrew Strelzik, BMO Capital Markets Equity Research - Restaurants Analyst [73]

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I just had a question on tech investments. Across your kind of limited service peer group, there's a lot of focus there and a lot of investment going in that direction. So my question is, how do you evaluate the right level of investment behind technology to ensure that you're remaining competitive? And not just on the consumer-facing elements but also maybe on some of the capabilities, given the conversation around green shoots there, it feels like maybe there's an opportunity to lean in more. So I'm just curious how you're evaluating those opportunities.

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David L. Hoffmann, Dunkin' Brands Group, Inc. - CEO & Director [74]

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Yes, let me start, and Stephanie can jump in. Look, we thought this was a big opportunity when we did the $100 million investment last year and the idea that we can secure the -- our IP app, which we thought was state of the art, bring that in-house and be a bit more nimble. So we're in the process right now of doing that to give us that flexibility. So everything you've heard us say is really around creating a frictionless experience for the consumer. So early days, that's why they want to over-ramp on anything more than green shoots around that.

And look, we've got some -- obviously, we're asset-light, and we look at what the -- always what the competitors are doing, but we've got some great relationships and strategic partners in this area. And Stephanie is all over this. And so we feel good about the path we're on. We don't feel like we're at a competitive disadvantage. We've always been one of the leaders in the market around this. We know we've got some gaps to close in terms of our loyalty and also mobile order and pay. But we feel good about our position and the investments we're making, and we don't think there's anything -- any reason for us to think that we're going to be boxed out of anything. We're excited about 2020 and where that's headed.

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Operator [75]

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Our next question comes from the line of Stephen Anderson from Maxim Group.

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Stephen Anderson, Maxim Group LLC, Research Division - Senior VP & Senior Equity Research Analyst [76]

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I wanted to just follow up on -- actually, it's on some of the recent changes in management, notably the departure of Tony Weisman over in the marketing. And so I wanted to ask what you've been looking for in terms of your search and if you can comment on that search to date.

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David L. Hoffmann, Dunkin' Brands Group, Inc. - CEO & Director [77]

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Yes, thanks, Stephen. Tony had a great 2-year run with us, decided to step away, and we wish him well and thank him for his contributions. And going forward, we're actively in the middle of a search. Look, I'm -- we're looking for somebody who's got a deep understanding of menu strategy and the innovation-to-market process; somebody who uses the voice of the consumer to inform decisions; someone who knows how to market to and develop a greater user experience on our digital platform; and then finally, somebody who understands our brand purpose and brand voice and how to weave that into how we communicate through our agencies and strategic partnerships. So I think that's pretty much a sort of a brief or a job description for any CMO, but that's what we're looking for, and that's our need right now, and I'm looking for that type of partner to come in here. And so we're getting a lot of great candidates. Obviously, this is a highly desired top-tier role, and so we're getting a lot of people that we're looking at right now. So more to come on that when we have an announcement in the future.

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Operator [78]

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Our final question comes from the line of Peter Saleh from BTIG.

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Peter Mokhlis Saleh, BTIG, LLC, Research Division - MD and Senior Restaurant Analyst [79]

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I heard you guys talk a lot about digital and definitely the partnership with Beyond. But you don't provide any update on your delivery partnership with Grub and how that may be going. Could you give us some thoughts on how you guys are viewing delivery? And is that still part of the strategy going forward?

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Stephanie Meltzer-Paul, Dunkin' Donuts USA, Inc. - VP of Digital and Loyalty Marketing [80]

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It's Stephanie. Thanks for the question. Yes, we're still very excited about delivery. We're still very excited about our partnership with Grubhub. Our POS integration with them is key for efficiency for our franchisees and our operators around delivery, and we think that is definitely a winning proposition. We're live now in 3 major markets, in New York, in Boston and Philly. We're gaining a lot of learnings, and we're excited about the future there as we head into next year. But we are open to working with other delivery partners. And we are continuing with DoorDash at the moment. We also have some stores live with them. But we're still very excited about the space as we learn more and will scale into the future.

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David L. Hoffmann, Dunkin' Brands Group, Inc. - CEO & Director [81]

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And Peter, the only thing I'd add is, look, we read their letter, this is Grubhub, value their transparency about what they're doing to shift their strategy and better compete in such a competitive climate. So we appreciate that. But as Stephanie said, we continue to have relationships with multi delivery partners and are focused on increasing convenience for our customers through any channel.

So that would be it. Okay. That's -- I think that clears the queue, operator, and I'm just going to say thanks, everyone, for being on.

Look, I'm going to reiterate something I said earlier, and again, you're going to hear me continue to beat this drum. We have a 5-year Blueprint plan, and we're working that long-term plan rather than managing to a quarter. We're delivering exactly what we guided to and exactly what we said. I am confident. I know we're on the table. We're confident and thrilled that we've got the best franchisees and the best partnership in the industry, and we're bringing them along on this journey. And that's been critical to the long-term success. And I'm -- look, as it relates to Q3, I'm proud of the balance we had across both brands domestically and internationally, but we all know we can do more. And so you can count on that from this team.

So thanks again, everyone. Have a safe Halloween. And just remember, Munchkins go well during Halloween, and they're great to be handed out to the kids. So thanks, everyone. Take care.

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Operator [82]

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Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.