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Edited Transcript of DNKN earnings conference call or presentation 30-Apr-20 11:30am GMT

Q1 2020 Dunkin' Brands Group Inc Earnings Call

Canton May 18, 2020 (Thomson StreetEvents) -- Edited Transcript of Dunkin' Brands Group Inc earnings conference call or presentation Thursday, April 30, 2020 at 11:30:00am 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. - President of Dunkin’ Americas

* 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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* David E. Tarantino

Robert W. Baird & Co. Incorporated, Research Division - 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

* 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

* Matthew James DiFrisco

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

* Sharon Zackfia

William Blair & Company L.L.C., Research Division - Partner & Group Head of Consumer

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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 First Quarter 2020 Earnings Call. (Operator Instructions)

I would now like to introduce your host for today's program, Stacey Caravella, Senior Director, 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, operator, and good morning, everyone. Speaking on today's call will be Dunkin' Brands Chief Executive Officer, Dave Hoffmann; President of Dunkin' Americas, Scott Murphy; Dunkin Brands Chief Financial Officer, Kate Jaspon. Following prepared remarks, we'll open the call to questions. 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 the call. I'd like to note that we're practicing social distancing, so please bear with us if there are any technical issues during the 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.

With that, 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, and thanks, everyone, for joining today. It's hard not to notice how different today's call feels from what we normally do. I want to take a minute upfront to give a heartfelt thank you to everyone listening in, working from home and say I hope you're healthy and well. Please stay vigilant. We will get through this together.

Like all of you, we've had to make decisions without perfect information. What has served this leadership team well, navigating through this -- and all of you, I think, know my years internationally, having been in almost every crisis management foxhole possible. Early on, we rallied around a phrase that no one will remember an overreaction, but they will certainly never forget an underreaction. Our response to COVID started early based on lessons learned from what we were seeing abroad. From day 1, our goal, our duty our obligation has been simply to do the right thing.

Nothing is more important to us than safety. The decisions we've had to make over the last month are uncharted, but we've moved quickly to do what's right in the face of uncertainty. We've chosen to do what was timely over what was flawless. We've protected people over dollars. We haven't been perfect, but we've done everything we can to look out for our employees, our franchisees, their families, their crew and, of course, our customers. Together with our franchisees, we did what was right in our restaurants to protect dedicated crew members and loyal customers. Our franchisees went the extra mile to keep their restaurants open and their people employed wherever they could. We instituted new brand standards, face masks, plexiglass at the counters, latex gloves, and this week shipped infrared thermometers to every location in the U.S. We removed dining room tables and chairs and evolved the model already built for speed into one built for new social distancing protocols. We added curbside pickup, expanded delivery options and gave incentives for customers to use contactless mobile ordering through our app.

Together with our suppliers and other partners, we did what was right for our franchisees, to protect their cash flow and preserve their businesses that they built with their families. We like to refer to the partnership among our brand, franchisees and suppliers as a three-legged stool and are proud to see all 3 legs standing strong through this crisis. We extended payment terms on royalties and the advertising fund, deferred rent in the corporate properties we control and worked with vendors, lenders and suppliers to provide additional flexibility to protect franchisee liquidity. The average Dunkin' franchisee in our system has around 150 employees as independent business owners many of them have successfully applied for loans under the federal Payroll Protection Program (sic) [Paycheck Protection Program.] We want to make it clear that as 100% franchisee-owned-and-operated system, Dunkin' Brands has neither applied for nor received any loans from this program. However, we are very grateful for the additional support provided directly to our franchisees through measures such as the CARES Act.

Lastly, we did what was right for our Dunkin' Brands employees. I'm proud that we have avoided furloughs since the crisis started. Instead, we identified 45 million in G&A and CapEx savings to preserve cash while protecting our workforce. We cut back on operating expenses, suspended discretionary matching contributions of 401(k) retirement plans and made changes to other employee benefits as well. We created a gig program to allow employees with roles impacted by COVID to be reallocated to other critical functional areas.

Today, our Board of Directors also announced that we have suspended our regular dividend program. We believe that a temporary suspension of our dividend is the prudent and responsible thing to do. This management team and our Board remain committed to paying dividends over the long-term and we expect to reinstitute that program when it is appropriate to do so.

Additionally, our senior leadership team is voluntarily offering reductions in their base salaries from May to August of this year. Our Board of Directors has also agreed to a reduction in their cash compensation. These savings will be contributed to the Dunkin' Brands Family Fund, which supports Dunkin' and Baskin-Robbins crew members in times of crisis such as now.

We've got your back is more than just a saying around here. Being in the QSR industry is first and foremost about serving others. Service runs in our blood, whether that's behind the counter, at the drive-thru or in the hospitals and school parking lots during times of crisis. That's why we're doing everything we can as a company to serve the needs of our franchisees, employees and communities during these challenging times. It's not just about preserving liquidity or our reputation. It's simply about doing the right thing.

I'm touched by the acts of kindness we see everyday from our franchisees to support the people and the communities where they live and work. I want to give just a few examples that speak to the heart and soul of our system. Lou and Julie Cabral are assisting children who may not know where their next meal will come from by offering them a free drink, sandwich and doughnut at their 9 Dunkin' shops in Richmond, Virginia.

Jerry Fives has turned the dining room of one of his restaurants into a sewing room, where his employees are sewing face masks for the local senior center in Dixon City, Pennsylvania. In San Diego, franchisee Tali Burton is recognizing medical staff and first responders with free beverages and the California Highway Patrol is helping bring them to local health care facilities. There are also compelling stories of franchisees helping other franchisees in their communities. For example, in New York City, franchisees are temporarily hiring crew members from other Dunkin' restaurants that have closed until they can reopen again.

We all know the saying, you are judged by the company that you keep. I am very proud of the company we've kept through this crisis. I want to thank all of the crew, guests, franchisees, suppliers, and of course, our Dunkin' brands employees. You have demonstrated resilience, commitment and loyalty, and we greatly, greatly appreciate all that you have done to help our restaurants continue to operate. I am incredibly proud of the solidarity within our system.

All right, now on to Q1 results. For the full quarter, Dunkin' U.S. comparable store sales were down 2% versus the prior year. The rapid onset of COVID reversed strong momentum across the system that kick-started the year. During the first 10 weeks of the quarter, Dunkin' U.S. had 3.5% comparable store sales, on track to deliver the highest quarterly comp since Q3 of 2013. We also had positive traffic for the first time in 4 years. U.S. comps only declined during the final 3 weeks of the quarter as shelter-in-place mandates and social distancing practices spread across the country.

Average weekly sales have leveled off through the first 4 weeks of the second quarter, and we are starting to see slight increases week over week.

At the end of March and into early April, comparable store sales were down by 35% and more recently, declines are hovering around 25%. With customers' daily morning routines disrupted, we are seeing a shift in sales across dayparts. Sales volumes in the early morning are down but have picked up from 10:00 a.m. to 2:00 p.m. as people venture out for a break. Approximately 90% of our Dunkin' U.S. system remains open for off-premise consumption.

The 1000-or-so restaurants that are temporarily closed are primarily located in transportation hubs, college campuses and the dense urban centers like New York City and Philadelphia. Over the past few weeks, the closure rate has slowed and the number of open stores has been increasing. As we continue to serve our guests during this crisis, we're also focused on ways to quickly bring back morning rituals in the postpandemic world. We believe our high frequency, low touch, affordable ticket business model will serve us very well in the new reality.

Now moving to Baskin. Baskin-Robbins U.S. also delivered solid results during the first quarter, with comparable store sales up 1.8%. Through the first 10 weeks of the quarter, Baskin had 11% comparable store sales and positive traffic. We're pleased to see the quarter close with positive results despite the impact of sales and traffic from COVID. More than 90% of U.S. locations remain open today.

Our international business was also on track to deliver significant gains in Q1. Through the end of February, Dunkin' International had 7.2% comps and Baskin International had 7% comps. They ended the first quarter with a minus 7.1% and a positive 2.5% comps, respectively. Many of our international markets remain completely shut down and others continue to be restricted by curfews or are delivery-only. In total, approximately 50% of our international portfolio is open. The closures are split about equally between both brands.

Undoubtedly, the world will be a different place when the COVID pandemic is over. Until that time, we will continue to do what we've always done, stay true to our values of being strong, smart and kind. We'll do the best we can with the information in front of us and feel confident knowing we've done the right thing in the face of adversity. We think people need a little joy in their lives right now. And we're proud to play a role in providing that safely.

Once again, I want to thank all of the crew members, guests, franchisees, suppliers and Dunkin' Brands employees who have had our backs during this crisis.

And now I will hand it over to Scott to cover the Dunkin' U.S. business in more depth. Scott?

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Scott Murphy, Dunkin' Brands Group, Inc. - President of Dunkin’ Americas [4]

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Thanks, Dave. These are truly unprecedented times for our industry, our franchisees and our communities, but I've never been prouder of how we've come together with our franchisees than in this time of crisis.

We've been guided by 4 key principles. One, ensure the safety of our franchisees crew and customers; two, provide flexibility to simplify the operations in-restaurant; three, support our franchisees with financial assistance where possible; and four, empower quick field-based decision-making as conditions change. As I talk about each one of these, it's important to note that everything we've done over the past 7 weeks has been done in concert with our franchisee leadership. And I want to publicly thank them for their tireless efforts as we stand shoulder to shoulder in this crisis.

Ensuring the safety of our crew and customers will remain our top priority. We quickly made a series of decisions as the COVID situation escalated. It started with more frequent hand washing and required hygiene videos. It progressed to single-use gloves, face masks and plexiglass shields at the front counter. We removed tables and chairs and converted the entire system to take out and drive-thru only. We marked 6-foot increments on the floor tile to encourage social distancing when in line and suspended our refillable mug program. We encouraged paying with our mobile app and saw nice growth in our On-The-Go platform as people sought out our contactless option in the store.

Our independent franchisee-owned supply chain co-op implemented touchless delivery of supplies in the back room with new digital receipt technology. And we have ordered infrared thermometers for each store and will continue to follow the CDC guidelines for essential workers as they evolve in the coming weeks.

Providing flexibility to franchisees was our next step. With the widespread stay-at-home orders and significant reductions in restaurant traffic, we saw as many as 1,200 restaurants temporarily closed. We offered franchisees the opportunity to shrink core operating hours, and most stores are now closing by 7:00 p.m. This allowed for more time at night for rigorous cleaning, and importantly, allowed crew to spend time with their families. Almost 2,000 stores closed their front lobby entirely and focused exclusively on the drive-thru as customers showed a preference for staying in their vehicles. We offered curbside ordering through our app, and it's already generating about 2% of transactions for the almost 1,000 stores using this feature.

Delivery through Grubhub, Uber Eats and other partners is now available at more than 4,000 restaurants across the country. And since March 12, delivery sales have grown steadily, now 1.4% of sales at participating restaurants with over 3x our normal ticket.

We also limited certain varieties of products to improve speed and reduce complexity at the restaurant. And we've gone as far as to develop a radically reduced menu called The Essentials Menu that is a great alternative for a franchisee who may only have access to a limited staff but still wants to serve our guests.

As Kate will discuss further, in the initial weeks of the outbreak, we worked hard to provide financial relief to franchisees to help them preserve cash flow by extending payment terms on royalties and ad fees as well as rent on the 900 corporate properties we control. Many of our franchisees have been in our system for years or even decades. But they still appreciated it when we engaged external experts and hosted a series of webinars to provide recommendations and share best practices on how to negotiate with their own landlords and banks on deferment and how to apply for CARES Act loans. Recently, we created tools to help them track the loans and uses of funds to stay within forgiveness guidelines. And I must say I'm impressed with how the extended Dunkin' family of vendors and partners came through with assistance to our franchisees in this time of need. It was the very support these small business owner franchisees needed for March and April.

We're also giving more flexibility on the timing of other franchisee capital expenditure commitments such as the purchase of equipment, remodels and new restaurant builds. We've reached out to every single remodel or new store that is planned for the next 2 quarters to offer flexibility in dates. While it's still too early to predict overall numbers, many franchisees have asked for some extra time while others have expressed the desire to continue. Some are choosing to preserve cash in the short term, while some are taking advantage of slower restaurants to conduct a remodel. It is fair to say, however, that we will see a temporary slowdown in remodels and new store development as we navigate this crisis. But we've already started brainstorming on how remodels and new builds should look in this post-COVID world.

We've also slowed down our installations of the new smart brewer hot coffee machines to respect the stay-at-home orders in many states but plan to resume installations next month.

And finally, remember our franchisees also share in the profits of our CPG business in the United States which had a solid quarter, particularly in March with K-Cup, bagged coffee and ready-to-drink coffee sales through our partners, Keurig, Dr Pepper, J.M. Smucker and The Coca-Cola Company.

Our last principle is around staying nimble and making quick decisions. We have scaled back our national media spend and paused on launching new, potentially complex limited-time offers. We have thoughtfully started to return to media with appropriate messaging thanking our first responders and our crew members through our Raise A Cup campaign. You'll see a rotating suite of content on our social channels and increasingly in traditional media as well. Our marketing leadership team continues to create, assess and refine a phased approach for relaunching our brand responsibly at the right time as the state governors signal a return to normalcy.

In the meantime, you'll see us smartly rely on digital marketing as it is proven the most nimble and effective tool during COVID. And by the way, it's worth noting that all of these efforts are not just for Dunkin' U.S., but are happening at Baskin as well.

So these 4 principles have served us well and will continue to guide our decision-making moving forward. Although times have been tough, our model is strong. Great coffee fast in a high frequency, low-touch environment is what we're all about, even before COVID. Our franchisees are strong. They are eagerly serving their communities across the country and can't wait to do more. I'm so proud of all the work of our teams, our partners and mostly our franchisees and crew members have accomplished. And while I know this is just the beginning, and we have a lot of work ahead of us, I can't think of a better group to partner with than our Dunkin' and Baskin franchisees.

And with that, I will turn it over to Kate to cover our financials and liquidity. Kate?

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Katherine D. Jaspon, Dunkin' Brands Group, Inc. - CFO [5]

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Thanks, Scott. While my commentary will primarily be around the current state of the business, let me quickly take you through the results of the first quarter. In the first quarter, Dunkin' Brands franchisees and licensees opened 38 net new restaurants globally. This included 7 net new Dunkin' U.S. locations inclusive of the closure of 12 Speedway locations; 14 Baskin-Robbins International locations; and 23 Dunkin' International locations, offset by net closures of 6 Baskin-Robbins U.S. locations. Additionally, Dunkin' U.S. franchisees remodeled 32 restaurants and Baskin-Robbins U.S. franchisees remodeled 6 restaurants during the first quarter.

Revenues for the first quarter increased approximately $4 million or 1.3% compared to the prior year period due to an increase in sales of ice cream and other products as well as an increase in other revenues driven primarily by license fees related to Dunkin' K-Cup pods and retail packaged coffee.

Q1 operating income and adjusted operating income of approximately $101 million and $106 million, respectively, were relatively flat compared to the prior year period as increases in net margin on ice cream and other products and net income from our joint ventures as well as the increase in other revenues were offset by an increase in G&A expense. The increase in G&A expense was primarily due to an increase in training expenses associated with the rollout of new high-volume brewers and an increase in reserves for uncollectible receivables.

Net income and adjusted net income for Q1 of $52.1 million and $55.5 million, respectively, were relatively flat compared to the prior year period. Diluted earnings per share and diluted adjusted earnings per share of $0.63 and $0.67, respectively, also remained flat compared to the prior year period. We should note that first quarter adjusted operating income included approximately $7 million of estimated impact related to COVID-19, including the impact to royalties, bad debt reserves and G&A expenses relating to the safety materials and training. Although we deferred royalty, advertising fee, rent and other cash collections the last few weeks of the first quarter, we continued to recognize revenue.

It's in times like these that we appreciate the low cash needs of our business model. We also ended fiscal 2019 with one of the highest cash balances since we became a public company in 2011. We returned $97 million in cash to shareholders during the quarter, including 33 million in dividends and 64 million through open market share repurchases. Let me be clear, we stopped repurchasing shares under our share repurchase program as soon as it became clear that we would be unable to predict the immediate impact of COVID-19 on our business. Given the market uncertainty arising from COVID-19 and to ensure we could continue to have access to funds, we took a precautionary measure in March and borrowed the remaining $116 million under our variable funding notes. This step was taken to further strengthen our financial flexibility to help navigate this challenging situation.

Excluding cash reserved for gift cards and advertising funds of $195 million, we ended the quarter with $381 million in unrestricted cash held domestically and $25 million held in accounts outside of the United States. As required under our debt agreements, our restricted cash reserve of $73 million includes approximately 3 months of debt service amounts, including principal and interest.

And as Dave mentioned earlier, we announced that our Board of Directors has suspended our regular dividend program. The suspension of our Q2 2020 dividend will result in cash savings of approximately $33 million and will reinforce our already strong balance sheet position. We believe that temporary suspension of our dividend is the prudent and responsible thing to do. As Dave noted, the Board of Directors remains committed to paying dividends over the long term, and we expect to reinstitute the program when it is appropriate to do so.

Given our strong balance sheet, our low capital expenditures and our ability to leverage G&A, we anticipate that we will have sufficient cash to cover our debt obligations and to cover operating costs even if current conditions were to remain for a prolonged period. We will continue to manage our liquidity very closely by controlling our operating and capital expenditures and have ceased nearly all nonessential spending. We have also been able to work with many of our landlords and vendors to either reduce or defer payments and have significantly scaled back our marketing spend to retain ad fund balances.

By making smart, tactical decisions around reducing or delaying certain expenses, we have been able to significantly reduce our outlay of cash while also managing the business for the long term and ensuring we best position ourselves for the future. The beauty of our model is our ability to leverage our G&A, and we will continue to do so until the business normalizes.

Our average monthly G&A and CapEx cash burn prior to the pandemic was approximately $20 million to $25 million. We estimate with current conditions and the steps we have taken to protect our liquidity, our revised average monthly G&A and capital expenditure cash burn will be approximately $15 million to $20 million until the business returns to normal. Again, that is outgoing funds for G&A and capital expenditures only.

On top of that, we also expect to save approximately $6 million in taxes in fiscal 2020 as a result of the CARES Act.

Moving to our leverage. We ended the first quarter with a debt to adjusted EBITDA ratio of 5:1. As a reminder, our leverage is calculated net of cash. Based on the leverage ratios specified in our debt agreement and where we ended Q1, we are not required to make and do not plan to make our Q2 2020 principal payment. This helps us to conserve approximately $8 million of cash outflow in the second quarter of 2020. It is also important to note that we do not have any maturities coming due on our debt until February of 2024.

Turning to debt covenants. The primary financial covenant under our securitization is a debt service coverage ratio. The ratio was calculated at the end of each quarter on a trailing 12-month basis. There are various covenant triggers based on this coverage ratio, the first of which would result in 50% of our excess cash flows being segregated in a separate account for debt repayment purposes. This cash trapping event would occur only if our debt service coverage ratio fell below 1.75x. We finished the first quarter of fiscal 2020 with a debt service coverage ratio of 3.27x. Therefore, our trailing 12-month cash flows would need to fall by nearly 50% before reaching the first trigger of this covenant.

Based on extensive scenario modeling, we do not expect that current business results coupled with any of the actions we have taken, such as the extension of franchisee payment terms, will impact our ability to meet cash needs in the ordinary course or to comply with the covenants under our securitization.

We do have the ability and available capacity under our securitization agreement to take on additional debt, both within and outside of the securitization market, should we choose. However, we do not currently have plans to seek additional financing at this time.

Due to the evolving nature and uncertainty related to COVID-19 and its impact on financial and operational results, we are withdrawing our fiscal year 2020 targets issued on February 6 and our long-term growth targets issued on February 7, 2019.

Now more than ever, it's about supporting our franchisees. Our relationships with our franchisees are incredibly strong. And collectively, our franchisee system is financially healthy. We are working hard to ensure our operators have the financial resources and store level liquidity to get through these challenging times. To this end, we temporarily extended payment terms for royalties and advertising fees for franchisees in the United States and Canada to provide them with more financial flexibility to enable them to better support their employees and guests.

Specifically for 60 days, we extended franchisee payment terms on royalties and ad fees from 12 days to 45 days. We've also waived rental payments for 1 month and allowed them to defer rental payments for 2 months on our approximately 900 properties for which we are the landlord. And we worked with countless third-party service vendors to defer payments such as technology fees, equipment enrollments, software fees and other service contracts.

We have recently engaged in encouraging discussions with our franchisees and licensees regarding a transition back to standard payment terms that will meet both of our needs and should ensure we receive cash collections from the majority of our system for much of the second quarter. Dunkin' Brands and our franchisees have long-standing productive relationships with many of the lenders with whom we work. Collectively, we have weathered tough times before as many have conducted business with our franchisees for more than 30 years. Early on, we began hosting multiple calls with our franchisee lender banks reminding them of the small business nature of our franchisees and that in conjunction with what we were committed to do from a franchisor perspective, they would also need their partnership.

Most lenders have been extremely supportive, many deferring principal and/or interest payments, extending lines of credit when requested and continuing to lend to franchisees who choose to advance with their remodels and new store development.

We have also been in constant contact with our franchisees and have engaged external experts to help them navigate areas, such as approaching landlords and to request rent relief, managing staffing levels, determining what operating hours would be best for their restaurant given their individual circumstances, adhering to local government regulations and accessing federal assistance.

Additionally, we've been in frequent communication with our franchisees on the CARES Act and the potential support and benefits that they were eligible to access. Throughout the process, we have continued to work closely with our franchisees to ensure that they are well-educated on the loan application process, had the proper information on hand as required to apply for the loans and are prepared to manage their payroll and occupancy data to ensure they maximize the benefits of the programs.

While we don't typically discuss the average Dunkin' U.S. franchisee, I think it's important to give some more color around their cash flow. We expect that the average traditional Dunkin' restaurant franchisee's operating cash flow for the full year will be down significantly as a result of depressed sales. However, the majority of our franchisees quickly flexed operating hours, payroll and food costs to match comp trends and reduce operating cost and capital expenditures as much as possible. Keeping all fixed costs the same, then layering in the funding the average franchisee could receive from the CARES Act programs, we anticipate franchisee operating cash flow by the end of fiscal 2020 to approximate 80% of where we expected it to be at the beginning of the year, even with significantly lower sales projections.

The 80% reflects a representative estimate for a traditional Dunkin' stand-alone restaurant that receives government assistance. This estimate also does not include any other relief that our franchisees may receive from their banks, landlords or vendors.

It's also worth noting that the CARES Act included a retroactive technical correction to the depreciation treatment of qualified improvement property that was missed in the original tax overhaul. The correction allows franchisees to take 100% depreciation on qualified remodels completed in 2018 and 2019 immediately as opposed to depreciating them over 39 years. We expect the average franchisee who completed remodels in those years to amend their fiscal 2018 tax returns and apply the correction to remodels within their 2019 tax returns. We estimate that this will result in additional cash benefit of approximately $10,000 to $40,000 per remodel.

Given these measures and the flexibility on the timing of franchisee capital expenditure commitments, such as the purchase of equipment, remodels and new restaurant builds, we are very confident in the financial health of our franchisees.

In closing, strong franchisee relationships will get us through this crisis. We're all in this together. We've got each other's back.

Now I'll turn it back to the operator for Q&A. Operator?

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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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I hope everyone is well. Yes, I just wanted to talk about some of the franchise economics, if I could. Even at your down 20% same-store sales, I would think that most of your franchisees would make money at the store level, make cash at the store level, maybe even relative to some other companies, a substantial amount of money at the store level. So just kind of walk us through what you see franchise store level breakeven is here, I guess, relative to 2019 average unit volume. And I guess using that as a starting point, talk about whether deferral of rents, deferral of royalties, something that you would anticipate having to do at all going forward, I guess, is the first point. And secondly, considering that you have -- you've done some of this and your franchisees have successfully applied for PPP, if there has been a review of the leverage levels at the franchise organization level that may be influencing their cash flow at the organization level and if there's an opportunity longer-term to begin to work with them to start to rein in those leverage levels that have gotten higher over time.

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

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Yes, thanks, John, and good to hear from you. You got a lot in that question there. Let me start with franchisee economics in the first one there. Look, Scott and Kate's team put together what I thought was a really smart tool that they sent out to the franchisees to show various break points with the comp sales going negative. And so there was a break point -- to your comment, there was a break point at negative EBITDA. But then there was a break point further down that -- in order to cover fixed costs. So I think this allowed each franchisee to evaluate where they were at, their fixed cost needs around whether it was rent and utilities and debt and things like that and how far they could go down. So we modeled that out and it was a tremendous tool to help the franchisees say, even if you got to the negative EBITDA level, you were still better off staying open and we never had to touch that point, but it was really well-delivered tool. And I think to your comment, yes, we've weathered well even at those aggressive negative comp numbers. We've seen some uptake recently. There's a whole bunch of factors that you can imagine around that, whether that's stimulus or markets opening up, et cetera. So that's been one that I think has been really good for us to see with the help of our franchisees.

On the deferral program, we've just introduced a program on how we're going to collect that. It was in collaboration -- a partnership with our franchisees. And so it's got various levers to pull for the franchisee to help them with their liquidity. Some are stronger than others, but we wanted to, as Kate said in her comments, this was all about making sure that we protected the financial health of our franchisees and made sure that they were strong during all of this. So we're not going to give out too much details around that, but our franchisees are pleased with our extended rent payments, our extended franchisee fee and marketing fee payments. So we feel good about that. And I think let me leave it there unless you have another follow-up, John.

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

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The question was also on the leverage at the franchisee organization level, and yes, I know I hit on a couple of big topics there. I mean if that's something that you've kind of had the chance to go back and look at and maybe reducing some of those leverage levels that probably have ticked up as they have for the rest of the industry, whether reducing some of those leverage levels might make sense for some of the franchisees over time? In other words, if you're kind of taking this crisis and making it kind of a broader conversation around capital structure at the franchisee level.

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Katherine D. Jaspon, Dunkin' Brands Group, Inc. - CFO [5]

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Yes, John, this is Kate. Great question. I would say one of the best things that's come out of this, if there's anything is we've proven that our relationships with our franchisee lenders are strong and enhanced those. So I actually feel like our franchisees, the majority of them are in a very good place. Obviously, some are more levered than others. Those that just did new store openings or remodels in the past few years tend to have a little bit more leverage, and obviously, the larger the organization, they may have more leverage. But we feel very good about the health of our franchisees. Our lenders stepped in very quickly to help defer principal and interest to work through with the franchisees. They also continue to lend to our franchisees that have decided to pursue their remodels and openings, which I think is a great sign of their belief in the health of our system. And so while we are working with our franchisees, there's the very few that may be in a distressed situation, we have a group that's working with them on helping them get through these situations. It's a smaller population than I think you believe, and I think we have great ability to work with those lenders.

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Operator [6]

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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 [7]

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Great opening remarks this morning. I mean we hear you guys are doing a great job out there in terms of support. I wanted to ask about -- you're thinking about the pace of recovery. And where I'm going with this is there has been this income that consumers have gotten from the checks that started coming through on April 15, a lot of restaurants out there got a big boost from that. And the boost hasn't been as great for some of the coffee players, and it kind of shows where coffee fits in people's lives. It really comes from being on the go so you guys need people to get back to work. And so we're going to have unemployment factors, we're going to have the social distancing factors. How do you think about this in terms of your pace of recovery through 2020? And how are you thinking about ways to combat the inevitable lingering unemployment that we're going to have as we go into '21?

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

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Yes, thanks, David, and a lot of good nuggets in there as well. I would say the first thing, in terms of what the new reality is going to look like, the way we're preparing for that, however soon or long it takes to get there is, look, it's going to be around safety of course and then how to access brands in a big way. And we've made a lot of investments in that but we're continuing to accelerate that. So on the safety side, we don't look at these as costs. We look at these as investments. So we've got a brand standard around gloves, masks, plexiglass guards. And just this past week, Scott and team have shipped infrared thermometers to every restaurant, Dunkin' and BR, in the U.S. And so those are investments that we made that we think is going to be critical. Do I feel safe as an employee? Do I feel safe as a customer? And they're going to be looking for trusted brands to deliver against that. I think the second thing that you touch on is access to brands. We've actually seen -- and look, whether it's stimulus checks or probably a host of other factors, you heard us talk about in March minus 35% comps was probably the deepest. Now we're hovering around minus 20% to minus 25%, somewhere in that range. And again, it's all -- it's going to be about how can you create greater access to your brands. Before the crisis, 90% of our traffic was some form of takeaway, so it was easier for us to accelerate into this. But drive-thrus, we've added 1,000 curbside locations during this. Delivery, we've doubled our footprint from 2,000 to 4,000 stores. Digital, you know we were making a lot of investments and Stephanie's on the line, she can talk about 1 in 5 transactions now are through a loyalty member. On-The-Go has doubled during this. And even channel, while we're a habitual brand, channel, we do $1 billion of retail sales through channel. And in the grocery, our bagged coffee and our K-cups are up around 20% to 30% and outperforming the category. So we feel good about that. You're right about the high unemployment numbers. And value is going to play a part. And that has been one of the strong pillars of our triangle offense, which was all about beverage and menu innovation, of value and digital acceleration. And so value will continue to play a major role in whatever that new reality looks like. So we think we're well-positioned, and this is a business model that we've been refining for 70 years. And again, I think Next Gen and what we're doing around that just continues to fit in that new reality.

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Operator [9]

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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 [10]

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We've pivoted to an at-home model here, too. We've got the biggest can of Dunkin' coffee, I think you've ever seen in our kitchen counter. So helping those 20% at-home business grow. On -- first, on the business, right, so since it's a morning business and since the work from home and disruption, that routine is going to be disrupted for a time being. How do you think about how you can drive business outside of the traditional morning hours? Are you already thinking about either promotional activity or operational changes that can get people through in the nontraditional hours? And then I had a follow-up on the franchisee health, please.

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David L. Hoffmann, Dunkin' Brands Group, Inc. - CEO & Director [11]

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Yes. And thanks for the Dunkin' love in-home. We want to be there for you, however you want to use us. John, what -- as you know, and David said this earlier, we get people started in the morning. And we do well when people are moving about. We've seen the decline in the 6 a.m. to 9 a.m. part of the business, but we've seen a nice uptick on the 10 a.m. to 2:00 p.m. So we're positive in that time frame. So whether that's people are getting a little cabin fever and they want to come out for their cup of coffee or whatever, but we feel like we've been able to capture that. And if you remember, our approach here has always been to move into that second daypart in the afternoon, we had our happy hour promotion. So customers have started to become accustomed to us. The espresso played very well to that. Some of the snacking that we've been working on, we've got Croissant Stuffers in the restaurants right now that play to that sort of afternoon occasion, and we think are -- there's a lot of simplicity in the preparation of those for the franchisees, but they also pair very well with our espresso and iced beverages. So we think we can make that appropriate shift. But again, I keep coming back to -- the first priority is customers are going to seek out trusted brands, and we are one of those trusted brands. And then we've made, I think, smart strategic investments into safety but then it's going to be about access. And we've been really heavily vigilant on expanding our access and accentuating that, whether that's, again, digital acceleration, drive-thru, delivery, curbside, channel, et cetera, we are continuing to double down on that. We're very pleased with what we're seeing out of digital. We've got 400,000 new members, what we call our 90-day active users. We've grown that by 400,000 new users from Q4 to Q1. So a nice number on our base. And On-The-Go has doubled and in many of our nondrive-thru locations, it's even greater than that, 4x, 5x of that. So we feel really good on how we're positioned and how we're going to win in that new reality.

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John Stephenson Glass, Morgan Stanley, Research Division - MD [12]

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Okay. Could I just ask just a very simple follow-up, what portion of the $7 million I think you said that included a number of items but including bad debt. What was the bad debt? And I know there's an accounting change. So what is the comparable number? And what percentage of your franchisees now are in arrears on payments that would reflect?

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Katherine D. Jaspon, Dunkin' Brands Group, Inc. - CFO [13]

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Yes, so I'll take the latter first. So right now, we're just coming out of the deferral period for our franchisees. So we actually don't have anybody in arrears because they're just coming out of that deferral period. I would say the majority of our franchisees, we do a direct poll from their bank accounts. So it's very rare that there would be anybody in arrears. And then internationally, we work specifically with our licensees. They're typically on a longer payment term, but are typically compliant with those payment terms.

Within the $7 million, the impact of bad debt is very low, I would call it somewhere around $1 million. So that number consists primarily of our estimate of royalty impact, increase in G&A, things like training and equipment for safety, gloves and training programs around hygiene for the stores, et cetera, and then is offset by a reduction, obviously, in our bonus at FTI program. So bad debt is a small portion of that.

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Operator [14]

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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 [15]

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Just wanted to ask a broader question. Dave, I know you mentioned that you've often been in crisis management throughout your career. So obviously, it's some good perspective. It does seem like from an independent restaurant standpoint, this is somewhat of an existential crisis. Just wondering how you think about the future for the industry, the supply/demand imbalance that has perhaps existed, maybe that eases. And on the heels of that, whether in the future, if your franchisee demand is still strong, whether you'd see better real estate opportunities post some of these closures or market share opportunity. How do you think about, one, the broader industry; and then two, Dunkin's positioning within that to come out stronger and perhaps grow faster on the heels of it?

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David L. Hoffmann, Dunkin' Brands Group, Inc. - CEO & Director [16]

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Yes, thanks, Jeff. Part of -- you first have to step back with all the things when you get into these situations, and they are all unique, these different crisis management situations. But I think you have to evaluate your business model and say, where are you strong? And I come back to 90% of our transactions prior to the crisis were some form of takeaway. So we were, we are, and we've been -- our franchisees have been refining a model that I think is adaptable and will win in whatever the new reality looks like. And that's been low-touch, high-frequency affordable ticket. I firmly believe that's a winning formula for a trusted brand that's been around for 70 years.

And so the only other thing I would say that we're focused on right now that we've done a lot of really great work led by Scott and Kate and a whole bunch of people behind the scenes with our franchisees and whether that's webinars, weekly calls, we've been very tight as a system and making sure that all 3 legs of the stool, our franchisees, our brand and our suppliers, are all equal. So we've -- our solidarity was great before. It has never been better than it is right now. And so we're heavily focused on coming out of this.

The one thing I would say is we've got a separate team called the Green Team that is very focused. They're completely separate from the daily crisis management team, and this was from some of my learnings where you get them off, they evaluate the business model, they look at what our opportunities are. Real estate, as you're talking about, is one of them, but also how we're going to emerge from this in multiple phases.

Right now, we're making investments in safety and brand trust. We think that's the right place to be. The next phase is going to be a sort of a scrappy ramp-up phase for us. And then finally -- and look, we're going to follow the science with the CDC and local health officials, and it may be piecemeal across the country but we are going to have a breakout at some point. And so that Green Team is efforting through all of that and also taking a look at where we can be opportunistic in terms of real estate plays and things like that. So I think the real estate comment is spot on, Jeff, as you know, where we have white space and can grow. So I think that's one that we feel also fits into the opportunity set for us as well.

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Operator [17]

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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 - Director of Research and Senior Research Analyst [18]

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I hope everyone's doing well. I had a couple of questions. First, I was wondering if you could frame up the risk that you might see some store closures amid all the sales weakness we're seeing here. I know you did a great job outlining average franchisee profitability, but I'm specifically wondering if you had some marginal performers coming in, if those units or those franchisees might be at risk of closing more permanently. Any way to frame that up at this point? And then I have a follow-up question.

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Scott Murphy, Dunkin' Brands Group, Inc. - President of Dunkin’ Americas [19]

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Thank you, David. It's Scott. It's a great question and something we started working on as part of that Green Team that Dave mentioned. We've got about 1,000 temp closed stores now, and we're looking at every single one of them with our franchisees because you're absolutely right. Maybe some of those low-performing or marginal performing stores, maybe there is an opportunity to consolidate, to reload, to add a drive-thru in a better location. And we're having -- we're starting to have those conversations with the franchisees now. A little too early to put our arms around exactly how many, but we're having those conversations right now.

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David E. Tarantino, Robert W. Baird & Co. Incorporated, Research Division - Director of Research and Senior Research Analyst [20]

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Great, great. And then the second question I had was related to the morning daypart. It's a lot of kind of routines and routine behavior. And I guess as consumers have been knocked out of their routine for a prolonged period, and it might be an even longer period. Just wondering your thoughts on how you get them back on the routine of going to Dunkin' daily and what levers you plan to pull to try to drive that business.

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David L. Hoffmann, Dunkin' Brands Group, Inc. - CEO & Director [21]

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Yes. David, on that one, you're right. We're very much a habitual brand. And look it's what the team is working on, whether that's in the ramp-up or the breakout phase, value is going to play a big part in that and sort of a welcome back, thank you to America type of campaign.

So we think we're -- because we've been strong in that area, we think that's going to play very well. Our guests have really appreciated that we've been open. We've been very focused, as I said, on safety, but we've been trying to do the right thing in the communities that we serve, stay open, serve those first responders, health care workers, all the people that are keeping the communities running right now and we've been doing that, and our franchisees have been incredible with the restaurant crews during all of this.

So -- and we have to look at what's the mindset of the consumer going forward in terms of trends. The starting hour for the commute may go earlier if people are driving more than they are taking public transportation. They may have to start earlier. So we think we're nimble enough. We've been very flexible with our franchisees on hours of operations, limited menu, as you heard from Scott, but we think we've got a business model that is nimble and is built for what the new reality -- whatever it's going to look like, we're ready to adapt and win in that environment.

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Operator [22]

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

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Matthew James DiFrisco, Guggenheim Securities, LLC, Research Division - Director and Senior Equity Analyst [23]

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Kate, thank you for all that detail on the cash flow, I think that's important to understand. I just wanted to understand how many stores potentially could fit in there? How many -- what percent of your franchisees roughly received the CARES Act? And then if you could just remind us, looking back in '18 and '19 on those remodels, how many stores have that potential or how many franchisees sort of fall in and getting that potential of the $10,000 to $40,000 cash benefit also?

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Katherine D. Jaspon, Dunkin' Brands Group, Inc. - CFO [24]

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Yes. On the CARES Act, we haven't actually collected how many of our franchisees have applied. I would just say the majority of our Baskin franchisees own less than 2 stores on average. And so that was clearly a great program for them. And then on the Dunkin' side, the average franchisee employs about 150 crew members. So also a great program for them. So they had relationships already with many of the lenders and banks that helped them work through the SBA process. We believe PPP was the program that they preferred through the CARES Act, but I think the majority would be eligible and would qualify for the payroll waiver that would come out of that. But unfortunately, we don't have data collected on how many of them received them. The majority I'm expecting has.

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Matthew James DiFrisco, Guggenheim Securities, LLC, Research Division - Director and Senior Equity Analyst [25]

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And then on the remodel side, how many sort of get that 10% to 40% accelerated depreciation benefit? And that was not included in your 80% cash flow metrics, that would be on top of it?

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Katherine D. Jaspon, Dunkin' Brands Group, Inc. - CFO [26]

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It is actually included in there at the lower end. So we put the $10,000 in. There's hundreds of stores that have gone through the remodel process. And actually, Baskin U.S. would also have some of those as well. So hundreds of franchisees, they can actually amend their 2018 tax returns as well as apply it in 2019 and then take advantage now as we go into 2020.

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Operator [27]

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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 [28]

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I'm glad that everyone sounds like they're doing well. I appreciate the commentary on same-store sales trends. But if you can maybe clarify whether you removed the temporary store closures from the comp base. I think in the release, it said that the down 25% was excluding the store closures. And then I have a follow-up question on Perks.

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Katherine D. Jaspon, Dunkin' Brands Group, Inc. - CFO [29]

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Yes, that's a great question. So the way that our comp works is if a store reported a sale, any sale in the week, in this year versus last year, it will be included in that comp base. So for the weeks that they closed, they are included in there. If they've been completely closed through the week, they are removed. So the guide that Dave was referring to approximately 20% to 25% excludes the majority of the approximately 1,000 temp closed. We anticipate, if you put that in, it's probably about another 5 basis points.

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Eric Andrew Gonzalez, KeyBanc Capital Markets Inc., Research Division - Restaurants Analyst [30]

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So the down 35% number that you spoke about at the trough, does that include the closures or exclude the closures?

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Katherine D. Jaspon, Dunkin' Brands Group, Inc. - CFO [31]

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I'm sorry, could you -- I couldn't -- you cut out in the middle there. Could you repeat that?

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Eric Andrew Gonzalez, KeyBanc Capital Markets Inc., Research Division - Restaurants Analyst [32]

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The negative 35% that the trough comps declined in late March, does that encompass the 1,000 stores closed over that time period?

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Katherine D. Jaspon, Dunkin' Brands Group, Inc. - CFO [33]

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No, it was consistent, the exact way that I just described it. So if the store was open for any day during the week, it was in. If it was closed...

(technical difficulty)

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Eric Andrew Gonzalez, KeyBanc Capital Markets Inc., Research Division - Restaurants Analyst [34]

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Can you hear me?

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Katherine D. Jaspon, Dunkin' Brands Group, Inc. - CFO [35]

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Yes.

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Eric Andrew Gonzalez, KeyBanc Capital Markets Inc., Research Division - Restaurants Analyst [36]

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Okay. On Perks, as a follow-up, I don't think there was a lot of commentary in the prepared remarks, but maybe a little bit in Q&A. But I was wondering, is the crisis an opportunity to expand the usage of your mobile app and perhaps drive user growth? And if you could talk about like the percentage of digital orders either before and after the crisis began, whether you saw any increasing or acceleration in user growth?

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David L. Hoffmann, Dunkin' Brands Group, Inc. - CEO & Director [37]

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Yes, Stephanie is on the line here. Yes, go ahead, Stephanie.

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Stephanie Meltzer-Paul, Dunkin' Donuts USA, Inc. - VP of Digital and Loyalty Marketing [38]

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Hi, Eric. Thanks, Dave. Hi, Eric, it's Stephanie Meltzer-Paul. Yes, we've been really pleased with our performance on Perks. We're up about 300 basis points just from March to April. So right now, Perks is around 18% of sales and 20% of transactions, and it's growing every week. As Dave mentioned previously, our On-The-Go was doubling. We're up to 7% of rooftop sales coming from mobile ordering. We've been definitely leaning into our marketing and being able to acquire 400,000 new active members quarter-over-quarter. So we're gaining a lot of new and reactivated members during this time, and we feel really good about our Perks program and the marketing that we're doing and how that's helping drive customers into our stores during this time who are really still looking for their Dunkin'.

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Operator [39]

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Our next question comes from the line of Sharon Zackfia from William Blair.

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Sharon Zackfia, William Blair & Company L.L.C., Research Division - Partner & Group Head of Consumer [40]

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I was hoping you could talk a bit about any kind of divergence you're seeing in the comp trend between drive-thru and nondrive-thru locations? And then secondarily, in terms of menu innovation, I know you had a pretty good pipeline of menu innovation set for this year. Does the current disruption kind of change your thoughts on how you pursue menu innovation in 2020?

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Scott Murphy, Dunkin' Brands Group, Inc. - President of Dunkin’ Americas [41]

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Sharon, it's Scott. Drive-thru, obviously, is a big part of our business, almost 70% of the stores and as you might imagine, performing significantly better than the nondrive-thru stores, so probably 3x better. And it's interesting to note, stores that have a drive-thru, almost 94% or 95% of the sales are going through the drive-thru. So it speaks to how powerful that drive-thru is. And not surprisingly, the markets that have predominant drive-thrus are doing better than those that don't.

Dave mentioned curbside which is sort of a drive-thru for the nondrive-thru, if you will. And we're seeing some nice growth for stores that don't have a drive through when they've adding -- when they've started to add curbside. So it's a good way for the consumers to get that product without having to come in the store.

As far as innovation, we do have a strong pipeline lined up moving forward, but we are looking at it exactly, as you mentioned. As the consumer behavior probably changes a little bit as that daypart shifts a little to the middle of the day as people start to maybe do a little more bulk ordering or even On-The-Go. We are looking at different products for different dayparts. So that is part of the pipeline and the innovation work that we're looking at.

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Operator [42]

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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 [43]

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Dave, you touched it briefly a bit, I think, on some of the potential future white space opportunities that could arise emerging from this. Just wondering if you could talk a bit more about some of the puts and takes around unit growth considerations looking out over the next couple of years, maybe recognizing you don't have a crystal ball, but how do you think about maybe some of the incremental opportunities that could arise and then kind of thinking about some of the -- how difficult maybe access to capital may be? I think all the color on the health of the franchisees is great. But just anything more, Dave, that you can provide on kind of some of those puts and takes looking ahead knowing what you know right now.

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

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Yes. And yes, thanks for that, Dennis. Look, if I step back and take a look at the Next Gen model that we've got out there, again, that is built, I think, for this new reality. And when I talk about access and having great access, we may accentuate certain things, but it's a heavy focus on drive-thru. It's a heavy focus on On-The-Go and expanding that to a higher level. So there may be more things that we accentuate as part of this, but we think that's a model that plays well going forward. We're really pleased, not able to share at this point, but we're pleased with the willingness of the franchisees and to reaffirm their determination, they continue to grow and remodel. And I think the future has gotten a little bit more clear over the last month, but we're pleased with what we're hearing out of the early signs of the franchisees and their willingness to go after growth.

And look, you've got to balance a fine line between doing right by your system and doing right by communities. If there's opportunities that makes sense for us on the real estate side, we will pursue those. But you also want to balance being a good corporate citizen and sticking to your values and not being a shark either. So we're going to walk that tight rope. But that's what that Green Team is focused on. And I think what you're going to see, our fleet today, 70% of our portfolio has a drive-thru. We've added 1,000 curbsides, many to those nondrive-thru locations. So we think we are really well positioned to be an on-the-go brand in the new reality.

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Dennis Geiger, UBS Investment Bank, Research Division - Director and Equity Research Analyst of Restaurants [45]

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Great, and kudos on doing the right thing by your franchisees and employees.

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

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Yes, appreciate that, Dennis. Thanks.

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Operator [47]

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This does conclude the question-and-answer session for today's program. I'd like to hand the program back to Dave Hoffmann for any further remarks. .

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David L. Hoffmann, Dunkin' Brands Group, Inc. - CEO & Director [48]

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No. I just want to thank everyone for being on the call, and we appreciate all the well wishes we got from you and the support you have given us.

And again, I know these are trying times and from the Dunkin' Brands family and all of our franchisees, we just wish all of you stay safe and stay secure. And we'll get through this together. But we appreciate your interest and your commitment to Dunkin' Brands. Thanks, everyone. Be good.

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Operator [49]

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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.