NEW YORK, N.Y. – Hot sales of the new cold-brew coffee at Dunkin’ Donuts helped offset lower customer traffic, the company said Thursday, as quarterly revenue dipped and the company offered a downbeat outlook.
The cold brew drink costs more than the chain’s regular iced coffee. Nigel Travis, CEO of parent company Dunkin’ Brands, said the cold brew has been particularly popular with millennial customers.
“They like the taste profile of it,” Travis said. “It’s certainly in vogue.”
The chain has been adding more specialty coffee offerings over the past several years, such as macchiatos and other espresso drinks, to better compete with rival Starbucks Corp. Travis said the cold brew — made by steeping coffee beans for 12 hours — was its most successful product launch in the last 16 years.
Although less people came to Dunkin’ Donuts shops in the last quarter, those that did spent more money. Buyers of iced drinks are more likely to purchase food or more coffee than those that buy hot drinks, Travis said. Dunkin’ Donuts attributed a 2 per cent rise in U.S. stores open at least a year to its iced coffee.
But parent company Dunkin’ Brands Group Inc. also said it now expects total revenue for the company to grow less than previously expected, mainly due to its other chain, Baskin-Robbins.
The company now expects full-year revenue growth of about 2 per cent, down from a forecast of 3 per cent to 5 per cent. It blamed lower demand for ice cream at its international Baskin-Robbins stores.
Shares of Dunkin’ Brands fell $1.89, or 3.8 per cent, to $49.08 in afternoon trading.
The company earned $52.7 million, or 57 cents per share, for the three months ended Sept. 24, up from $46.2 million, or 48 cents per share, a year earlier. Adjusted earnings were 60 cents per share, which was 2 cents better than Wall Street had expected, according to analysts surveyed by Zacks Investment Research.
Revenue slipped 1.3 per cent to $207.1 million, well short of analyst projections of $213.3 million. Dunkin’ Brands cited the sale of its remaining company-owned and -operated stores. It said that after the sale, all of its stores are franchised. Dunkin’ Brands, based in Canton, Massachusetts, said there are 12,000 Dunkin’ Donuts locations and 7,700 Baskin-Robbins locations around the world.
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Elements of this story were generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research. Access a Zacks stock report on DNKN at http://www.zacks.com/ap/DNKN
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Keywords: Dunkin’ Brands, Earnings Report
