Dunkin' Brands Group (DNKN) reported first-quarter financial results on May 2. The parent company of Dunkin' Donuts and Baskin-Robbins continues to expand within the highly competitive restaurant arena.

Dunkin' Brands Group results: The raw numbers

Metric

Q1 2019

Q1 2018

Year-Over-Year Change

Revenue

$319.1 million

$301.3 million

5.9%

Operating income

$101.4 million

$89.8 million

12.8%

Earnings per share

$0.63

$0.57

10.5%

Data source: Dunkin' Brands Group Q1 2019 earnings release.

What happened with Dunkin' Brands Group this quarter? 

Dunkin's U.S. stores delivered systemwide sales growth of 5.5%, fueled by new restaurant openings and the segment's highest comparable-sales growth in four years.

Franchisees opened 34 net new Dunkin' restaurants in the U.S. in the first quarter and a total of 256 locations in the past year, bringing the company's total U.S. store count to 9,453 restaurants. Meanwhile, Dunkin's U.S. same-store sales rose 2.4%, driven by price increases and strong sales of premium-priced espresso and frozen beverages.

Dunkin's new espresso drinks.

Dunkin's new espresso drinks are helping to boost sales. Image source: Dunkin' Brands Group.

However, the comp gains from higher prices were partially offset by lower traffic. To meet this challenge, Dunkin' is attempting to drive traffic to its stores during times other than just its core breakfast daypart, with new menu items and value-meal promotions. 

Still, CEO Dave Hoffmann acknowledged that traffic trends are likely to remain an ongoing challenge during a conference call with analysts. According to Hoffman:

The consumer has more choices in the marketplace than they ever had before. It's highly competitive. It's still a fight for share in the marketplace.

Dunkin's Baskin-Robbins ice-cream stores are also facing some difficulties. Baskin-Robbins' U.S. comps fell 2.8%. Lower traffic owing, in part, to unfavorable weather, dented results. Additionally, the company closed three Baskin-Robbins stores in the U.S and 18 international locations during the first quarter.

Despite these challenges, Dunkin' Brands Group's companywide revenue increased by 5.9%, to $319.1 million. Operating income -- adjusted to exclude certain amortization and impairment charges -- climbed 11.1%, to $106.3 million, while adjusted earnings per share rose 8.1%, to $0.67.

Looking forward

Dunkin' Brands Group reiterated several aspects of its fiscal 2019 full-year outlook, including:

  • 200 to 250 net new Dunkin' U.S. restaurant openings
  • Comparable-store sales growth for Dunkin' and Baskin-Robbins restaurants in the U.S. in the low single digits
  • Revenue growth in the low- to mid-single digits
  • Operating and adjusted operating income growth in the mid- to high-single digits
  • Adjusted earnings per share of $2.94 to $2.99

"With this team and our world-class franchisees and great suppliers, we believe we have what it takes to succeed," Hoffmann said. "We're proud with how we started this year, but we're not losing sight of creating sustainable value for our customers, franchisees, and shareholders in the years ahead."