While America didn't run away from Dunkin' Brands (DNKN) during the pandemic, they weren't exactly fueling up on its coffee and donuts either.
Sales fell 20% in the second quarter to $287 million while profits got cut in half, tumbling to $36 million, or $0.44 per share, compared to $72 million, or $0.71 per share, last year. Even adjusting for non-recurring items only boosted it to $0.49 per share, which still missed expectations by a penny.
The donut shop did beat on the top line, though, and management announced it would restore the dividend it suspended back in April.
Shifting to the new normal
Dunkin' should have easily taken advantage of the tumult the pandemic caused in the restaurant industry as 90% of its business was takeout before COVID-19. In restaurants with drive-thru windows, 95% of their sales come through that channel.
Yet with non-essential businesses closed during the COVID-19 outbreak, the breakfast daypart traffic that also looms large in Dunkin' Brands' operations evaporated. Consumers didn't need to be out traveling in the morning anymore to get the coffee and donuts.
However, Dunkin' CEO Dave Hoffman said in a press release it was able to salvage sales by quickly pivoting to "introduce new menu items designed to appeal to customers who are now visiting us later in the day," such as its Refreshers iced beverages.
CFO Kate Jaspon said reinstating the dividend reflected on Dunkin' Brands' overall financial health as it ended the quarter with over $600 million in cash, restricted cash, and equivalents. The coffee shop was also able to repay all of its borrowings under its variable loan programs.
The dividend of $0.4025 per share is payable on Sept. 9 to shareholders of record at the close of business on Sept. 1.