Dunkin’ Brands Group Inc. sales of iced coffee, frozen beverages and breakfast sandwiches boosted domestic comparable-store sales in the third quarter despite fewer people visiting the restaurants, reported The Wall Street Journal (Oct. 25). Overall sales rose 6% to $350 million, above the forecasted $342.9 million.
The sales report comes as Dunkin’ is in the middle of overhauling its brand, as in September, the company dropped the word “Donuts” from its name, part of its strategy to focus on beverages, which represent over half of its sales.
“It’s just one of many things we’re doing across both brands to modernize the guest experience in our restaurants,” said CEO David L. Hoffman. “From new restaurant designs, to menu innovation on premium products, to compelling value offerings, we are providing our guests with great beverages, perfectly paired food and unparalleled convenience.”
The chain has simplified its menu to make room “for more impactful product innovation” said Hoffman. The first such change is the company relaunching its espresso products. It installed new espresso equipment, developed an updated espresso recipe, launched redesigned packaging and began extensive restaurant training to boost the quality of its lattes and cappuccinos and meet the profile preferred by espresso customers, particularly younger drinkers.
“Espresso is one of the fastest growing coffee categories, particularly among younger consumers and with our coffee credentials we believe we have a tremendous opportunity to improve our awareness and credibility among espresso drinkers,” said Tony Weisman, CMO, Dunkin’ U.S.
The launch will be supported by a comprehensive marketing campaign. The espresso cups will be undergoing a redesign –bright orange with an exclamation point to symbolize that the espresso drinks being served are bold, new, and exciting, according to Dunkin’.
All espresso beverages will continue to be made with
100% espresso beans sourced from Rainforest Alliance Certified farms.
The company will invest $100 million in the U.S. in the coming year, over half of it going toward restaurant technology, including the expresso machines, reported The Wall Street Journal (Oct. 25).
Along with its beverage line up, the chain launched its “Dunkin’ Run” platform, a $2 snacking menu. This drove afternoon sales, according to Hoffman. Dunkin’ kicked off the launch with the release of Donut Fries which became one of the best-performing limited-time offer bakery items in the brand’s recent history.
In quarter three, Dunkin’ leveraged its partnership with The Coca-Cola Co. and introduced two new bottled products. A new Pumpkin Spice flavor of its ready-to-drink iced coffee line was released, as well as Shot in the Dark, an espresso-based coffee-forward beverage.
“It’s been a deliberate sequencing of events that started with menu simplification, national value and afternoon snacking platform and our rebranding as well…all of this brought together under our Next Generation restaurant,” said Hoffman.
There are now over 60 new and remodeled Next Generation restaurants across the country – ahead of the initial target of 50. The NextGen locations include a more modern look and feel, state-of-the-art equipment and a focus on technology.
“It’s really exciting for mobile, for on-the-go orders,” said COO Scott Murphy. “Everything about that store with the technology and the layout is set to drive growth in on-the-go orders and we’re seeing that in a big way.”
Dunkin’ U.S. opened 52 new restaurants and completed 31 remodels during the quarter. Dunkin International now has 90 newly designed restaurants in 11 markets, including its flagship store in Thailand that opened in quarter three, Dunkin’s largest store with a drive-thru in Asia Pacific.
For the full story, go to this week’s Food Institute Report.
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