DNKN - Earnings call transcript Q1 2019

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Operator

Good day, ladies and gentlemen, and welcome to the Dunkin' Brands First Quarter 2019 Earnings Call. [Operator Instructions]. And as a reminder, this conference may be recorded. I would now like to turn the call over to Stacey Caravella, you may begin.

Stacey Caravella

Thank you, operator, and good morning, everyone.

will Dunkin' Brands' Kate Brands' call Dave Executive Jaspon. today's and Hoffmann; Chief on be Chief Dunkin' Officer, Speaking Financial Officer, Today's recorded webcast being replay. call live is for and

to over statements forward-looking in made our applies Dave, call during language also included the release our turn that the I I'd Before like to remind earnings this everyone on to comments call.

financial measures. with found along with of non-GAAP Our their investor.dunkinbrands.com any call the GAAP website, release measures on can on our be corresponding mentioned reconciliation

Lastly, you earnings for XXXX. QX QX remind let release We the X XX. August release dates me tentative our of to of and in quarterly October on on plan

turn call the Dave. to I'll Now over

Dave Hoffmann

Thanks, Stacey.

results is and by sales rebranding, throughout largest such the we actions first year strong place enabled quarterly delivered the of Dunkin' as the the years. by for U.S., espresso, last in and put into in million menu U.S. our producing Dunkin' the The business same-store increase was we national modernize for foray investment app some X coupled Performance next and growth. quarter to customers X.X% generation paying During meaningful the our of intensive demonstrate simplification, Dunkin' value, to In growth first was and with our for quarter, XXXX improvements These all U.S. results way, this $XXX and this better we of progress focus strategy off. on execution. training our the sales made long-term committed is systemwide first Growth, our consumers. franchisees. X.X% brands for plans growth XXXX, against Blueprint the And healthy to unlock

growth From East adjusted U.S. markets optimization and transfers such focus as of excess efforts growth, a our raising-the-bar as long-term business, which infrastructure. our through its XX% for growth the approximately inclusive Asia delivery share, of strengthening part restaurant tax stepped financial standpoint, well per as of than and achieved Middle plan. parts we $X.XX X% international revenue As earnings its of we as up benefits. And base income more on and closures restaurant Baskin-Robbins $X.XX is strategic opportunities operating to strategic continue adjusted including

in still to implementing about the in the we're are is the globally. we early We plans, our brands QX and and accomplishments Key of have we our transform innings licensees. progress our strong confident our to franchisees with collaboration made

alike. creating ever business together healthy We of are and business before smarter owners and making Alright. decisions consumers a generation than the next for

So now Dunkin' onto U.S.

earlier, X.X% sales said I QX grew systemwide As sales and store grew comparable X.X%.

This Girl exciting the in and by momentum and handcrafted was frozen national reception coffee, quarter strongest marked Cold on-trend product double return flavors. value sustained of sales new distributed a of digits, by beverages, by national for the was are by iced nearly our X years. XXXX offers value favorite, to pillars Growth Menu platform, was beverages plans. beverages, Cold QX our consistent for increase menu espresso the Scouts our the innovation. in grew beverages consumer multiple espresso, and terrific Brew, led fan led innovation example, iced lines. across GoXs,

into could we at category to and price the XX% success operational leadership the our also speed, to espresso coffee and into we've in by importantly, come customers maintained us restaurants. the and who of iced grown translate hot category long brought sold our coffee High-quality market We've that our espresso day the believe the committed do. fast. served fair is democratize something it the We seeing a to drip are we brand incredible every relaunch. speed guests at Most are our can critical term. Dunkin' and why expecting why of for beverages only espresso, great we we're It's new

GoXs higher-than-average and transactions and of GoXs $X, The and sold items, munchkins the We Power of including including quarter. it and with the you Sandwich. donuts. calories, throughout Power and a the sandwich. summer a innovation to than that of GoXs, of We're around ticket $X. greater success signature the had includes Breakfast say the the supplementing run with XX we XX national if new recently season. country. training premium our as tried get and doubling of Day, popular trial national beverage I sales would of brand. Chipotle rate. sales we particularly we also who of Donuts latte espresso repurchase launched We're bacon are on fundamental Approximately On you for crews are the with all strong than platform Valentine's new average promoting traffic the into in espresso, perfectly After sandwiches, you restaurant contained one breakfast the protein QX the course, with today. and menu X go a revised a a including XXXX, records of in one, remain new back achieved X with value we first proud with And incremental the most million Sandwich had line. more platform, It breakfast Breakfast delivered success our part as brought value down call, grams bagels XX% of donuts And of should pairing on has XXX an haven't

flexible sales building calories. bowl, featuring positive and a Break points XX% members located, the allowing than marked week, fourth you'll increase of where half a grow consecutive X% of today. for X,XXX open XX% XXX Nearly grams more than success to they many represented stands guests Dunkin' are restaurants bigger it our at a pilot us egg believe in of terrific our only XX which there now, super license transactions. Dunkin' guests Dunkin'. to better-for-you the power guests. our weekly initiatives it. transactions of Last way. afternoon with into offerings espresso to made ordering quarter launch It is of the daypart unlock right, On-the-Go more of how is still launched we app, And of total We first test has From The well. own across On-the-Go convenience grow sites of get drive-thru, and that program category on Perks mobile to Perks new step mobile has pay. for high-volume comps. interesting across particularly beverage driven menu secured of call runs convenience our a to of the the All initiatives. up and to deliver QX in and $X year-over-year. average think it many PM afternoon perspective, to saw options and like their of protein our our use without way. get are powers offers at we but believe, a And ordering. that It's to regardless a get and QX beyond be opportunity the out as on orders X% tremendous recent multi-tender a white earn to mobile digital DD transactions love market enabling sales loyalty as It's our digital in lineup us proves now business Mobile you with true is multi-tender customers by sales we're our and more country, code it of to XX% our platform to exceed more on Dunkin', to year, in, perpetual faster I efforts locations Perks to off our momentum the ecosystem I proposition to Last trial enabling this backbone to today, right ordering winning at super and areas. urban our at

is performing our it delivery have U.S. As and across our markets. additional to we with to initiative, expanded test few expectations, our a for restaurants Grubhub

We future. expect in to scale a test larger quickly near to the it market

as more make in goods quarter, than other beyond Retail products was extend this first sales X% efforts and of the our accessible, to Dunkin' into restaurants consumer-packaged IRI. Our by grew according to our channels and well.

both $XX in retail loyalty million have total customer combine X brands beverage an sales. brands like you you unstoppable When of of delivered offering. Coca-Cola in the products and more including ready-to-drink credibility sales CPG Our in strong across Company, Dunkin' portfolio The QX, million than $XXX and

positive. quarter, Shot reaction expanded of we in XX-ounce and product. products This been coffee a added has our distribution the iced espresso multi-serve extremely of these beverage Dark Consumer Dunkin'

we Dunkin'-branded aspect Ale. to and continue limited our We I of our beer, alternative Coffee early brands in terrific but to can brand breakfast our to products sister this quality these tastes coffee-inspired Summer relevance the our Pale stretch walls the early, of traditional beverages one of up of terrific success four amazing. that our April, through proud we're The Dunkin' to we partnership beyond products. here, it even introduce bring more and these unique partnerships and coffee, teamed again, beyond edition with driving new the will bakery of Harpoon, know Also marketplace. it's how We're the proves restaurants leverage a brand great channels.

also means expanding footprint As know, convenience restaurant you the our U.S. across

by franchisees restaurants are nearly quarter, XX the and remodels, units. between our NextGen net also They've During new-builds the they added encouraged XXX we're up generating. opened first new and returns

the in of image, new our previous this in built than We, NextGen progress that summer. majority already with along a vast the are and design that release remodel design. were other zoned expect the expect making solid permitted on it will be NextGen to restaurants few XXXX in the and We franchisees,

in press to Dunkin' new be As expect continue lower at XXX XXX morning's U.S. we end to stated for the XXXX. units in net this we to release, of

a between is units Blueprint XX% developing results And before, me stores the premium quality markets. is the confidence stages returns. offer shift Our is of XXXX be as on the to accompany products. quantity in you've of a right, by brand a continue newer the to now theme of to future. in our as U.S. They early cohort say XX% Baskin-Robbins new high-quality that the in over achieved cash heard Baskin. All markets experience top we cash working our to strengthened for the core XX on transformation will to foreseeable

our franchisees began franchisee base with transfers remain strategic ice portfolio restaurant strategy are we brand optimize hand-in-hand restaurant accelerated and In of quarter, cream through course, on our growth. closures the first the future raising-the-bar the we to relevance, of Baskin-Robbins in laser-focused our We market, as parlors and brand for We working on as initiative. driving our strongest profitability. position of part

on to international. moving Now

thought driving seasonal We delivery. leaders and across April, product held business We continued and bringing on insights practices to in and in our traffic for stabilize to with Global strategic industry our expanding another innovation, quarter the Summit best partnerships strategy. share the our a offerings, first partners, international through focus together value licensees Delivery delivery

design, the customer date, experience. date through to and nontraditional cafe are XXX to designed across consumer's we've our with The as Dunkin' brand experience in-store opened the are quarter international's exploring is as continued remodels growing pleased increase sales all to more international increase And channels, to new opportunities look We we sales in rollout to it and our guests responding. an delivery, meet are new-builds enhance between X, In than whether be beverage effort our we new how needs. locations markets. well enhancing and to growing relevance,

Okay.

to Let turn results. it and will I over our there, it end so financial Kate now to cover me

Kate Jaspon

to million excess lease $XX first the for in The as by and XX.X% franchisees. period increase the nearly costs the a income $X.X the and year first primarily prior net $X.XX sales the due tax as to the million from prior by of compensation, of income result the or an shares new increases pass outstanding. driven first income million The nearly our increased approximately the through diluted quarter and and quarter standard as period, the we X.X% increase income operating $X.X in in income Diluted year to rental adjusted and by from primarily X.X% an quarter income as shares XXXX of exercise rental offset which resulted quarter period, result or QX prior as well offset XX%, revenues compared the income $XX.X in was compared since to net of operating from in increase advertising well and for in in adjusted and million increase operating the a to a period. income the decrease presentation first decrease for prior decrease The prior quarter benefits income, quarter in in Operating the of income the Net the year to to a which shares accounting X.X%, year to result the primarily primarily result in compared as the requires repurchase fees certain in of income lease a the net EPS increases of QX income $X.X primarily adoption in million by royalty compared $X.XX XX% tax adjusted by million first respectively, or adjusted increased expense the reduction was gross increases increased in beginning growth was increase increase and period, year in of systemized respectively, options. income. of XXXX in the X% first stock of tax of XXXX, G&A the well period XXXX, and respectively, of that as from in Dave. to the royalty of income as or and as as expense. due expenses. share-based increased $X.X EPS a or income million $XX.X current adjusted Thanks,

diluted of first EPS the and end approximately EPS At been excess the we $X.XX $X.XX the Excluding quarter, had debt-to-adjusted-EBITDA XXXX, quarter respectively. X.X:X. XXXX have a both impact for of recognized diluted by of benefits, tax ratio first lower and the and would of adjusted

quarter securitized our with We $XXX cash in during placement represents replaced balances. $XX.X dividend $XXX on our associated During QX that the our marketing balance short-term our free pay the our quarter XXXX card which Earlier shareholders. and we million billion fund gift $X.X of ended We flow. week, cash $XX a million quarter, the million, cash completed used in cash approximately million cash this we debt, and sheet. Of restricted to note. $XXX in cash million with generated to

funding the of take to deal us facility. Additionally, existing placement million successful highly It our of variable facility enabled replaced was a note $XXX conditions. that advantage market

as maintain fixed just strong environment. We of rate total in $X.X This blended fixed debt. well to provides under for are refinancing to a future pleased overall our market rate for billion greater as our X% navigate interest flexibility years many

or not EPS interest net to for receive For were us in the clarity, update our given favorable the adjusted we target. refinancing, it's to rates that able our necessary expense guidance

end. debt costs related We the remained to will our of note balance have that a on XXXX write-off capitalized sheet at quarter

As will P&L the million the expense April, the extinguishment closed debt in $XX quarter. deal our through as of come in approximately second

of expense, debt $X.XX. expect per now share to we $X.XX a As result diluted GAAP of extinguishment the earnings

the per diluted it targets In We morning, to the to with And $X.XX. our adjusted continue expect earnings for I'll to over performance. release reiterated our fiscal we hand operator of regarding share this press of XXXX our remainder questions. that, $X.XX

Operator

Instructions]. [Operator

of line Our Morgan Stanley. comes Glass of the question John from first

open. is line Your

Dave Hoffmann

there? you John. be speaking. I can't may He are hear Operator, we John, Hey, don't --

him back to Jeff? and want to go come You to

Operator

next Barclays. the of Absolutely. our of line comes from Bernstein And Jeffrey question

line Your is open.

Jeffrey Bernstein

And been has commodity to the if franchise the if questions for year-on-year, to your can the business. is I follow-up. in current franchisees the growth Two then of an strategic just One, basket I'm labor you wondering update pricing wondering industry inflation. one you And a portion on franchisees which seeing -- estimate of mentioned? are net in topic there how and profit is I'm that your of had popular compares related just late.

Dave Hoffmann

had have but Yes, EBITDA from had disclose, an they've Jeff, so quarter the standpoint. we -- good don't franchisees a

put negative, GoXs good transaction's pricing, but the pricing in from us still we're for marketplace. with of piece of products above line really attachment quarters, big the premium a -- other solid we the was the strategic and -- big from but terms In some mix into that

concern see and yet. out inflation but monitoring like the we're for had weather is we not to things Sandwich, wage good the and So of Chipotle price inflation it we're whack a But Power trying the don't franchisees, that, that. We here and sandwich. certainly, get on our Breakfast really attachment

Jeffrey Bernstein

blended for inflation what estimate a there or the franchisee? to of Is labor be food be to inflation basket you'd

Dave Hoffmann

don't don't We we No, share have. yes. that,

Jeffrey Bernstein

are the seem other number as on the with would cost pressures frustration. asset. was about Okay. could relations. just I today years if ago? Dave, and everyone questions talking you talk the outsized that maybe where in And franchisee several qualitatively franchisees was we your one about lately collaboration you wondering with and franchisees with an franchise QSR my That mentioned relationship versus anomaly

Dave Hoffmann

Scott going to to over Jeff, it I'm Yes, here, Murphy. Scott kick

Scott Murphy

one is the regular us closely about the we've with Thanks, that think operational which one number over with it X we pieces in they're of do lot a think And our basis location with franchisees, them really example months with us our different we get out last at been collaboration helps because very of our Yes. better a is those counter, I'd unprecedented the day, business. the it helped help our of we're on say, almost actually remodels, I I that equipment, the NextGen and really have they you but fine tune meeting them in the pieces of make collaboration us so good the assets they've because the working Jeff. a is restaurants better. sequencing the the industry, behind the think them and every of concept,

Operator

question Stephens. line from comes of the Thank of Slabaugh My next Will you.

is open. line Your

Will Slabaugh

beverages? hear And that's adoption. more inducing you in you were it the think did Is why first you being we months question How the that sure And espresso, we obviously or taking versus as Thanks trial? by trial the about Or on quarter? resonate? to think to particular. simply the make to other XQ that just improved it about quarter, I speak about relates something had and good it first a drive you on heavily to influenced in should few was Yes. trying do it's guys. in Dunkin' the clear to cold U.S. occurring. in began acceleration just I'm some now, messaging a espresso different

Dave Hoffmann

Yes, and consumers hear here, how continue the competing you're you're is here past. the Look, in are from than go what a We to and experience the for to have the delivering think us like what of question. ways better to Blueprint, in QX, we thanks, the in we early going we've better but responded. got stages we're seeing we Will, we're

just -- made taking espresso think in the XXXX smart that's I being one consumer biggest the back, a some think we of step of those. I and responding investments with

So and install, sacrifice was a that needed and to have we better to extraction new espresso needed after quality undertakings any had those of that the needed sure make one in to get beans, speed. and also better deliver was of we we the machines we the out culture QX, biggest gone ever we so the didn't

responded So responded the to well it. very -- offer to consumer they've has the

probably in in as afternoon trial We younger when drove out promotion, had we of the an occasion. would first box. lot skew is offer X-to-X haven't the more terms And you than as you trial it done the in different a know, in of afternoon. is a skew and afternoon tell we came so espresso of it anything what QX But is I

the responded, customers but now, across signature it really those good really as with when and you well that flavor how balance fanatics. afternoon. we liked And morning had are couple well with so as the that And that do lattes, also we the

it's Mocha, you lattes, layers of Blueberry in Caramel on that. when Crisp bring things top So like again, just

for pleased us. to we're going be a So very build it's long-term

extremely I translate on we're coffee all coffee, think is espresso we and those ice iced which in and credentials drip well, uptake into great well. complements it seeing do what iced as

would be the So that. on narrative, well, that overall

Operator

line you. And Thank our of from question Glass. next the is John

is open. line Your

John Glass

least it disclose correctly? And going of the any traffic, of give moving in are the sort moving like trends Blueprint? you go morning? that was I on Or at you positive, you those or just but process what's in Is please? and traffic I afternoon interpret dayparts, just on can through First, as improving what if sounded directionally, what's balance X know of sense was Did don't positive. it -- the directionally this is in

Tony Weisman

a our afternoon the directionally pleased Again, seeing consistent across that we're espresso. quarter, enhanced morning, back offer, that well with, the dayparts. We're the X-for-X consistent with with going. say which to traffic would we the bagel. with for was I then of the $X in X/X lift first the on responding both And X-to-X GoXs came offer where is in

think consistently very are very, I so those both pleased working we're driving the trend of of traffic And together kind about. that

we optimistic the said, As important We that value feel so consistent is are heading. the where goal messaging. know forward look we've consumers, trends is about for to going and

Dave Hoffmann

good have it's it's less a, deal pair you really competed offer marketplace. the X-to-X that the value a the espresso, Yes. like feel about that And $X with we think, compelling that is more morning John, negative, a you and we afternoon, a in of how new when the lineup in

your yes, to Do afternoon? will forward. focused area year our feel we to good Absolutely. have the the to question, so going Certainly. Traffic and ways be we it for one Blueprint, about this continue number and go? So, remains do

John Glass

quarter change And from first that -- is in Is Kate, there but conservatism, to the you differently didn't don't reason drove should the exceeded you first about that expect a that know, other the than repeat? growth follow-up, -- something profit operating don't them think I your year, any performance just any you a there targets quarter. handily for we

Kate Jaspon

revenue a expectation, you mean, quarter of our is our know, easiest so year prior was comp. sort too performance much I bumpy, roll to wouldn't obviously then I just G&A that. as read into And this No, from

there read no of year, quarter the into to our any is reason differently. for none this So changed expectations and have

Operator

you. Thank

of line next from the comes Our Ivankoe question of John JPMorgan.

Your line is open.

John Ivankoe

Hi. Thank you.

assume still sales the best from Obviously, of and benefiting direct years question. lot dayparts the I national this still be it listening remains your qualitative and positive to negative. mean, one in I on a year-over-year quarter, value. in comments comments the First, would around traffic a hearing think number follow-up traffic those that would also of but

just drive-thru wanted a talk in specifically understand execution an more why to opportunity. the that overall if from a happening? come as capability execute you've little about gotten place from perspective I times you to just customers perspective, drive-thru on And So that's as an to when additional bit your throughput and And they back. have

Dave Hoffmann

Yes.

John, an more but I in better is So the think mean, the competitive. the ever consumer I marketplace. highly has in It's we're than than marketplace obvious, share choices It's this fight they ever for before. had a competing have Again, still before. we

I momentum in traffic saw with of And several around seeing and better what year the on terms had -- the what think is consumer, the made we we in years. we're look, last than some of resonate there. we've investments

a is but that it's get waiving story, back flag So positive. nobody good to the on until we victory it

the products. good we're attachment we the And value the so uptake premium some offers, and of how like getting good with on like we

on So Sandwich the with budget. options better-for-you and Power for Breakfast has consumer, who really looking healthy resonated that is a lineup

go. today, ourselves like we've us, know we positioning ways to to we it. progress is so certainly, how we're And on but going a stay traffic, But for and this long-term the got tremendous it's we're in plan marketplace on but

John Ivankoe

that why you improve? you to could mean, drive-thru the traffic and opportunities perspective hasn't from on I that And execution? picked is have up gating your as drive-thru what that to one throughput, comment factors of

Scott Murphy

espresso we're I'm focus for we the there in speeds, we Scott. happy drive-thru drive-thru maintain us, huge It's opportunity. John, more so the any which haven't a been it's still able happy to the but to category seen as Yes, has is material impact report, grown know execution significantly. with, our We've restaurants.

So all installation that the label we've got some plans On-the-Go the the printer, year. simplification of and and throughput even last the the year, the in next efficiency like about app things restaurant. And see, we're menu is the improvements hopefully, enhancement bigger throughout doing to of the

John Ivankoe

one. I if question, next the And can have Okay.

NextGen which, going package the available terms of In I for think, have every you're prototype, this to summer. model

for? the place? Specifically, of this the piece it's are guess the a I it I Is are Is it you're mean, before guess, you're that franchisees? it to pieces at that I the perspective? is what in esthetics? the to trying figured guys out looking point, cost? I what get Is to mean, you what, mean, puzzle it's the I trying that final get -- functionality shown

Dave Hoffmann

Yes.

So my the earlier thing -- is say the first we're as collaborating we with I'd comment, franchisees.

schedule the we're on remodels, out in not we've them big within in remodels and networks, on a we we them the esthetics, we're contractors, the it's us don't summer the sequencing the working on So impact piece is business. really a the actual and of when cost on value plan strategically, the of really working later them layout, and component we flexibility. the roll this last to thoughtfully, make working the prioritize they've thing working that and them because got of unveil lot franchisee so to them that with the We're helped release. engineering, operational seamlessly to on sure do. And last order to out with sort The

Operator

next comes Andrew line you. question of of Charles from Thank The the Cowen.

Your line is open.

Andrew Charles

question. quarter, you factor? that focuses was this on on this a the for more a portable bowls menu breakfast reconcile you how And the sales. did guys and Last of in my inspires my with different of question perhaps the the X% other can given sales What clarification focus recent consumer? then Dave, really the markets, drive-thru years mix One innovation, with today caught increased then this is increase up And needs the first and quarter? you real to espresso see in in from X% just, test

Dave Hoffmann

To with a basic Americano. the first Andrew. a offering cappuccino, stayed Yes. still on macchiato a espresso Thanks, of and question, your latte, we

on remarks, continued in so increase XX% we've see And that I to lineup. espresso here, my said my opening script a

So we're with very that. pleased

we as QX, call gotten we're consumer Dunkin' loves the we we we the what fanatics, well comes seeing segment business. layer that and flavor we've into of in who own that so do -- Now with that what like when you to

another the we So just think mocha, the is layer that. Crisp, Blueberry the on of that all added to caramel,

how that's out in we like accelerated QX. So the performing how of that's and quarter

with of In really, alternatives is it's because great a tapped that Andrew, consumer think the healthier items pair better-for-you. under place deliver to and of bowls those looking we budget. header on the beverages. And into we're who that terms well think a for We we've our

the grains. And in like about in XXX it our And that now, how the Power want test chunk we foray north affordable. we a It's nice healthy with and think this of well. bowl was market, surpassed to a as expectations so the performed is on grams to introduced on. build that. platform calories Breakfast XX in that first Tony protein protein there so white We into egg calories, whole and Sandwich, continue team of bowls. And it The our have XXX is

can is these great events And Day us. about better-for-you we've donuts but GoXs offering, into play fun better certain think we our we're this responded with we than and us, great that tapped place brand type consumer. the a of a where Valentine's customers a well. be we does our to all to But giving So nobody and as lineup and it's continue to think for choice, going

Operator

Thank you.

Miller is of next of Nicole the Our question Jaffray. line from Piper

line open. is Your

Nicole Miller

if us guest versus on satisfaction performance? a.m. was notable terms share changes? is metric in which indicator say I scores, of any around the there leading Also is dayparts? then, would be have you anything wondering p.m., sales And best anything that you could to for maybe if commentary

Scott Murphy

is this take Yes, I'll Scott. that.

we of do we guest focus in from one lot there the of data experience because field. the things track out the So a obviously key it's

the think months have result direct over installation singular of I app. Some and on printers seen been improvements espresso, of label our around speed and X the based the that's the mobile on And on guests. focus a we've last enhancement our accuracy the our of

then look X.X I last are And and uptick seen Score, that is nice which other X drivers top box minus the more in guest it So on Promoter the we faster we're And on which biggest we months the that think way getting the the getting X we've the actually X -- at is think box. about metric. -- a those Net accurate, bottom satisfaction. we're over the thing

So they're simplification keep pushing for all us. the in going it They're training and restaurants. the right things direction and in moving are I these with other movements, on but we're small right in things through movements think to the direction,

Nicole Miller

value? commentary Any on

Dave Hoffmann

value? On

Nicole Miller

in scores. I Yes, terms would a of guest satisfaction indicator. that think leading might

Dave Hoffmann

Yes, go ahead, Tony.

Tony Weisman

we're as talking and I very to marks and high seeing as intercepts would that guest our consumers our asking say satisfaction No, well regular crew. surveys on

variety the to type the depending think like, responding it's size very well size is value I it's of are appetite. of persistent, the on the There consistent. of sandwich, you consumers products because your

going they're And they with so we're it's know -- delighted what hearing every consistency the with it's and and they're the and is the delighted to there fact variety be offering consistently the that day.

around particularly are lot so some more fact consumers considerably pay So we the among of we're watching. we to attention A conversations positive, offered we've that substantially social increasing in where and would we around that that that those are well. add espresso track of careful very are what and indicators game, as the that the overall media I delight lineup. also

Dave Hoffmann

Chocolate at of maybe market. point our you industry at and C-stores Brew of the can't speed that's to Cold we And be to no a look, in on speed When when laser-focused -- fast-food or that afternoon. have theme that products for Dunkin' great to those our And match is when types critical always be be with When the market, that, be have to tough like Nicole, act don't up your competitive Dunkin', pretty that we a we and the turning in we going of introduced in -- the make and we're on traffic $X didn't deliver with have quality you you just quality the around. now Dunkin'. general the even are but you on lowest that mistake, going Cherry price do the something you fair a beat, lineup espresso price to is Dunkin' pick you price have overall and thesis that think

Operator

you. Thank

Our question David Baird. the Tarantino of next from is of line

Your line is open.

David Tarantino

and couple those a trends the few questions on drivers. comp of a Just

versus sort QX rank of the is, espresso, order first would were things reasons in what drivers question cetera, the to I you So better saw the got if in in guess, why of of respect comps with part you what in et how saw those sort relative to out, importance you order you GoXs, to called you some rank of of the the QX QX QX?

Dave Hoffmann

the and about. remarks at what execution that espresso it and restaurant David. very were, prepared better and with so consistent Yes, I of Scott value it way in was level, the my say lot coupling I the talked marketplace a Thanks, with would Yes. -- what

we guys look sentence, methodical, bad in new on, were smart, as So technology know doing, thought that very were on half cetera. smart have working investments franchisees. Tony worked on and I'll that, the the and paused and label that et with And QX. made in was scenes some of we of innovation -- some been printers, team sequencing. the the we what We QX speed training. didn't out you when look, weren't the sure the we behind installs. I We've think very intentionally We have restaurants vigilant my our We you calendar and with which the to we've been some some as very train look, on saw quietly as bad. what the make We I marketing of activities say first with to bring his coming delivery

hero to interested of quarter, do And when we're Breakfast in marketplace the So was to great customer going of think clearly but we -- experience in what that out execution, silent value. manage business a going the a is it you we're were sort it reception that team of to we're drive great today. this about. Power better a going not I a you're quarter. all way, this Sandwich, with But was of to responsible delivering in just get forward, but espresso, going

David Tarantino

my part big was question that, you over then for that there I a a do a that you wondering And It seems as further whether fades? drives platform platform specifically. into the Tony, a Or follow-up period on next move sort GoXs keep your thoughts on the maybe element how And honeymoon was of is maybe newness QX. guess, the around the to I of the that is year few in excitement quarters? that story

Tony Weisman

Thanks, David.

to. think the I change X-for-X a there's we it. a you terrific did out X-for-X in couple the bagel, ways know, saw then as consumer swapping lineup, swapping Number with QX, which we've and we the response done one,

X-for-X We with a great have product. is bagel cheese a supreme spread great value.

the of made order As Dave feel XX% so very good a In to mentioned to attachment tweak one earlier, that line basket, and breakfast fresh, it customers broad hearty lineup. seeing like value, a keep the satisfy across swap really does drives thing middle variety customers. is a but of this the good the a also to is really we

intent second spike The purchase consumer campaign advertising 'XXs. nice did ways our the this purchase of and to high. the as and we we have the retro we that's icons look has refresh Cops introduce awareness in Buddy new intent awareness And in in to been, keep to variety us look around look and the is the long and with of continue you show. QX it. for a a The saw that spike around to messaging the When market overall for something as the messaging

plan So that forward. going will be our

Dave Hoffmann

be to conditions, the about series to this, us franchisees, make we adjust of feel it's and responded. that XXXX is our like we going a sure but is counterpunches and competitors, by to going key value punches -- the a in But and pillar industry nimble great has David, forward. for with Yes, while consumer stay market going we we'll how

our more internally we do. get sometimes says, often Tony As customers bored of before things

the responded some really the we of customers so talked the haven't and specifically we in bagels, tweaks a how like which about And while. to

a feel there we again. make them is is bring products core that -- there new ways and can and So fresh

what And was created that's lineup so they done for terrific, look and that something we've with so just that. this

Operator

Thank you.

the of is from of question next of Gregory Bank Our America. line Francfort

Your line open. is

Gregory Francfort

past shrinking question, think measure store to McDonald's XX changed a competition to then I as someone from store else's slowed the XX Do improvements has a Dave, or seeing comps growth new I And that you is months? currently picture you're how the been, as units. positive talked cannibalization much has you bigger lower quarter? negative And being to you've response just capacity due was about know in the Starbucks growth, the you weather category? it's in in slowed is but stores? of How in growth, tough think ever And that do over question,

Kate Jaspon

On but a for us, not for favorable for in quarter, it this question, is comps this the Kate. was weather the Greg, factor your weather us so favorable slightly quarter. was large

Dave Hoffmann

model the going continue still X, -- to Yes. development quantity, quality heard we've over of question, And lineup vigilant -- the But I just Scott on right. is this. piece that's slowed core to you yes, to X of a why and a across good making probably you've is is balance quality the when that or we're earnings. that that's we're model a core, think that And space. looking look, I sales, on be that. have that the in across see and quantity. X channel, it's get top development, line to What brilliance across And so say and my big be XX% a to going balance, the that's same-store wouldn't sure for of we're is be generates so healthy of strategy. the over developers nod good outside we this we return remodel big going

really is what we're that's looking nice that for balance. so And

our space. about developers feel very a a had where our we -- key in they're headed. confident developer some keeping we're We good. top form just with And we're so of And

the we're nice growth comp store but core outside all in seeing so not And core. the in sales,

awareness the And much return we but build outside other top a in those in that and some long-term we're So is good. brand how of it's that's because Clearly, we're is again, higher, cash-on-cash looking markets. core. showing number developing the numerator like XX up known performing

Operator

you. Thank

Our next & question the line of Oppenheimer from Bittner comes Brian of Co.

open. is line Your

Brian Bittner

years? And business. of be your opportunities non-loyalty fundamentally guys program. big group? loyalty is the think from How mix where to from relates loyalty can loyalty you mix versus couple customer perspective claim sales you your customer as your improve to just much do better question the trend appear group mobility digital for it a And Your over to more long-term too to

Tony Weisman

you, you overall January see we is program mean, mentioned our -- We're make do it to fifth you. XX But spend members. frequent our what Great on would We our consumers celebrated as XX.X that more Perks to -- as was, over would in I to I now in we the continues anniversary. of general, are growth. million -- question. important we're member and program visitors. are million-th loyalty you pleased expect, think Thank more

that to number grow as And reasons aware more So of doing give be become kinds joining things consumers we're we consistently all the benefits program. the see the and to of them program. more in of

ways On-the-Go use high course, recognize use Mobile Once got On-the-Go and Of significant of they Perks the way. to transactions the participate pay. very in, them customers how it stickiness. ordering, get look let right out now. ways has order, different in program of we've to continuing and helps And we're customers Perks well which get as a to That's got a get customers up begin their our majority to as which to Mobile X% on for

people more you pay an unlock they that in program and to previously allows choosing variable pay a our we come have We the to for will and more to because we've who have but important test join to members driver program into program, is continue couldn't. the the for multi-tender want. be Perks wanted for way a way may now, As right members any mentioned, which think

you frictionless. are app that more just we the and whole the lighter experience is consistently In expect, addition, program a easier, way as making unlocking significant would

order So even experience track are we've for even in and for you to on to want kinds easier look and redemption get and those of improvements. app of improvements a to to continue it even the making your to make where the get to quarter, made number points, easier with first them Perks into if us you deploy faster

the letting the good participate feel more which good feel respond. Perks we become We members ease we're good general, them in in Perks about members On-the-Go. letting So in we people ways about with feel and how about we're in which

Dave Hoffmann

see up that And bringing last of then terms in-house, Stephanie, the Yes. of always number on as one a Tony bit where and said, hook been I great click enrollment if theme the on of radar, see stuff Head to as the -- the good the on have and I the better year pay Jack, show by flexibility about on that but talked app, some And don't think, significantly we giving consumer that, little to steps was was easier. Digital made one nimbleness. that, how to has I sit, from of just and our going well. investments I we've us and again, we and back the the order it good more and reduced on in CIO; ordering the they're skins what more responding license and On-the-Go we our making to Mobile Tony Brian,

drip in user the just we're coffee we digital So higher dark that, has customer at younger all when skew but with espresso drip versus espresso the and customer when shooting not of coupled the does. customer, that, look here, -- you to than take is coffee the a adoption

that than lineup, savvy aspects part that more this is all talked what that one we're into Tony younger, very again, the digital all we of digital more think and we've skewing getting skewing monitoring so about. that qualitative into much and tapped before then had espresso we And was closely, a but consumer

this. smarter to want to come name what in on getting as the is of we offering, We a that and is them on the just one-to-one marketing speak one in had We always so play. of but and open to value marketplace, game this being a felt blanketed giving great consumer best really area. that able to they opposed think more like apps the long-term the So very we're

Operator

Thank you.

Andrew of of Capital Our next Strelzik from BMO the question Markets. comes line

is line open. Your

Andrew Strelzik

incrementally forward. simplification My might going what question like on look is that and

Specifically, you mentioned innovation being a big focus this year.

point, toward wondering menu items. another those newer as migrate presumably does of makes forward, So move sense simplification at will some you round I'm preference

opportunity represent maybe keep and margins that to tight? help some again execution does point at the the So an out

Kate Jaspon

take question. of part to the question. is and I'll on over Great the half turn This latter Kate. first I'll then Scott your it

menu impact would actually far menu a do menu from there from to completely So was that so simplification going over turn that. the simplification, quarter, now to in as again, And rolled very Murphy. whether simplification, Scott quarter's then very, rolled over I'm but we've over as this we we've impact small

Scott Murphy

-- necessarily for restaurant on is What of I it's is sort simplification. and we're menu simplification us actually working now life just simplification. a also way so of Yes, not

and every processes all to So piece to a try of seconds as house we're to place the week back well. that trying work take day and better looking improve out and at it happen the and labor and minutes of for employees procedures and try make every to

So that's for it'll continue laser-focused mantra Vice that new Restaurant of restaurant. us. a We've the of piece got on a Experience President improving

Dave Hoffmann

-- come with And that, our there they're and up systems and they've guess, Tony one Yes. score marketing calendar on I just that that the through. is internally taking Scott Andrew, new we've other of got complexity op a nugget head

big on in we making horizontally, if of another the to where like but -- get So us at calendar shame because me, last situation looking the to don't year, sure do just in at marketing it I calling they QX did we look not we have so. vertically want

see the else I tapped think anybody operator, out. in queue. don't we're Okay, I

Operator

you. Thank

Dave Hoffmann

Okay. Operator, else in and queue. I the tapped I see think don't we're out, anybody

Okay.

Operator

has Q&A The concluded.

Dave Hoffmann

importantly, of really the us lot it's those heard on early we and and we even this QX made our simplification, we are the heard new et covering our are in got cetera. And pleased thank for before, you early say us, while the you about appreciate you Growth. on advertising of early you things, from of a we've business lot calculated And carefully -- to code our your app, Last results still and again, pleased with seeing time, big progress more seasons espresso, call, we year, more very seeing and securing you risks menu questions, the appreciate on. being you know but future success, agencies, a thoughtful. some being the the innings of much Look, in very me Alright. I the Blueprint much. We're value, you've to but national for stages, progress are and excited on rebranding, are here. up demands for We very again, we we are set as and took the

our messages Our are working resonating are with our consumers, for investments franchisees.

Our system is and growing aligned together.

the objects shiny world-class succeed. laser-focused this on but along and not and suppliers, value not and takes how and team our sustainable the distracted great customers, with franchisees long ahead. We believe creating we proud what for year, losing With shareholders we We're of the have sight years this way. to it we're we are franchisees by the term started our in

the and in the you for see we'll thanks again, Take So everyone, market. time care.

Operator

does conclude in conference. This today's participation your you program. for and Ladies thank the gentlemen,

disconnect. a may now You Everyone, have day. great

Dunkin Brands (DNKN) 2 May 192019 Q1 Earnings call transcript