DNKN - Earnings call transcript Q3 2019

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Ladies and gentlemen, thank you for standing by and welcome to the Dunkin' Brands Third Quarter 2019 Earnings Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions].

As a reminder, today's program may be recorded.

to Director, host Investor like Stacey today's I'd Senior Caravella, Relations. now, introduce for your program, And Please go ahead.

Stacey Caravella

Thank you, Jonathan. And good morning, everyone.

call and Financial today's Officer, on will Brands Dunkin' Speaking Chief Dave Hoffmann, Kate Dunkin' Officer, Chief Brands Jaspon. be Executive

for call. Additionally, U.S. and questions the is for the at Dunkin' Q&A Scott available Operating session be end here, Chief during Murphy, Officer will of the

live is recorded for being webcast and call Today's replay.

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

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

I'll Now, call Hoffmann. the turn over to Dave

David Hoffmann

And third to a across sales growth everyone. delivered all net of sales systemwide same-store our just quarter global X.X%, units, business we strong global of development growth of new XXX begin, Thanks, Stacey. positive with and Hi, segments.

focus a relevant the new was and Around consistent, menu value, guest our more experience operational everyday delivering world, innovation. excellence, through modern

a with include of such was by espresso as well beverages Dunkin' highlights brew, sales our same-store cold systemwide growth. as the and U.S., GoXs. driven premium and quarter value national Performance platform as Starting sales growth Okay. X.X% X.X%

by We line. the the latte led sequential more strong were innovation third of our drive XX% pleased signature in than performance to comp quarter. year-over-year, improvement see beverages grew Espresso sales on new

our maintained we've importantly, while the category. most speed, And growing espresso operational

us obviously, best we the its slowed down. Drive-Through is continue of and by in service recently not XXXX coffee do In to speed will we fast fact, Espresso, QSR Study. Dunkin' brand drive. what with Great named fastest the what was Performance Magazine has

marketing, since months notably a relaunched our and equipment, XX the and training big way, nearly results. in improvements quality with driving new recipes, are been espresso It's we

can do that know more. But we also we

future. beverage-led big We part a our are brand, a of and is espresso

drip in recent and which our fight to iced, competition also However, we coffee, hard has both experienced protect leadership will in increasing hot years.

a is of growth. Better quality, blueprint for cornerstone the better enabled equipment, by

months, field the the in few new past coffee Over nationwide. we've iced out brewers been installing

leader iced steps market meaningful taking our share. We coffee and in to are a are grow

is, of leadership, eight-headed built showcasing tap well. that Our our system, an as bartender around next-generation creating beverage symbol the addition in only of restaurants our the a with fact, in true culture restaurant credibility, but we're iced not

a in as Quality drinks, a served and place smile. what well. and locations friendly in love your and you our made with next-gen of for environment, aiming we're clean right, favorite about course, It's what

value Approximately We to it's beverage of compelling also GoXs, doing include also with total critical offer of a average an national full-priced nearly beverage, food XX% $X. transactions ticket know exactly is platform, that. attachment. that our GoXs' will value drive

the to also of new bowls. Bacon comp food the our on contributed Innovation performance, lineup of Sandwich BBQ Breakfast premium launch breakfast with QX and our

finally, And be the nationwide X. to Sausage serve on to November brand Breakfast first Beyond US restaurant we beginning are excited

forward to look that. So,

opportunity an espresso our affordable a is on-trend great trends. did exactly how giving This consumers do plant-based that to want believe We is price. democratize Dunkin' is to we believe when an we I at to it brand like with and comes proteins more use it can innovation there tasting, platform.

we for green investments are smart is as positive year shoots. to we've this last Now, digital made some our where area see another initiatives, beginning where and

to announced enhancements our we two major September, In offering. digital

members members Dunkin' points card. way made flexible loyalty earn DD with we they DD pay, multi-tender expanding any reward enrolled debit Perks can more now or including cash, nationwide. Perks by the First, program credit, to an

membership DD enrollment, impact Perks will be and to multi-tender with expanding driving more a unlock multi-tender by that to Test margin. enabling results the marketing. incremental by true shown believe is active We grow material no program, targeted both have

third approximately contributing XX% We of rooftop with than ended sales. members the more loyalty million XX quarter

of mobile the is third place the just announced ordering a exactly way Dunkin' guest in just Guest through speed not way for of we want can members, the on-the-go. app. mobile This allows quarter, Dunkin' it. order one Perks checkout Also customers experience they to addition more any new customer, the the feature

this We mobile is giving fuel By access base processed quarter, increase ecosystem. growth ordering, in our further over can in the digital which we broader XX% prior XX million believe on-the-go even to year. third mobile orders guests we a versus build and

and recent These runway There designed platform. checkout, Dunkin' tremendous of us growing make as the advances, to along Delivers, of multi-tender guest with frictionless ahead all the Dunkin' it experience latest expansion when our possible. digital is as comes to are

made we into us business our and The digital enabling platforms, beverage top including line year, better and the in results a investments strategic drive to last guest deliver are experience.

the sales we systemwide returns growth; our staying pleased franchisee driving continue model, we goal our to investments year. U.S. and, that for very While Dunkin' long-term the in asset-light last expansion; To unit-level to economics; of with balanced, course, the will true with strategic from profitability. opportunities of we're business, investments strong date, evaluate made

All right.

Moving development. on to

our we Dunkin' restaurants in Pennsylvania. globally, in XXXth next-gen topped XX,XXX including units new quarter the US. on the XX And net the restaurant October addition During of XXth, opened

sales are pleased image. system, and mobile tap increases, order new iced core design with bakery performance the enhanced to Key driving Our through from front-facing category growth traffic from the case, and next-gen be results elements the of coming increased the from with and beverages glass area. double-digit the the from pay delivered franchisees continue pickup

love for our driving also The the next-gen store transformation customers. Guests change is appearance. modern noticeable

other satisfaction locations. in restaurants of are than next-gen scores guest proof in Dunkin' higher trending that, As

serving next-gen earnings. the for between commitment coffee XXXX underscores to remodel address remodels. blueprint in growth and pace we our will guidance builds have conjunction with XXXX QX Next embodiment great is our We're new we gen pace to restaurants fast. year-end, on by the of when opened And and XXX provide

right. All

driven Growth Baskin. Things. take Now the as same-store Netflix with performance well the Robbins cones, category, In by Baskin as and U.S. of cups quarter, third to home hit grew Stranger partnership the show, strong sales successful was X.X%.

moments speak world modern in Robbins. to relevant is a that It's proven formula and that around culture. Baskin and of products Great-tasting heart at the the resonates pop

In nationwide. quarter, introduced we third flavors the vegan dairy-free also two

category changing the Our dessert dietary lifestyle plant-based recognizes needs and entrance the into of customers.

products. It platform new cream, our to quality way gives customers options scale we Robbins the another Baskin can these sacrificing guests come ice have great high without from use expect great to and

All right.

Moving was quarter with on international. both X% and brands Robbins growth X.X% and QX of Baskin a for terrific sales Dunkin' posting respectively. same-store abroad, to

International. sales and progress we're the the on reflective experience, Dunkin' growth consecutive is QX of a of our Results sales quarter ninth are enhancing comp marks positive non-traditional strategy, channels. strong on which infrastructure, growing making in-store international establishing delivery the store for focused

pleased markets. of are the We the progress our very now third-party we're on making majority delivery. with international We available in options have

seeing of markets are double-digit restaurant from some successful our in most And sales a delivery. lift

capitalize and back This the major our unlock we're to US. is learnings a to on and to it future boomerang growth ready

to So, Dunkin' world, we're committed unique to by and nimble our the needs heritage the of also around transformation staying local markets. of while to the staying Baskin, meet true brand

I'll that, it turn over And now Kate. with to

Kate Jaspon

million due decreases an in fees. increase in growth offset franchise an or $X.X result primarily QX Dunkin' rental fees by as a compared U.S. systemwide income increase in income, prior-year royalty and X.X% advertising to Dave. of revenues Thanks, to and increased the period, sales

that discussed costs income the of the lease presentation in standard the As quarter fiscal to we from gross in resulted increase adoption requires we've quarters, new lease certain first through franchisees. previous in which of accounting of the rental XXXX, pass

a to systemwide advertising due a decrease program growth. in The an card fees offset advertising the of in by and income primarily fees, in decrease fees as related service increase sales gift was result

respective fees remaining franchisee investments incentives, was Dunkin' the blueprint recognized of result primarily over franchise being the of including growth to term for franchise agreement. the in decrease support that are U.S. each The

income for Operating quarter income $X.X and to million X.X% compared adjusted respectively, or third prior-year or increased $X.X and million period. the X.X%, the operating

royalty of the joint net primarily G&A and by South venture, was in increase a from decrease in our Korean the a growth in decrease fees. in expenses, offset income an income, franchise increase The result

Net the operating respectively, X.X% tax on or million of interest for by income and as income result operating a income $X.X balances, increased million or increase by as well earned to primarily income $X.X our income, in X.X%, quarter as and adjusted in offset net period, income increases the adjusted prior-year in the expense. compared cash third increase and an an

carryforwards. credit million in by compensation offset pre-tax the compared a to period. the increase to The income million tax increase tax million foreign period, and additional expense of ability the in to $X $X.X of was the driven by utilize income This was benefit $X.X from tax benefits primarily tax excess current in related prior-year in share-based

and Diluted X.X% adjusted a respectively, $X.XX in for respectively. and the earnings increased adjusted third result quarter per net as share increases and per period X.X% to share earnings income, to income compared diluted by of $X.XX, the net the prior-year to

Excluding recognized the of excess for and the XXXX per and third diluted per fiscal earnings $X.XX adjusted would have both by respectively. been benefits, lower tax and share diluted impact share earnings $X.XX of approximately XXXX quarter

debt to EBITDA we ratio end the of adjusted X:X. of third had At the quarter, a

balances. our we our million quarter, associated that cash quarter million, and in the $XXX approximately balance in short-term on marketing ended Of generated $XXX flow. card restricted sheet. gift We cash the fund with million cash During $XX million with cash and $XXX free represents

$XX to $XX shareholders million in repurchases. cash including market million million during returned share through dividends quarter, We open in $XX and the

now our approximately of margin the ice be of exception We flat following. compared XXXX's margin reiterated we to dollars be release cream ice this million. million. of Previously, with targets, morning, $XX.X the margin we cream In expected our to press would $XX majority the

be the tax This XX%. third We quarter full XX%. in any foreign from benefit realized from through the excess we as recorded credits recorded excess impact revised rate effective material tax benefits tax Previously, potential may $X XXXX. rate excludes the quarter expected fourth to tax guidance of tax be million future quarter. that reflects benefits now the guidance fiscal tax tax year in third well expect as This

Previously, per $X.XX And $X.XX. to expect GAAP expect to of diluted to now Previously, earnings We expected $X.XX. $X.XX earnings to share $X.XX diluted adjusted of $X.XX. $X.XX. expected $X.XX we per we share

fourth tax tightening as a This as our reflects we QX, guidance well in as realized benefits of our the updated head into quarter. range

operator the hand I for to over questions. with And will that, it

Operator

Certainly. [Operator Instructions].

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

Your question please

John Ivankoe

modernization sheet the investments, espresso future franchise a of I'm capital free perhaps we system whether last as If Hi, as the franchisees couple thank of anything plans? range the and to that directly years, begin you in you cost a in company, to may cost operating over in going ask unrestricted of you. basis. in Have a flow especially a now the while basis, you should midpoint more an of returns for system of involved generative on you your to be think about significantly finance kind about cash, type the franchise a see having of both we how benefits as question to learned the cash think is the of the Obviously, the and and on balance kind kind about think terms overall. getting XXXX lot

David Hoffmann

would John. I with if Thanks way Yeah, we're for pleased back, just investments. the we the look the Look, question. –

the starting Espresso made As Paul about that the $XXX million us. of And I the shoots investments green here we invested those. in in We're for business. Meltzer see the very in we of Stephanie opening back well all is digital. doing my to that made talk that said the room in we to

on we're very that. bullish So,

comfortable end As of place more. the the to through on sit use at said evaluating Kate what's it right that of there bit the a can I We're on QX, having are best now. cash the options sheet. balance terms all the in table go

and million healthy, But, well. cost hold consumer on prudent but we're to opportunistic cash very economy again, the We also plans is. make controls, very the and, through of like at keep about think we first the consumer continue working look we to for back the feel the us good some look, it's is turns good as have be but option. if I where that on economy said, we'll the And terms everything table in still $XXX us, to

John Ivankoe

remodels, something of whether kind which the at size rate experience third is the number maybe you're just And, to want it's you you looking at the of operational versus the is the from in of pace increase or fine-tuning sales you disclosing are or your be changes a small at more convinced across still cost that the it's there to ago, year the benefit understanding still that waiting the thought would as system, they some look system? of whether are or I see what be? relatively And you franchisees some remodels, of still you, quarter to guess,

Scott Murphy

I'd very Hey, And give still small our remodel with actual John. are right. It's excited package. next give earnings. far, is the you're guidance we on where Scott. are about The Franchisees so number say, QX we board. our but we're year when We'll

If you so we is released image release. the design that remember, on remodel design official Xst, July final our

great we to tweak. out now. right we there more continue continue things really But on we that as start and them about the from and iterate small we wild get operators customers, feedback because Now, in see the making improvements it of to we're getting good and we from changes feel we'll

John Ivankoe

Thanks.

Operator

you. Thank

question next Bernstein line the Barclays. Jeffrey comes Our from of from

question Your please.

Jeffrey Bernstein

well. as Two you. Thank Great.

breakfast. on one first the Just

the as the months and in for daypart players all a on Just maybe implications of competitive the more a big of the daypart your wondering few your breakfast burger national with one a launch whole, into with getting peers. a thoughts from category

And Just I in your around as ongoing wondering which any you'd think or there is competition. had is then usual, whether posture it's follow-up. the one or business change whether about that daypart how

David Hoffmann

Thanks Jeff. Hi, that. Yeah. for

on strong, to all get come this fight so to our competitor we continue out time. always new battle the day, We've wants space. one Every say hear to fronts. going won't You're into that. Everyone change a me all

menu it's coffee that that's value, one very best. innovations, on we'll why doubling we the focused new a new of all on do maniacally I and We're focus reason but what change think big more quality, which forward, we're keep is exciting doing down the part best, great doesn't competitor fast. going what we do and

Jeffrey Bernstein

the a Dunkin'. for then, And you. US just on Got follow-up comp

to Just mentioned or up you through quarter into trends of know the directional Are wondering magnitude those in all if this worse? of traffic. give to earlier you want the lower positive? specifics can trying size any dayparts on relative the ticket, I'm two don't quarter. that, offer getting Or up traffic maybe kind you. to I the Is maybe or year. you higher sequential just if metrics change the Thank in the comping still that. better

Kate Jaspon

Thanks. Kate. is This

want similar say out don't were get While the too to will quarter, ticket within quarter But the coming we through of continue as sequentially, into we the comp. I and of the PM quarter, the the quarter quarter. a performance AM from perspective both in we that consistent relatively actually previous from to breakdown far, to and accelerated out months comp to our see

Jeffrey Bernstein

you. Thank

Operator

Thank you.

Charles Our next Andrew question from comes line Cowen and from the Company. of

please. Your question

Andrew Charles

to mix that how roll do relative rest the to Also, the extrapolate ramped Great. Beyond you the experience you recognizing likely wondering as Thanks. Sausage guys nationally, talk if tests as awareness you the Beyond could a if product Manhattan, of I sales saw in honeymooned particularly out in Manhattan the show higher test grew? was you or sales of they is system? what of if about of

David Hoffmann

performed good Manhattan. a a insight key very that's there. We it Obviously, pleased with how were market. in that's Yeah,

tested love a it We – retrial but coast-to-coast in that resemble of out obviously, awareness as got that loved play. of the had also well. other it, we also of America We we the parts more

so, steady initial today. all but And it the versus to held up off way the just fell launch, slightly,

this, to to excited use this very this. So, America. to bring to we're our opportunity in be the able We lead love about platform

Dunkin' America. innovation. line believe We my heard great the to And we're You've of just in this that. me absolutely forefront at is be say, democratizes happy trends

an going be us the November platform And It's ready. But, and give live our Xth, choice. to across so, it options country. just again, to opportunity more use gives consumers

Andrew Charles

openings. just Openings other reiterating the U.S. my end was low seen of question guidance, it better if Makes for a sense. And over openings. were little you've on Dunkin' bit we've looks XQ. Street expecting. the And XX company, But were XXX-plus the XXXX than Dunkin' U.S. net on then, we right, I'm XQ openings doing math been the public in implied a every like since

quarter And the something there or is it in just curious about just the really that's conservatism? so, is guidance, one-off fourth

Kate Jaspon

we We're of permitting towns conservatism. and come and stem happening quarter continue some things at QX. not openings where for It's Kate. the those performing the end of getting our Obviously, is thought. majority in back-end will so to lot like we approvals be around in this of the loaded, weather built Yeah, A from there.

So, nothing unusual.

Andrew Charles

Got you. Thanks, guys.

Kate Jaspon

Thanks.

Operator

you. Thank

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

Your question please.

David Tarantino

engagement strategy you morning. Thanks. significant if you in initiatives. noticed And, going guess, I'm I've I where Good Hi. pretty could there, DD just a Perks the about you're to on of type ask having program. the are, impact the and what in that's amount the of talk uptick wondering about wanted the activity And where I business.

David Hoffmann

it our and is job Digital this. been fabulous here, a to now Stephanie Yeah. the and I'm Head Paul, with and room is who David, has over probably great a going is turn in with really doing year-and-a-half about she of a to and Meltzer doing us job,

take So, it just let from here. her I'll

Stephanie Meltzer-Paul

Stephanie. the Hi, question. David. It's much Thanks so for

them to a to the it Perks of and terms very in are in we enhancements think, going But month last big into us know lot our XXXX. we program more We year, program our open on We unlock, excited DD up the go that Perks. major ran earlier any the going one that we roadmap to of unlock The in based give investment is we pilot for the multi-tender pay that And is as that DD really members, is to tremendous the nationally. just about in launched way. allowing upside. just

David Hoffmann

– thought way a loyalty how on was constructed in, of funnel. add, our top maybe David, of the and as in she the we've she could lot Stephanie the talk of to if there handcuffs program when I terms well just for came

a big done And she just of part to open try that funnel. so, has is what

that see You with multi-tender.

And see that we're to market there guest in plan and she again, with how that drive good has going XXXX. a really on You usage in checkout. got new

David Tarantino

Great. And maybe follow-up. a

I guess, Or part that's when at of this think Kate Was we the trends in the it mentioned the else? uptick end I quarter. an of something was that? activity. noticed acceleration in

David Hoffmann

Too working about that. to our it's the value, it's lot we innovation, I too say compelling terms the We're as out We're lattes of Really, upfront, David, mentioned have it, digital. say a been tough but one-two around. early signature excited in like at punch just that like to Yeah. when on a for GoXs. us early

it about those excited did but And So, was to her app. and the to able said, I demand terms more further bear around along being we're really doing. in investments, lines, the starting digital in Stephanie what is that the in come blueprint some fruits to like drive are for of we

David Tarantino

thank Great, you.

David Hoffmann

Thanks.

Operator

Thank you.

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

question please. Your

John Glass

comps. Thanks night your to very it beverage wanted the And reported back core U.S. rivals I much. sales very Dunkin' in traffic in was cross-country to robust go their and last led. business,

sales? on how majority there And And base. business some iced do your the on have biggest pressures your coffee has you a pressure business, I business? if the but business, still core defending food think small I well, there there understand done may where it's which your that's the coffee very core the so, you But be about just can been or traffic? still at go core the about Dunkin', talk is How of of beverage if the is been, one looking that business, trends all stabilization drip espresso has the good. given attachments And

David Hoffmann

who and expanding blueprint coffee I of core and have before, are. we the a part sweet John, big was talked as you our very donuts to Drip spot. was

see about around news drive will into XXXX espresso. you'll that. more we're that. doing to new we're and as getting We again, also drip about categories in coffee it excited about again, But, And what continue is such

can we in a that big where way. us, for New go after

where the we're this may we look, coffee. market in plan, and bit So, repetitive of terms delivering rather our our We're much five-year plan. iced – guided And, and to player quarter. that sound iced is are. exactly a than have biggest we're a working we we in are What coffee, very still long-term a what managing We the peers blueprint to. know boring,

you We know, as than others. are better also,

journey in are along got is industry. to on the has what the XXX% we We critical and believe franchised. believe long-term been franchisees And best partnership success. relationship the we with We've the bringing is what us this

and that So, that know delivered we across I'm we especially can internationally. we domestically proud balance the do on what clearly, of quarter, more. did the both we But, brands, all

John Glass

remodeling you'll in you blueprint about talked Okay. to this the sort the is bringing And piece And how point, you're think, XXXX. get key the financed. of talk about life. a guidance is give remodel, how that multi-year then, looking at going Do at And to going of to some you plan? you have

be is there that contribution, able might you if might more assess how were take or does it, for of you involved out if you involved us So, corporate it? lay be you'll that to how a – how really in out in the plays to funding time

David Hoffmann

We'll John. on very that. all of be transparent Yeah,

So, And when again, then. of our earnings part transparent release that's very thinking. talk about QX we be and we'll it all

John Glass

Okay, thank you.

Operator

you. Thank

line of next of comes the Our from Gregory America. Frank from question Bank

Your question please.

Gregory Francfort

Thanks just for guys. question. have I Hey, the two.

have the lift by the any far or you sales Any I remodels. in the to been of of but experiencing? there? what on know only terms returns so the was plan has help first reads early year, end The you're XXX that

was And on then, drive-through the just question speeds. other had I

wondering you or have same I'm able of back the peers the the pretty maybe it been in your to materially. and if I on a guys guys America. out have at Thanks. see few to address happen larger fastest of as change called it changed to been seeing drive-through able call if I that that's kind I you are you think – down tilt And think you the same? all? think Can

Scott Murphy

Hey, Scott. It's Greg.

say. would I what is Here

are small are relatively the it performance, very On we're our releasing remodel happy franchisees. piece, the as still not set remodel It's we with on but numbers. a the

and of the three out tap nice the seeing we're the the then pickup. order a of counter bakery. components So, bobile front system on-the-go core Obviously, growth

happy happy we're returns seeing. So, very it. are Franchisees with the with

So, give to next we'll we when get more that details scale. year on

On of small, your drive-through. tactical the high-def drive-through, like our there. audio, headsets, is. obviously, digital blueprint great positioning And so lot making with queue coffee, menu changes out small second focus comes It's the a of things where car and counters, life and especially fast, it's even the through boards, we on to piece whether the of the are a lot

things digital recognized now, AM also some future. But to we're get some part that We're speed right really doing by bigger around the it Magazine. you'll seeing on hear the about for improvements, QSR tacks was in in brass day nice nice and especially the it's and our

Gregory Francfort

seen And there. the other that of maybe industry you a Thanks. when lot to change improvement the has change? on for were last months, six timeframe that kind there. just players a Dunkin' I the an kind also have in think see that able of seen follow-up of front? When a Is

Scott Murphy

So, I'd actually go back little a further.

when with of started menu that initiative SKUs of the out we it did think I there. some simplification, slower-moving got and

even little iced speed beverage espresso, a before our especially summer us, helped the season. during focus, us though, time This pickup that. saw was bit we with the really So, was nice for on that actually with a

Gregory Francfort

Thanks.

David Hoffmann

down a all to this out challenge from one the his going all add rallied and the the the – The you, other internally, I and that, saying, around slow credit Scott is and world ops but system was and espresso us would that. to in on really okay, team, to of rollout we that put goes is thing but

is a big And around well. as so, tailwind piece there that

done. and bootstraps So, it, the and the what and getting have just your team pretty much after rolling Scott and up franchisees that's

Operator

you. Thank

of from Evercore Palmer Our line ISI. next question comes from David the

question please. Your

David Palmer

Thanks.

ROI a to I coax Just slightly than just are an in limited. sizable spend or Reimaging, nervous I'm franchisee going reimage you reimaging about pace would of relatively money big be wondering a that – to brand to you of stand up. as my the be the reimaging. help talk the own question it's would cost more amount that terms machine. I since guess would the engineer contribution guess, it the here. These the in you're box itself could of an I on hope terms make its on espresso guess I'm owner value for

So, that on would and that future pace making any thinking thought how helpful? accelerate you're about be the in

Kate Jaspon

set if Yeah, off And alarms. this is Kate. any I we apologize

that backing I referring And to think But, say thoughts evaluating you're through anything are return given is espresso, committed substantial like year cash. trying franchisees table. and use we're of always not investment the the we're obviously, best all to our digital the and the have what our on to last and from accelerating remodel.

into the not I on saw, own. accelerate collectively their we the any get to to trying something certainly doing do investment franchisees were would system that would we similar that would be do you not to make think something espresso, as where something and could something. It's

they're to I apologize at to just excited. came time. image. field, rate them We're don't about with that Please and incorrectly. Scott's team which is figure the the off working They're excited ones now. working what that. next-gen with into So in right read do out pace if and the them

David Palmer

is traffic certainly defend lately. portraying you going with the value, entrant guess is, curiosity showed your food a check. guess coming little feels be has been bit traffic in more other, at really out All you like is I there that to unit a Do But created Thank breakfast of new through what or like of up value. that think, seems It been on helpful value you. it's often lot the general happen are the have It And focus – new least like you've they traffic? feel like, – like right, being a food got? and GoXs, to much was value in traffic the some but maybe what reported I combos, actually to make digital fast thank missing sustain from have of in. traffic on in traffic what thought had my focus really obviously, ones in positive ability, fast yesterday. you. Starbucks do you there, tools

David Hoffmann

long-term of a had Look, core we're with where as of David. that business. Look, We be. thought have areas. hot and know big I you've categories those value always been We're a more said, to succeeding outside blueprint. we've lattes. It's Like such to Yeah, plan year-to-date how our since cold brew, working do drip espresso, need part coffee best the we not traffic offerings, the XXXX. I talked is about the in in signature traditionally want

and single to more one drivers Next-gen we best add so our quietly has units. been be as continues traffic of

So, we're our but that's also present, game. opportunities very pleased about that. long the control. much of part But our also within are But

just our from platform, key. as Expanding the has more be as are Stephanie, new that against revenue expanding to going customer all faster key. these and as such you the importantly, And to be delivery, be convenience blueprint. catering part digital sharper, new to So, going is market is relevant. but, And more of heard things streams, innovation efforting we're the to

David Palmer

you. Thank

Operator

you. Thank

comes Eric line KeyBanc. the Gonzalez from next of from question Our

question Your please.

Eric Gonzalez

thanks. Hey,

a that doesn't get a on small your of international. often. it's Just question business, mentioned part I know it but

firmer International accelerating on of together, even And four put looks in growth think, footing. it's quarters Baskin Dunkin' You International. comp I like

either So, I opportunity how development you the the think momentum? by wondering got growth to now new comp markets markets, or accelerate you've about just was Thanks. existing entering that

David Hoffmann

in get out wanted right market terms we question. that into something that Nothing there. of Yeah, new entries. thanks now It's for to

focus in I being better been it's a getting current think, the at market. on us, better for really

brought to dealt to So, the the seeing help been that talent there. with some minimizing JVs in of a off adding you're any that our external pay we've more part often this. attention in and that Paying big with past that, in interest and surprises we has

Look, well, it's delivery, channels experience, as pursuing we about new that stability the the happy sort of blueprint international the and all customer formula. CPG. balance have through with working We're better now. unlocking been That's

markets and both XX well. what markets know opened and as my exited in like we we of are years that I've we've we You a the got we've brands. lot But, around like portfolio doing some look,

the immediate plan. just pursue It's So, that think not where of there's will opportunities, we again. part we

Eric Gonzalez

Thanks.

Operator

you. Thank

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

please. question Your

Nicole Miller Regan

you. Thank

comps on market how customer? customer Just actually. outsized Donuts or same differently international quarters, the given you, think, five, four, more it's a that than little I U.S. the seven the Especially six, views for, does Dunkin' bit the

David Hoffmann

things Varughese team of pivoting. to and model done and history locally, get it not and And Any stale this my don't US is again, time one I international the you is John from export it think a just the work. well. tends well adapt you that have as

has formula just better to and Europe, offering the do, over there one it and in what a the adapting I has we're really single several understanding you at years, Too Arabia cover now. piece putting with in bring market. said, local good to being in that and Saudi in franchisees. this, to also again, job to but but sounds customer business the Yeah, of tastes. model doing to that at what think look boring, off it's I is much John you kind but answer, done Malaysia last a paid to our how if to right better of like And Philippines to just

with go Asia now. could East we're pleasantly a lot the across, across in the I've the Europe, even these Middle Southeast pleased way know I and doing but what all in guys Look, and and you areas, in of experience JVs got

his don't John steady doing on models there, your but nice a think John So, again, yeah, – overamp is team. some leadership, John of job I and

Nicole Miller Regan

to And little a lends bit just practices. that itself talk best about

there. lot have scale a leverage of benefits can and You

So, U.S. something maybe and there Dunkin' something loyalty Robbins? at investments or is of is learn or bring Dunkin' Baskin internationally that you in marketing at back to there you you terms learn

do from and internally a frankly, you brands, of benefits as do both how those scale at between maybe final between that question international Baskin? get Dunkin' me, and or Just domestic and/or

David Hoffmann

we're much the practices those best on pond. Yeah, sharing getting tighter across

Conversely, it's side the So, as delivery properties, side with whether what's relationships, like us is know, Nutella I the for new us. international the and our We're and movie we Stephanie's Dunkin' going developed on smarter things up is team US the team the say, CPG US or on of that. team opportunities, the terms Baskin on channels. tying international. whether also strategic terms strategic how both That in there did would of ahead very out to with figure way in to you They're partnering business, bit in getting pursue partnering it's and on is leverage a – partnerships. promotional of how there. And they then, over team

again, to to some more boomerang trying and synergies So, we're we're best practices come globe. definitely on the that, seeing but around definitely

I recently a on clever Dunkin' of out a calendar end will saw don't it, to U.S. the over Philippines. but up I really idea because our just it's idea. great think want share in and it was I

like we're smarter that starting that much about. things get to there's So,

Nicole Miller Regan

you. Thank

Operator

you. Thank

Our next line question from DiFrisco comes Matt Guggenheim from the of Securities.

please. question Your

Matthew DiFrisco

there. of reference night Thank the you. one also last to been competitors some has call your There from

to there wage better Just on drivers tighter a day side, that on could you an scheduling of the labor. bit you have is a redeploying in or of with at of or, how that? a comp little the labor to guess, management? cutting have so maybe, reaction And of some maybe as of little to flow comp result just incentivize a was the they one better modest labor labor not with I'm is maybe model could the sort or Do of ability end effectively or franchisees you recent reflective see it the the curious to back to labor of type redeployment respect increases, of could way maybe perhaps if profits? franchise the I their through more better – some knee-jerk of comment direct more monitor growth

Scott Murphy

the our a focus you've give we're on our doing us we optimism the spend scheduling, couple of on, deployment. Scott. And it's of for labor that future. a tacks one to point what those terms say franchisees. in me lot areas of I'd and Matt, working things interesting time brass biggest hit That's Yeah. I'd for And

for growth and the ordering, transaction talked we transaction efficient time Stephanie the mobile most And that whole take the ordering everything of that and accurate high-quality about on which restaurant, on customers' so our process all outside happens of the just and is digital. restaurants. and restaurant, tendering, most on-the-go the that, see the in obviously, when the is, we One move it of outside

So, we love in that, the box.

I'd The new next-gen, is say the second thing image.

has what so, building. model looks in finish behind a enough what it We And the it from and and is talking love franchisees inside What the the the we the do of to about change don't like talk modern the and the probably outside atmosphere. operating love the love the to about talk counter. about tap system how true and and we fit

just out seeing So, for we've high-volume that that efficient in we've I scheduling is got system coffee the absolutely but products, loves optimistic not equipment new and starting a and we're think more with to much there make in got got line. staff. technology some management help that how roll they a efficiencies, the We've the we're future. to will labor the there in room that And that be of crew

Matthew DiFrisco

to not parallel scheduling labor having it, but the to gen that is a the element So, essential an or be necessarily store is next next-gen of will that part

Scott Murphy

to image. out with going it conjunction roll So, we're next-gen the in

office, it that's yes. back and it, our So, for with platform new goes technology

Matthew DiFrisco

pay last – was order mobile say did you and What think now? X% it I what year. order mobile is and pay And

David Hoffmann

X%.

Matthew DiFrisco

Thank much. you so

David Hoffmann

Thanks.

Operator

Thank you.

comes Stephens Inc. question of next Our Slabaugh line from the Will

Your please. question

Will Slabaugh

you. Thank Yeah.

the order that's typical to story convergence looks those Perks curious to if Perks that that customers that ordering? You mobile on as mentioned customers. of successful success they're compared And how aren't member Perks to what converting I'm customer allowing a in members, and behaves like,

Stephanie Meltzer-Paul

Stephanie. the month guest question. rolled Hi. just for It's a We ago. Thanks ordering out about

very very, it's we So, are early. pleased. But

Perks that they direct a XX% mobile we the app guest over order the order. follow-up convert after is first around orders seeing within One promote we're then marketing guest few within the over email. days far, guest So and to with of after place because we

actually to numbers really our early is to do for to ultimately, join ordering, very bigger option not, but, those unlock. we're Perks That them is So, on. to for even the the Perks pleased get them an we want over guest goal with give program or

Will Slabaugh

I versus in quarter the the it. you could, And Can in to just speak GoXs performed value, quick broadly Got in previous a on follow-up quarters? mixed if how those particular.

David Hoffmann

get off with but know big the But, the against combination back one. my to don't I part it of that on quarter, head right of of you the that signature delivering latte. the I top have now. was it a was look, to

and how of of So, a both performed. we those were It has it very pleased with us. lot for still legs

for driver to and get calls, maybe follow but have we'll up the that. key we'll more a QX, was – on on details side you it So,

Kate Jaspon

Kate. This is

may mix GoXs perspective, the year-over-year national last year, of Just come actually recall to we this quarter several our a offers. off add you testing we're saw so had from the certainly on, regional increase, that we and

and So, our year, so on we've within an consistent, in year-over-year. this had messaging increase seen our a we've sustained value, ticket mix

Will Slabaugh

thank Great, you.

Operator

you. Thank

from Our of next UBS. Dennis question line the comes Geiger from

please. question Your

Dennis Geiger

place variety innovation, you. guess, initiatives ops, remodels, Dave, of whole sales on cetera. Thank touched buckets, across bunch in I of across et you technology, a a

or the on new that as you of the established contribution of of developments layer kind help that of them launching. some technology you guess, I some these others are and the Some significant, drivers frame of national, Beyond of are if potential could the newer are just close as I new But, guess, drivers Thanks. to be XXXX? other as some look Can some the XXXX. you year, this as to business going innovations for for

David Hoffmann

to a we get into strategy, part these us as That digital question. And, expanding to big coffee Yeah. going of I adventurers. showed but drip innovation, is is on has speed convenience espresso key focus good I our forward, menu that before, love for coffee, can look, the sweet be going as and other areas spot. our tool us. new mentioned is speak our the A platform

is of cold some best espresso, brew, there lattes, only R&D credentials team we've our the lot but got not in iced. on, our So, around the a signature hot, working that there is industry around

again, very with attachment other have those to better focused I is heavily to innovation. So, for opportunity one beverage attachment, be think some have us opportunities And, we element us GoXs the to piece where see on a beverages. around of attachment. is key but that there's continue

what and again, platform, you'd lot unlocking program. Stephanie doing app accessing I usage the, the the loyalty is our of guess, on digital handcuffs just then, around and a is And say, our

along And is efforting against incremental that. more those year, lines So, to in-app additive. think be that that and going she's want we we offers against next been things market and to

My areas and love with other finally, talking over greater our use We to platform then, with we Ethan relationship certain for Brown like Beyond. There's that. the to folks we're the there, lead And already strategic partnerships. partnership good. in us. And for opportunities

that elevating menu an under the then, job, job is like, That's a and amazing lot of there there at customer Scott's it. experience. does innovation always we and So, XX/X, course, under digital,

Dennis Geiger

thanks. Great,

Operator

you. Thank

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

question please. Your

Brian Bittner

guys. questions. Two Thanks,

realize the on X% the above system, up following it's of on-the-go in markets. way also that I ordering, app certain is, and I for usage First sales understand it's but

you So, it overall in is actually trends than do stores the see or where the sales way above, better those system markets in markets?

after roll to relative espresso? from an Is it are my bigger on last just accelerated lift is is it or a seeing Thanks. is And sustained quarter? impact update question performing How today than second espresso. or even directly you the out

David Hoffmann

one espresso. second one first will the do answer on and Scott I'll Brian, the

obviously, on as is pay you, just industry our trends seeing and and greater, a urban areas are that, Xx, and guys the not located, again, the it also we but continued where that's Xx us, future, that's designing mentioned translating into next-gen terms of, we're to is, and, that. much we significantly will whole. you throughput restaurants but is but a mobile are now the we've in where which better order for especially not this, think In a work X%, as designing for go What

areas and very throughput. the building on to in up it's located XX%, that pleased. XX% in that again, the better you We mind we're are but So, we're seeing first, guys with much get restaurant

as and beyond just has into crannies, And key – so type seen to get you've throughput. ordering this and nooks and pickup moving a lot been know, our traditional we're of able you Dunkin' of for a into

it's of success with yes, and, seeing we're yes, strategy part it. So, our big a

Scott Murphy

Really more any continues continues the platform. flavors, sustain that especially this month really excited got well excited we're be about about earlier. in, We've about that as and it some and growth couldn't to season innovation, talked for signature we and the the lattes Brian, XX% holiday nice espresso, And, we with month out.

think mentioned is goes Dunkin' we've who training are break consumer. a we nice executing driving the for seeing done that value the in for little to a which it more couple that a younger, areas I the our attachment, crews The and One, things. all of the proposition that items, skews PM the that at espresso And great growth afternoon speed of for the toward we're future. and restaurant offer donuts the great espresso traffic a obviously, a has little target to female and for savory and with a it other is more little

So, even come. very to think And I espresso. more excited there's about

Brian Bittner

guys. Thanks,

Operator

Thank you.

of comes Sachs. from Katherine line Our next question Goldman Fogertey from the

please. question Your

Katherine Fogertey

you. thank Great,

just So, espresso one is of the point. back on going my questions

percentage the previously from of disclosed sales that You were had guys espresso. coming

I sales quarter, think, to it from of XX%. X% last grew

on is And tracking I Thank follow-up. now. a right So, where curious you. that have just

Scott Murphy

Yeah.

So, it's mix right tracking XX% now. about at

Katherine Fogertey

that Thank this would US you. quarter, that anything any XQ? in great. opened you been forward the And then, there was XQ special this maybe anything were see units additions on pull kind of quarter? of did opened unit Okay, have there kind – the about in in Was

should as was going year-over-year cadence we quarter year-on-year. a because we've choppiness the about somebody alluded been about thinking of the think if kind this there any this XX%, was basis. was forward. down call XX% of wondering up there tracking ask when kind Thanks. that X% on kind on the of on units I else I to, of units down And

Kate Jaspon

end Thanks, There of unusual on the nothing that nothing were forward few still was we stores question. QX, into expecting but this And XXX. pulled great Maybe that to Yeah, expecting QX unusual. Katherine. XXX quarter. in a lower the

Katherine Fogertey

thank All right, you.

Operator

Thank you.

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

Your question please.

Andrew Strelzik

of lot Across a there and focus there I peer lot limited good had direction. morning. investments. investment question group, tech service your of on a in Hey, that going of is kind just a

not elements, how technology just the some investment but behind that level do you're also is, of on And on maybe competitive? question my So, consumer-facing capabilities. you ensure of to evaluate the remaining right the

like Given in feels there, there opportunity an more. the greenshoots maybe lean around to is conversation it

just curious opportunities. I'm those So, how you're evaluating

David Hoffmann

Yeah, a year, we $XXX be did we nimble. that app, was bit let we we me was this Look, secure opportunity investment last that the a Stephanie could million in. bring idea big IP the thought start more thought can and in-house jump and which when and state-of-the-art, our

now give right process the us doing that, in of that we're So, flexibility. to

experience really you've us frictionless say consumer. heard is So, the a creating for everything around

greenshoots to early That's that. So, why want days. overamp more didn't anything on around I than

over we've doing, in and what the this. got some Stephanie great – obviously, got always look this all is asset-light strategic look, competitors relationships at And some partners we're we've we and area. And, but are

feel so, path on. about we're And good we the

to some feel about we competitive for there's mobile close a about we're We've We disadvantage. reason and we're – and in market of feel like We're around this. and any and anything always position in headed. been the don't we going that's be out the our And anything. investments boxed XXXX excited think got don't leaders We order we've the pay, us but think we're that our where gaps one at good making. of to loyalty also to of know terms

Andrew Strelzik

Great, thank you much. very

Operator

you. Thank

Group. Our Anderson next question Stephen comes Maxim from the from line of

question Your please.

Stephen Anderson

terms Tony just in actually that search to over of of Weisman to the and departure today. morning. on for comment search looking follow-up you notably you've the been Yes, good can some of And marketing. changes ask just what your wanted recent if I wanted on management, in in

David Hoffmann

and of with a him And, market process. great who the looking and well strategy decided the has thank deep and going in of middle Tony run we we're menu Look, Yeah. Thanks, innovation forward, got two-year had wish search. a contributions. him actively understanding to Stephen. us, a his to somebody step away for for we're

Somebody who the inform to of uses the consumer voice decisions.

how somebody market that then, greater a experience voice partnership. agencies our develop and user finally, to in who knows how we to understands through our strategic how brand digital and who and And purpose into our and to Someone platform. weave communicate brand

of now. for need description that's looking that's here. and job any brief our much in looking partner sort pretty think for right I that's come what CMO, we're And for So, but type that I'm a of to

a great a of at this people lot lot is role, right Obviously, highly we're that and getting of getting top-tier we're a looking desired we're now. so So, candidates.

on in So, future. more we an that to the have announcement come when

Stephen Anderson

Thank you.

David Hoffmann

Thanks.

Operator

Thank you.

Our BTIG. of from line final the comes question Peter from Saleh

please. question Your

Peter Saleh

right, provide a on you digital partnership you update that thanks. some on about can definitely how going lot strategy still delivery heard talk the guys if and an thoughts the you All I and that give part with may us your and forward? Beyond, of Could but with viewing are partnership a is guys delivery how be you going. Grub

Stephanie Meltzer-Paul

Stephanie. our Hi, still We're still it's excited very very for Grubhub. Yeah, with question. excited the Thanks we're about about partnership delivery.

and lot York is and the a we're gaining DoorDash we New as efficiency at and delivery, our into in key Our we we head learnings with excited Boston franchisees are operators with the to for open but a We're major proposition. in And other Philly. partners. with of POS moment. about next year, markets winning definitely now are and continuing them live We're that our integration there working delivery for around and think future we is three

stores some and into future. have them, the about also as but we excited learn We space very more the live with still we'll we're scale

David Hoffmann

add letter. a compete about I'd better and in what such is Grubhub. is, they're strategy climate. Value to we thing This only shift the read their look, their competitive their Peter, transparency And, doing

we to through appreciate are and on But for with relationships channel. we continue focused that. So, increasing customers convenience have said, any as Stephanie multi partners delivery our

So…

Peter Saleh

you All very Thank right. much.

David Hoffmann

Thanks, Peter.

David Hoffmann

Okay.

everyone, you're I'm that continue thanks, And, I'm going to being something clears queue, just going Look, And beat to to again, I reiterate me to think I said going earlier. the hear drum. on. operator. say this for

partnership a confident and along in the And to have we we've journey. been confident, delivering I the long-term this blueprint exactly said. to exactly and the what and around managing and we're success. working thrilled that's bringing We're know rather got on what plan critical them that a to guided we're I We best the plan am quarter. best we long-term industry table, five-year and we're franchisees the that than

and balance Look, it both across do relates domestically proud we the all to as we know internationally. But can brands, we QX, more. of had I'm

you from can on so, count And that this team.

Halloween. to And to well Munchkins Have go everyone. they're again, the handed thanks safe during Halloween out a be just kids. great So, and remember

care. So, thanks, everyone. Take

Operator

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

disconnect. now Good may You day.

Dunkin Brands (DNKN) 3 Nov 192019 Q3 Earnings call transcript