Dunkin’ US could close up to 800 stores.
CANTON, Massachusetts — As part of a real estate portfolio rationalisation, over 800 Dunkin’ US stores—including the 450 limited-menu Speedway sites that were previously announced—may close permanently in 2020, Dunkin Brands Group, Inc. said on July 30 while releasing its second-quarter financial results. The 800 sites would account for roughly 2% of Dunkin’ US systemwide revenues in 2019 and 8% of the company’s overall US restaurant base.
During a July 30 earnings call, David L. Hoffman, the chief executive officer of Dunkin’ Brands Group, stated, “For Dunkin’ US, this means locations that have low average weekly sales, those that cannot support our beverage innovation or a next-generation remodel, or, frankly, there are locations where the traffic patterns have changed, and they can’t be relocated or add a drive-thru.”
Katherine D. Jaspon, chief financial officer of Dunkin’ Brands Group, stated that the firm still anticipates the average franchisee operating cash flow in Dunkin’ US to be roughly 80% of what Dunkin’ anticipated it to be at the beginning of the year.
She also mentioned that foreign licensees and franchisees are evaluating real estate holdings.
By the end of 2020, “we anticipate that we could see an additional 350 restaurants close internationally,” she stated. “These are low volume sales locations, which are unprofitable for our franchisees and licensees, similar to the closures in the US.”
The Canton-based Dunkin’ Brands Group reported net income of $36.5 million, or 44 cents per share on common stock, for the second quarter that ended on June 27. This represents a 40% decrease from $59.6 million. 72c per share in the second quarter of the preceding year. Income dropped from $359.3 million to $287.4 million, a 20% decrease. From a close of $71.68 per share on July 29 to $68.65 per share on July 30, Dunkin’ Brands’ share price on the Nasdaq decreased by 4.2%.
At the conclusion of the second quarter, Dunkin’ Brands had $117 million in available borrowing under its $150 million variable funding notes and $291 million in unrestricted cash retained in the United States, excluding cash set aside for gift cards and advertising money. Under its variable funding notes, Dunkin’ Brands borrowed roughly $116 million in the first quarter and paid back all of the debt in the second.
Both locally and abroad, Dunkin’ and Baskin-Robbins saw a fall in same-store sales as a result of COVID-19-related traffic reductions somewhat mitigated by an increase in average ticket price.
Dunkin’ US saw a 19% decline in same-store sales during the second quarter. After a 32% decline in April, a 17% reduction in May, and a 9% drop in June, they improved progressively. The quarter’s segment profit decreased by 24% to $96.2 million, while overall revenues decreased by 20% to $134.1 million. In providing a third-quarter update, Dunkin’ Brands stated that for the approximately 96% of Dunkin’ US locations that remained open as of July 25, same-store sales reductions were in the low single digits.
Dunkin’ International reported a 35% reduction in same-store sales, a 66% decline in segment profit of $1.8 million, and a 63% decline in overall revenues of $2.8 million.
For the quarter, Baskin-Robbins US reported a 6% loss in same-store sales, an 8% decrease in segment profit of $9.3 million, and a 13% decline in overall revenues of $12.4 million. According to Mr. Hoffman, Baskin-Robbins US’s delivery sales increased by almost 250% in the second quarter of the previous year. Same-store sales at Baskin-Robbins International decreased by 5%, while net revenues decreased by 18% to $26.6 million and segment profit decreased to $9.9 million.
Dunkin’ Brands reported a 21% decrease in net income to $88.6 million, or $1.07 per share, on a company-wide basis for the six months ended June 27, from $111.9 million, or $1.35 million, the previous year. per share, during the same period the year prior. Revenue for the first half of the year was $610.5 million, 10% less than $678.4 million.