Dunkin’ to Invest $60 Million in NextGen Evolution – QSR magazine

Posted: February 9, 2020 at 2:50 am

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Dunkin Brands CEO Dave Hoffmann compared growth in 2019 to the triangle offense, a basketball scheme championed most notably by the 1990s Chicago Bulls.

Instead of Hall-of-Famers Michael Jordan, Scottie Pippen, and Dennis Rodman, though, Dunkin points to beverage leadership, food innovation, and consistent value as the key pillars of its blueprint for growth strategy.

In 2020, the company will focus more on that triple threat, as Hoffman calls it, through a multi-million-dollar investment.

Dunkinas part of the push for NextGen remodelingwill shell out roughly $60 million for state-of-the-art, high-volume brewing equipment for domestic locations, with matching investments from franchisees, it said. The brewers will allow the brand to expand the variety of drip coffee blends, increase operational efficiencies, reduce waste, and enhance the quality and consistency across the system. This is on top of the new espresso machines installed in 2018 and the new iced coffee brewers in 2019.

The brand ended 2019 with 525 NextGen stores, a redesign including an eight-headed tap system, modern dcor, front-counter bakery, efficient coffee line, and enhanced pick-up area. The company expects to end 2020 with 1,400.

There's a natural momentum with NextGen, said Scott Murphy, president of Dunkin Americas, during the companys fourth-quarter and annual review. Once a franchisee has a couple of units open and has worked out any operational kinks, they love it. The crew loves it and importantly the customers love it. NextGen represents our best comp and traffic driver in our system.

The 13,137-unit breakfast and coffee chain saw a 2.1 percent increase in domestic same-store sales in 2019 (9,630 U.S. locations), the highest in seven years. In the fourth quarter, comp sales rose 2.8 percent, year-over-year, the highest in six years. Baskin-Robbins domestic comp sales grew 0.8 percent in 2019 (2,524 domestic units) and increased by 4.1 percent in Q4. Across both brands, revenue bumped 3.7 percent to $1.37 billion in 2019. In Q4, revenue rose 5.1 percent to $335.9 million.

Internationally, Dunkins Q4 comp sales increased 6.9 percent, year-over-year, the 10th positive quarter in a row. Baskins global stores saw a 3.2 percent rise. Dunkin operates 3,507 stores outside of the U.S., while Baskin has 5,636.

Amid the growth, Dunkin will exit and terminate its agreement with 450 Speedway stores along the East Coast. Murphy said those units represented less than 0.5 percent of Dunkin domestic sales in 2019. He believes the holes left by these stores will be filled by the chains NextGen restaurants. The agreement with the convenience store chain dates back more than a decade ago with Hess Corp. Speedway took over the Dunkin locations when it acquired Hess in 2014.

By exiting these sites, with minimal financial impact, we're confident we'll be better positioned to serve many of these trade areas in the coming years with new Dunkin' NextGen restaurants that offer a broader menu, said Kate Japson, chief financial officer.

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Dunkin' to Invest $60 Million in NextGen Evolution - QSR magazine

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February 9th, 2020 at 2:50 am