Dunkin’ announced their Q2 earnings last week. The revenue was less than normal, largely because of the pandemic. However, Dunkin’ was somewhat quiet about its digital acceleration goals.
Global sales for the company, which also include Baskin Robbins, dropped 20.8% because of both temporary and permanent closures due to the pandemic. Store sales declined 18.7% in Q2 because of a decline in traffic. They were partially offset by increasing average ticket size however. According to a Dunkin’ spokesman, comp store sales have been improving each quarter.
Dunkin’ also announced that around 800 of their US locations (about 8% of the Dunkin’ footprint) might close permanently this year. This figure includes the 450 limited-menu Speedway locations. The reason for these closures is part of a real estate portfolio rationalization.
CEO Dave Hoffmann gave changing consumer behaviors as one reason behind the reduction in earnings. With Covid-19, a lot of customers who would previously go to a coffee shop location to grab their morning brew are now having their coffee at home instead, or visiting their local Dunkin’ at a different time of the day.
Store sales were already down by 35% by the end of March/beginning of April this year, and many customers’ morning routines have changed, Hoffmann explains. Sale volumes in the morning are down, with the period between 10AM and 2PM the new busy time. This is when people come out for a break during their workday.
There were not many details released with regard to digital acceleration. Questions after Dunkin’s official announcement mainly concerned the financial health of the company. Hoffmann did confirm that digital channels have boosted customer engagement though, and said the company has some 400,000 new loyalty program members. App downloads are also popular, and Hoffmann reveals that the company is planning to increase their digital marketing as more locations reopen.
Hoffmann explains the company has scaled back its national media spend, and is currently not launching limited-time offers. Instead, Dunkin’ is choosing to stay with appropriate messaging media, thanking their crew members as well as first responders with their raise-a-cup campaign. There is rotating content on both traditional media and social media channels. Hoffmann says his marketing team will keep creating and refining their branch relaunch, but this must be done responsibly and the timing must be chosen with care. In the interim, Dunkin’ plans to rely on digital marketing since it has been giving them good results.
Philip Auberbach, Dunkin’s new Chief Digital and Strategy Officer, will join the company later this month and oversee a new digital engagement team to fix the company’s digital acceleration. Auerbach says he is excited to be joining the Dunkin’ brand and wants to build a digital ecosystem to deliver a top-quality, personalized experience across every channel. Formerly, Auerbach was Chief Commercial Officer at Lindblad Expeditions, an expedition travel company. Before that, he was Senior VP and Regional Chief Marketing Officer for Caesars Entertainment, where he oversaw digital product development, strategic partnerships and third-party distribution for Caesars’ Las Vegas portfolio.