NEW YORK (AP) — Dunkin’ Brands’ revenue was not as strong as some expected in the second quarter as the chain blamed price increases for keeping some customers away.
Though the company edged out profit expectations, it trimmed its revenue growth expectations for the year, citing its plans to sell off some of the stores it owns to franchisees.
In the U.S., same-store sales at Dunkin’ Donuts locations edged up 0.5 percent as higher average spending set off a decline in customer visits. CEO Nigel Travis said the company’s franchisees raised prices to offset higher labor costs around the country.
In the meantime, Travis said Dunkin’ is working on improving the quality of its food to better compete with rivals. For the egg product in its breakfast sandwiches, Dunkin’ said it has been testing a formula that should be in stores nationally by the end of August or September. The company said the new product will have a higher concentration of egg, and less water content and other ingredients.
“The yolk is much fuller, it looks much more yellow,” Travis said.
Other food offerings, including bagels and bacon, are being tweaked as well, the company said.
Dunkin’ Brands Group Inc. is also hoping to attract more customers with espresso drinks and a recently introduced cold brew coffee. It’s upping its technology as well, allowing customers to order ahead on mobile devices so that their orders are waiting when they show up.
Profit for the Canton, Massachusetts, company jumped 17 percent to $49.6 million, or 54 cents per share. Earnings, adjusted for one-time gains and costs, were 57 cents per share, which was a penny better than expected, according to a poll of analysts by Zacks Investment Research. The year-ago results were hurt by costs related to a settlement of the company’s Canadian pension plan.
Total revenue rose 2.3 percent to $216.3 million, shy of the $220.2 million that Wall Street was looking for. For the year, revenue growth is now expected to be in the range of 3 percent to 5 percent, down from 4 percent to 6 percent.
For its Baskin-Robbins chains, same-store sales rose 0.6 percent in the U.S.
The company also declared a quarterly dividend of 30 cents per share.
Dunkin’ Brands shares slipped 11 cents to $46.96 in morning trading Thursday. Its shares have fallen almost 15 percent over the past year.