Dunkin' Brands Group Inc (NASDAQ:DNKN) Q1 2018 Earnings Conference Call - Preliminary Transcript

Apr 26, 2018 • 08:00 am ET


Dunkin' Brands Group Inc (NASDAQ:DNKN) Q1 2018 Earnings Conference Call - Preliminary Transcript


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Good day, ladies and gentlemen, and welcome to the Dunkin' Brands First Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time.

(Operator Instructions)

As a reminder, this conference is being recorded.

I would now like to introduce your host for today's conference, Stacey Caravella, Senior Director of Investor Relations. You may begin.

Stacey Caravella

Thank you, operator, and good morning, everyone. Speaking on today's call will be Dunkin' Brands' Chairman and Chief Executive Officer, Nigel Travis; President of Dunkin' Donuts US, Dave Hoffmann; and Dunkin' Brands Chief Financial Officer, Kate Jaspon. Today's call is being webcast live and recorded for replay.

Before I turn the call over to Nigel, I'd like to remind everyone that the language on forward-looking statements included in our earnings release also applies to our comments made during the call. Our release can be found on our website investor.dunkinbrands.com along with any reconciliation of non-GAAP financial measures mentioned on the call with their corresponding GAAP measures.

Now, we'll turn the call over to Nigel.

Nigel Travis

Stacey, thank you. Thanks to everyone for joining today's call to discuss our first quarter 2018 results. These results were delivered against a tough backdrop which included the national rollout of menu simplification, continuing intense competitive activity, as well as adverse weather. As I said on prior calls, in fact, many prior calls, we are not immune to the current macro environment.

It is an increasingly challenging environment for retail and restaurants. Value wars among QSRs fighting for market share. Minimum wage increases and low unemployment. These are all realities our franchisees are seeing and feeling in the business and, of course, the consumer is changing, retail is changing and we are responding to these changes positively with the Dunkin' Donuts blueprint for growth.

A three-year plan designed to transform Dunkin' US into the number one beverage led on-the-go brand. As outlined at our Investor and Analyst Day in February, Dave and his team have been hard at work operationalizing this blueprint. And while our first quarter performance was admittedly choppy, just as Dave predicted it would be, we are pleased with the progress that we along with our franchisees have made with the plan.

And let me tell you, I'm truly excited about the work being done. Before I hand over to Dave, I would like to call out a few notable achievements for the quarter. First, our franchisees achieved strong restaurant growth in the quarter, adding 71 net new locations globally, 56 of these were domestic Dunkin' locations and we continued our trend, as well as the fastest growing retail concepts in the country in terms of net unit growth, and likely the fastest in terms of a large franchise operation.

That sets us apart. Secondly, retail sales of Dunkin' Branded CPG products grew by more than 10% in the first quarter, according to IRI data. Our total portfolio of CPG products across