The restaurant industry is anticipated to grow at a CAGR of 7.2% in the next 3 years. In 2011, total revenues were $2,457.1 billion and this is expected to reach $3,482.5 billion by the end of 2016. This growth is mainly due to the fact that the demand for food is rising with the population growth globally. The changing lifestyles of working professionals has also increased the traffic of restaurants. Restaurants are now constantly experimenting with new menus in order to achieve a larger customer base. As mobile apps become more popular, the marketing strategy is more focused on the internet marketing and online order-processing systems.
Dunkin' Brands(DNKN) is a common name among those fond of baked food, ice creams, and coffee. The company operates in 60 countries with more than 18,000 outlets spread across the globe. The company primarily operates through its two prime brands, Dunkin' Donuts and Baskin-Robbins.
Quarter overview
The company recently posted its second quarter results. Revenue increased, but did not reach management's expectations. The consolidated revenue grew 4.6% year-over-year to $190 million, compared to $182.5 million in the same quarter last year. Growth in revenue was due to the increased royalty income resulting from system wide sales boost.
The revenue growth had direct impact on the operating income of the company. Operating income increased by 14%, to record $10.8 million. Adjusted operating income gained 3.3% year over year, to record $3 million. The increase in revenue and the operating income was mainly due the growth in sales of all company-owned restaurant chains in the Atlanta market.
The bottom line for the quarter also grew by 13.2% to $5.4 million. The company saved $3.4 million on interest burden which had a strong impact on the growth of the bottom line, partly offset by increase in the income tax of $9.2 million.
Diluted EPS also witnessed a growth by 14.6% year-over-year to $0.47, compared to $0.41 in the same period last year. The share repurchase program had an impact on the EPS, as the company repurchased 1,260,000 shares in the second quarter, reducing the shares outstanding.
New outlets
Dunkin' Brands expanded its global outlet count by 151.
| Sno | Brand | New Outlet |
| 01 | Dunkin' Donuts U.S. locations, | 75 |
| 02 | Dunkin' Donuts International locations | 17 |
| 03 | Baskin-Robbins U.S. locations | 12 |
| 04 | Baskin-Robbins International locations | 47 |
Statistics that influence future growth
The bottom line of any company is influenced mainly by the expenses incurred in generating revenue. Dunkin' Donuts' expenses are mainly administrative, food inventory, and infrastructure costs. Administrative cost was down by 4% to record $56 million; this is 30% of total sales. In the same quarter last year, total administrative cost was $64 million, or 34% of total revenue. Infrastructure costs remained flat since most of the lease agreements are long term.
Journey Ahead
The company has lowered its guidance for the fiscal year.
Comparable stores sales for Dunkin' Donuts is anticipated to grow by 2-3%, down from the earlier estimate of 3-4%, while Baskin Robbins expects to record growth between 1-3%. The company plans to open about 685 to 800 new locations globally. The company anticipates revenue growth between 6
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