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Dunkin' Brands Continues Beverage & Digital Innovations

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Dunkin' Brands Group, Inc.’s (DNKN - Free Report) riveting growth potential lies in the company’s consistent efforts in expanding its beverage portfolio and strengthening digital capabilities. To this end, Dunkin' Donuts — the leading provider of coffee and baked goods under Dunkin’ Brands, is continuously innovating its menu offerings as well as making its mobile ordering easier for customers.

This coffee chain recently announced that its On-the-Go Mobile Ordering can be availed through Alexa, Amazon's (AMZN - Free Report) cloud-based voice service. The integration will allow the company’s loyalty members to place mobile orders on an Alexa-enabled device and payment options will be offered by Dunkin' Donuts' mobile platform. The company aims to improve its service to customers under the DD Perks program.

Moreover, yesterday Dunkin’ Donuts announced its latest offering of bottled Pumpkin Spice Iced Coffee. With fall approaching, this coffee giant is already offering an array of pumpkin choices. This latest ready-to-drink iced-coffee beverage will be available from Sep 10. As it is, the company offers a wide range of flavors for its iced coffee, manufactured and distributed by Coca Cola (KO - Free Report) .

Notably, backed by strong brand presence and various sales-building efforts, Dunkin’ Brands’ shares have returned 39.1% in the past year, outperforming the industry’s collective growth of 7.3%.


Innovation in Beverage Offerings

Dunkin' Brands continues to boost sales through regular product launches. With the demand for coffee expected to grow, Dunkin Donuts’ is continuously adding coffee beverages to the menu, both in the value and premium offering segment, like the Macchiato's line of products and the recent Cold Brew coffee. On an incremental sales basis, cold brew has been the most successful product launch and is helping to drive the brand’s coffee credibility. In 2017, the company launched ready-to-drink bottled iced coffee, Fruited Iced Teas, Dunkin' Energy Punch and frozen coffee.

Digital Initiatives Aid

With the growing clout of Internet, digital innovation has become the need of the hour. Restaurant giants, such as McDonald’s (MCD - Free Report) , are continuously partnering with delivery channels and digital platforms to drive incremental sales. Dunkin' Brands is also not far behind in this race. The company is growing, in terms of the usage of digital technology through DD card, DD mobile app, DD Perks rewards program, On-the-Go ordering and delivery. These initiatives make Dunkin' Donuts more convenient and accessible for customers.

Dunkin’ Donuts’ mobile ordering service — On-the-Go — is available nationwide, exclusively for Dunkin' Donuts DD Perks Rewards Program members. On-the-Go gives it the power to drive customer loyalty, efficiency as well as the speed of service at its restaurants. Meanwhile, in August 2016, Baskin-Robbins' launched a mobile app with a variety of interactive features. These initiatives are likely to gain popularity among consumers.

Additionally, the company expects to see a larger percentage of Dunkin’ restaurants to open with drive-thrus (85% in 2017, compared with only 70% five years ago). This increased emphasis on drive-thrus is huge part of the company’s strategy to be an On-the-Go brand and offer frictionless experience to guests.

Our Take

We believe that the latest moves will drive revenues in the company’s Dunkin’ Donuts segment. In the second quarter of 2018, Dunkin' Donuts U.S. reported revenue growth of 4.2% year over year while the international business saw 14% top-line growth from the year-ago quarter.

Moreover, the recent partnership with Alexa will strengthen the company’s relationship with its loyalty members. As it is, DD Perks Loyalty Program continues to be a major sales driver, primarily on the back of the company’s brand recognition. The loyalty program has been introduced in January 2014 in the United States and currently has 8 million members. In 2017, 2 million members were added to this loyalty program.

Dunkin’ Brands currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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