Dunkin’s Off-Prem Pivot Includes Curbside Ordering via Mobile App
Before to the COVID-19 pandemic came into full view in North America, Dunkin' U.S. was on track to have its highest quarterly comps in more than six years and positive traffic, explained Dave Hoffmann, Dunkin' Brands CEO, in a quarterly earnings call with analysts. In mid-March as stay-at-home orders rolled out coast to coast, Dunkin’ US locations reduced hours and limited service to drive-thru and carry-out only.
Approximately 90% of Dunkin' U.S. locations are open for off-premises sales. More than 5,300 locations with drive-thrus remain open. “Almost 2,000 stores closed their front lobby entirely and focused exclusively on the drive-thru as customers showed a preference for staying in their vehicles,” explained Scott Murphy, President of Dunkin' Americas, in an earnings call with analysts.
Inside the locations, tables and chairs were removed, and In the back room, deliveries are now touchless and include digital receipt technology. Six-foot increments are marked on the floor to encourage appropriate social distancing when in line. “We encouraged paying with our mobile app and saw nice growth in our On-The-Go platform as people sought out our contactless option in the store,” Murphy said.
Sales through Dunkin' Perks, the QSR's mobile app and loyalty program, is around 18% of sales and 20% of transactions, "and it's growing every week," explained Stephanie Meltzer-Paul - Vice President, Digital and Loyalty Marketing.
Drive-thru is the most popular way to get food from restaurants, with two-thirds (67.4%) of consumers across all age groups saying it’s their preferred service channel, according to Service Management Group (SMG) research.
About 1,000 locations -- located in transportation hubs, college campuses and the dense urban centers like New York City and Philadelphia – remain temporarily closed.
“Over the past few weeks the closure rate has slowed and the number of open stores has been increasing,” said Hoffman in the April 30 earnings call with analysts. “As we continue to serve our guests during this crisis, we're also focused on ways to quickly bring back morning rituals in the post-pandemic world. We believe our high frequency, low touch, affordable ticket business model will serve us very well in the new reality.”
Curbside Ordering: There’s an App for That
At 1,000 locations, curbside ordering is now available through Dunkin’s mobile app, and it’s already generating 2% of those locations’ transactions, explained Murphy.
The brand has been expanding its third-party delivery options. More than 4,000 locations are offering delivery through Grubhub and other partners. Dunkin' is expanding its delivery options to include Uber Eats, and by the end of May, more than 4,000 locations will offer delivery nationwide.
“And since March 12, delivery sales have grown steadily, now 1.4% of sales at participating restaurants with over 3x our normal ticket,” Murphy said.
For franchisees with a limited staff, Dunkin’ is suggesting a ”radically reduced” menu, The Essentials Menu, “to improve speed and reduce complexity at the restaurant,” Murphy explained.
“Great coffee fast in a high frequency, low-touch environment is what we're all about, even before COVID,” Murphy said.
Safety Matters
Dunkin' Brands Group, Inc., the parent company of Dunkin' and Baskin-Robbins (BR), reported results for the Q1 on April 30. Before to the COVID-19 pandemic came into full view in North America, Dunkin' U.S. was on track to have its highest quarterly comps in more than six years and positive traffic, said Hoffman. "With the number-one priority being the safety of crew members and our guests, early in the crisis we implemented strong safety measures at our restaurants with gloves, masks, and plexiglass shields, and now we are shipping an infrared thermometer to every U.S. restaurant to help monitor crew health.”
Brands such as Shake Shack, Ruth Chris’, Kura Sushi and Potbelly Sandwich Works came under fire for taking loans under the Payroll Protection Program. All have returned the funds after public outcry and after reports that many small businesses, including local restaurants, were unable to get loads, reports the Chicago Sun-Times.
Hoffman was clear: the company did not request any federal loans under PPP. Some franchise owners did, and the company helped them navigate that process.
The company has taken steps to streamline its ops as it tries to keep everyone on the payroll. "At Dunkin' Brands, we feel an obligation to do our part to keep America working by avoiding any corporate furloughs,” said Hoffman. “Our focus has been to preserve our strong balance sheet by aggressively reducing operating expenses and preserving cash, including suspending our quarterly dividend and share repurchase programs.” National media spend has been reduced is Management and board members are voluntarily taking salary and fee reductions with the savings generated going to the Dunkin' Brands Family Fund, which supports Dunkin' and Baskin-Robbins crew members in times of crisis.
The company’s full earnings release is here.