Dunkin’ Brands Group Inc. franchisees are slowing openings of new outlets in the US due to economic uncertainty.
Uncertainty around the outcome of the US Presidential election, unknown potential regulations and minimum wage increases are causing the franchisees to be more cautious.
The group now expects net new US Dunkin’ Donuts openings to be at the low end of a previously provided range of 430 to 460 stores this year.
US restaurants also are battling intense competition from upstart chains and meal-kit sellers, in addition to getting battered by falling grocery prices, which are encouraging more people to eat at home. Even, some restaurant chains have filed for chapter 11 bankruptcy protection in recent weeks and others have been closing underperforming restaurants.
Despite the slowdown in new unit openings, the company’s long-term annual unit growth rate target of four per cent to six per cent remains intact.
The company reported a 14 per cent jump in profit for its third quarter helped by coffee sales, but lowered its revenue outlook for the year because of weakness at Baskin-Robbins.
Dunkin’ Brands updated its 2016 outlook to two per cent growth in revenue, a drop from the 3 per cent to 5 per cent guided in the second quarter, driven by weaker-than-expected sales of ice cream products related to its Baskin-Robbins International segment.
Over all for the period, profit rose to US$ 52.7 million, or 57 cents a share, compared with US$ 46.2 million, or 48 cents a share, in the year-ago quarter. On an adjusted basis, the doughnut company said per-share earnings rose to 60 cents from 52 cents.
Revenue slipped 1.3 per cent to US$ 207.1 million, driven by the sale of Dunkin’s remaining company-operated stores, in a move to become 100 per cent franchised. Total systemwide sales increased 6.3 per cent to US$ 2.82 billion.
Same-store sales at Dunkin’ Donuts in the US grew two per cent, while domestic same-store Baskin-Robbins sales declined 0.9 per cent.