Why Baskin-Robbins’ 3Q14 same-store sales were up in the US

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Baskin-Robbins

About two-fifths of Dunkin’ Brands Group, Inc.’s (DNKN) restaurants are Baskin-Robbins. The ice-cream stores are spread across the U.S. and international markets. Together, the domestic and international segments contributed 11% of the company’s total revenues. Let’s look at the same-store sales performance of both U.S. and international markets.

Baskin Same-Store Sales Growth 2014-10-31

U.S. market

Baskin-Robbins U.S. same-store sales grew 5.8% from 3.2% year-over-year. This was primarily driven by the company’s Plus Up promotion and by online cake sales. The Plus Up promotion gives customers a free waffle cone when they purchase a second scoop. According to the company, the promotion in particular drove franchise profitability in 3Q14.

International market

Baskin-Robbins International same-store sales dropped to -1.5% compared to 0.7% year-over-year. Sales in this period were affected by an inventory adjustment made by one of Baskin-Robbins’ international licensees.

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We know that traffic and ticket are both important drivers of same-store sales. When a company sees a decline in traffic, it may see an increase in ticket (average check) per transaction if it strategically prices combos, and vice versa. According to the company’s management, Baskin-Robbins International had balanced transaction and ticket growth during the quarter.

To invest in a more diversified portfolio, you might consider the Vanguard Total Stock Market ETF (VTI), which includes other restaurant stocks such as Starbucks Corporation (SBUX), McDonald’s Corporation (MCD), and Jack in the Box Inc. (JACK).

To improve same-store sales, the company launched new products such as Dark Roast coffee and breakfast sandwiches. We’ll look at these in more details in the next part of this series.

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