Dunkin’ Donuts’ 3Q14 same-store sales dip in Korean market

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Understanding same-store sales

Same-store sales is a key metric for restaurant stocks such as Dunkin’ Brands Group, Inc. (DNKN). It drives revenues and earnings per share (or EPS). Under Dunkin’ Brands Group, or Dunkin’ Brands, there are four segments—Dunkin’ Donuts U.S., Dunkin’ Donuts International, Baskin-Robbins U.S., and Baskin-Robbins International. In this part of the series, we’ll discuss same-store sales performance for the Dunkin’ Donuts brand.

Dunkin Same-Store Sales Growth 2014-10-31

U.S. market

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Dunkin’ Donuts U.S. same-store sales grew 2% during the quarter, compared to 4.2% year-over-year. Beverages such as iced coffee and coolattas drove this growth. Baskin-Robbins’ same-store sales were also driven by Frozen Arnold Palmer, and watermelon and OREO coolattas. Keep in mind that these sales took place during the third quarter, which includes the summer months. As the colder weather approaches, these products will yield fewer sales for the company.

We discussed the above-mentioned products and strategy in the article, What strategies are driving Dunkin’ Brands.

International market

Dunkin’ Donuts International’s same-store sales were -2.9% compared to -1.4% in the same quarter last year. The company operates Dunkin’ restaurants in several international markets including Korea, United Kingdom, Australia, China, the Philippines, and Spain, among others.

The Korean market, which represents 45% of Dunkin’s International segment’s sales, dragged down the same-store sales. The company also closed stores in Korea and the Philippines during the quarter. The Japanese market, which represented 33% of this segment’s sales, offset some of this downside, according to the company.

Dunkin’ Brands is a part of 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).

In the next part of this series, we’ll look at the same-store sales performance of Baskin-Robbins in both U.S. and international markets.

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