Earlier today, Dunkin’ Brands Group (DNKN; Neutral) reported Q2 adjusted EPS of $0.86, surpassing our $0.82 forecast and sell-side consensus (according to Consensus Metrix) of $0.82. Dunkin’ notes that about two cents of the EPS beat is due to “recognized excess tax benefits.”
Not too long ago, the Dunkin’ concept owned and franchised by Dunkin’ Brands Group (DNKN; Neutral) filed its 700+ page Franchise Disclosure Document (FDD) for 2019. In this report, we cite some of the highlights from that document following our review of it, including our review of it in comparison to last year’s Franchise Disclosure Document. For example, we note that the average cost of goods sold for a Dunkin’ unit in the continental U.S. for the 12 months ended October 31, 2018 was 26.9% of sales (please keep in mind that all Dunkin’ units are franchised). The average labor cost was 27.8% of sales. These figures were up year-over-year by ten basis points and 20 basis points, respectively. Also, the average freestanding Dunkin’ unit in the continental U.S. generated average sales of $1,299,700 (for the 12-month period ending October 27, 2018) for units with a drive-thru, and average sales of $1,032,159 (for the same time period) for units lacking a drive-thru. The year-ago averages from the 2018 FDD were $1,299,922 and $1,041,001, respectively. We maintain our Neutral rating on DNKN and note the following:
In April, Restaurant Business reported that “Yum [Brands], the parent company of Taco Bell, KFC and Pizza Hut, will ‘absolutely’ acquire another brand one day, [CEO Greg] Creed said. ‘In the future, other brands will want to become part of the Yum family,’ he said. ‘We’ll do it because these brands want to join us more than I want to pay some huge multiple.’”