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Dunkin’ Brands reported a two percent drop in comparable sales for its Dunkin’ restaurant chain in the U.S., of which approximately 1,000 of which are closed due to the pandemic.
The negative comparison hits after the 3.5 percent growth the company received in the first 10 weeks of the first-quarter, which was offset by a 19.4 percent dive it received in the last three weeks of the quarter. Moreover, the company announced it is suspending its regular dividend program to save around $33 million for the second quarter.
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The coronavirus pandemic has hampered sales for a variety of American companies, especially restaurants, as millions do their best to not leave their homes. FOX Business’ Liz Claman spoke with Dunkin’ CEO Dave Hoffman to get his input on why the suspension is necessary amid the coronavirus.
“This is just, unprecedented times,” Hoffman explained. “We know we’re being overly cautious right now. We’ve got a tremendous balance sheet and we just felt like this was the prudent and responsible thing to do at this time.”
“It was a difficult decision for us but we felt it was the right thing to do,” he added. “And I would say, just broadly speaking, our capital allocation philosophy hasn’t changed through all this, but with everything that going on, the idea that cash is king right now and there’s uncertainty in the future.”
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Hoffman did not share what favorable condition would bring the dividend back when asked, but he did remark that the company will make an evaluation at some point.
So far, Dunkin’ Brands is focused on safety and brand accessibility during the pandemic.
“We accelerated into this crisis very early,” Hoffman said while citing the crisis management experience he’s garnered overseas.
For brand accessibility, 90 percent of Dunkin’ restaurants are still operating amid the coronavirus pandemic. The company has added 1,000 curbside pickup locations to address the social distancing and grab-and-go needs of its customers.
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“Before this crisis, 90 percent of our transactions went out the door in some form of takeaway, so it was easier for us to flex into that. And 70 percent of our locations have a drive-thru,” Hoffman added.
The brand’s digital acceleration has grown exponentially as well as its retail channel, which makes about $1 billion of retail sales. In groceries, the Dunkin’ is up 20 percent to 30 percent.