Business

07.25.13

Dunkin' Donuts CEO Says He Feels Good About America's Economy

With a strong quarter and plans to open more stores, the CEO of Dunkin' Donuts says he feels "really good" about the U.S. economy.
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by Matthew J. Belvedere

Dunkin' Brands may bring "some smaller stores" to California before opening its first major franchises there in more than a decade, company CEO Nigel Travis told CNBC on Thursday, after the company reported better-than-expected earnings.

"Just to give you a mini-exclusive," Travis offered in a "Squawk Box" interview, "you will possibly see some smaller stores, in some unique locations coming out before" the bigger outlets there, which are set to be ready by 2015.

In the second quarter, profit at Dunkin' more than doubled to 41 cents a share excluding items. That was a penny ahead of Wall Street estimates. Revenue grew 5.9 percent to $182.5 million, but was a tad shy of expectations.

Based on the company's strong quarterly performance, Travis said he feels "really good" about the overall U.S. economy.

Dunkin' Donuts shops in the U.S. saw 4 percent growth in same-store sales for the quarter, compared with expectations of 3.6 percent. "When you dissect the number, we were up in both traffic and ticket. The ticket was driven by people going to higher-price sandwiches," he added.

The Massachusetts-based company, which started in the Northeast as a regional chain, announced a big push earlier this year into California, where it had a footprint but pulled out in 2002.

"We've signed up four franchisees. They're going to build 45 stores," Travis explained. "You won't see them quite yet, because it takes about a year and a half to get these stores up and running."

He added that over time the company hopes to open a thousand shops in California, which is the No. 1 state for sales of Dunkin' coffee bags in supermarkets.

As for Baskin-Robbins ice cream—the other business of Dunkin' Brands—it had an increase of 1.6 percent in same-store sales. "They've been in a steady decline for many years. [But] we've now had two quarters of where they've actually grown stores. We're optimistic about that business," Travis said.

Internationally, same-store sales were up 2.6 percent at Baskin-Robbins, but fell 1.7 percent at Dunkin' Donuts shops.