Digital strategy

We covered Dunkin’ Brands Group, Inc.’s (DNKN) Dunkin’ Donuts’ mobile application in our 2Q14 earnings overview. In that quarter, the number of downloads reached 8 million. During the third quarter, this increased to 10 million application downloads.

Meanwhile, Perk Reward members grew to 1.8 million from 1.3 million in 2Q14. Perk Reward members are customers who have all registered on the app.

Why digital strategy is important to Dunkin’ Brands 3Q14 results

In terms of Baskin-Robbins online cake sales, effective third-quarter end, all U.S. stores have transitioned to a minimum 24-hour order time. The company made the move from a 48-hour order time to boost sales. Keep in mind, the same-store sales for this segment grew 5.8% year-over-year, compared to 3.2% last year.

Digital age

Digital strategy has become critical to several restaurant players. For example, Starbucks Corporation (SBUX) has invested in digital assets, such as mobile apps, that make the purchase experience more convenient. McDonald’s Corporation (MCD) recently adopted Apple Pay in the U.S., allowing customers to pay their bills securely and more conveniently. And, as we learned in the article, Technology pushing Domino’s growth, Domino’s Pizza, Inc.’s (DPZ) 3Q14 sales from digital were in the mid-40% range.

These restaurant stocks are all held by the Vanguard Total Stock Market ETF (VTI).

Menu pricing

During the third quarter, Dunkin’ Brands increased its pricing by 1.1%. Meanwhile, this was offset by discounts on its trial products. Dairy and coffee prices faced higher pressure and so restaurants resorted to increase menu prices accordingly. McDonald’s increased its menu prices by 2%, and Chipotle Mexican Grill, Inc. (CMG) increased its prices by almost 6% during the quarter.

In the next part of this series, we’ll learn how Dunkin’ Brands’ revenues were impacted by same-store sales, unit growth, product launches, and digital strategy.

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