Rewards program generates buzz at Dunkin'

by Eric Schroeder
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CANTON, MASS. — Severe weather in the regions of the country where most of Dunkin’ Donuts restaurants are located adversely affected first-quarter results, but company executives perked up when discussing the company’s new rewards program during an April 24 conference call with analysts.

The program, coined DD Perks, launched Jan. 27. Guests enrolled in the program earn points for every dollar spent at Dunkin’ restaurants.

“The roll-out has gone incredibly smooth, from the technology backbone, to the operations in our restaurants, to our guests’ reception of the program,” said Nigel Travis, chief executive officer of Dunkin’ Brands and president of Dunkin’ Donuts U.S. “The Dunkin’ Donuts Perks program now has more than 750,000 members amassed.”

Although it’s still in the early days of the initiative, Mr. Travis said weekly spending of DD Perks members is higher than Dunkin’ cardholders who have not joined the program. He declined to share more information about the program, saying Dunkin’ needs to give it a full-year to fully understand its impact, but he did offer a few details.

“We have set a target of 2.5 million members by the end of the year,” he said. “We developed this call based on our own internal projections, and by analyzing what other loyalty programs have accomplished. Reaching our year-end target will mean that our loyalty program has grown faster in the first 10 months than the programs of anyone else in our space. We will have accomplished this with significantly fewer outlets than the robust loyalty programs that we benchmarked against.”

Mr. Travis said the simplicity in which the DD Perks program operates has impressed outsiders.

“It is so simple, and you get constant feedback about how you’re going to the next reward,” he said. “It focuses people on a reward, which is what everyone wants, which is a beverage.”

He said people have commented on the program’s ability to avoid complexities that other programs have.

Dunkin’ will need the program to succeed as it looks to recover from a difficult first quarter. In the period ended March 29, net income at Dunkin’ Brands totaled $23 million, equal to 22c per share on the common stock, down 0.8% from $23.8 million, or 22c per share, in the same period a year ago. Adjusted income, meanwhile, increased 4.5% to $35.6 million from $31.1 million. Revenues for the first quarter increased 10% to $171.9 million from $161.9 million.

At Dunkin’ Donuts U.S., first-quarter segment profit was $89,832,000, up nearly 8% from $83,555,000 in the same period a year ago. Revenues increased 5% to $125,219,000 from $119,634,000.
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