Dunkin' Brands Investor Presentation - MORGAN STANLEY GLOBAL CONSUMER & RETAIL CONFERENCE Q3 2017
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Dunkin’ Brands MORGAN STANLEY
GLOBAL CONSUMER &
Investor Presentation RETAIL CONFERENCE
Q3 2017
1
Forward-Looking Statements
• Certain information contained in this presentation, particularly information regarding future economic performance, finances, and
expectations and objectives of management constitutes forward-looking statements. Forward-looking statements can be identified by the
fact that they do not relate strictly to historical or current facts and are generally contain words such as “believes,” “expects,” “may,” “will,”
“should,” “seeks,” “approximately,” “intends,” “plans,” “estimates” or “anticipates” or similar expressions. Our forward-looking statements are
subject to risks and uncertainties, which may cause actual results to differ materially from those projected or implied by the forward-looking
statement.
• Forward-looking statements are based on current expectations and assumptions and currently available data and are neither predictions
nor guarantees of future events or performance. You should not place undue reliance on forward-looking statements, which speak only as
of the date hereof. We do not undertake to update or revise any forward-looking statements after they are made, whether as a result
of new information, future events, or otherwise, except as required by applicable law. For discussion of some of the important factors that
could cause these variations, please consult the “Risk Factors” section of the Company’s most recent Annual Report on Form 10-K. Nothing
in this presentation should be regarded as a representation by any person that these targets will be achieved and the Company undertakes
no duty to update its targets.
• Regulation G
This presentation contains certain non-GAAP measures which are provided to assist in an understanding of the Dunkin’ Brands Group, Inc.
business and its performance. These measure should always be considered in conjunction with the appropriate GAAP measure.
Reconciliations of non-GAAP amounts to the relevant GAAP amount are available on www.investor.dunkinbrands.com.
2
ASSET-LIGHT
60+
YEARS OF BRAND SIGNIFICANT U.S. &
100%
FRANCHISED BUSINESS
HERITAGE GLOBAL GROWTH OPPORTUNITY
Dunkin’ Brands is unique in the QSR space
3
76% 18%
OF 2016
SEGMENT
OF 2016
SEGMENT REVENUE
REVENUE
6%
OF 2016
SEGMENT
REVENUE
Focused strategies to drive incremental profitable
growth for Dunkin’ Brands and franchisees
INCREASE COMPARABLE STORE
CONTINUE DD U.S.
SALES AND PROFITABILITY
STORE EXPANSION
IN DD U.S.
INCREASE COMPARABLE DRIVE ACCELERATED
STORE SALES AND DRIVE STORE INTERNATIONAL GROWTH
GROWTHFOR BR U.S. ACROSS BOTH BRANDS
ENHANCE GLOBAL BRAND
RELEVANCE THROUGH CPG
5
INCREASE COMPARABLE STORE SALES
AND PROFITABILITY IN DD U.S.
6
Strong Dunkin’ Donuts U.S. comp growth momentum;
Resilient comp performance throughout economic cycles
8.0%
7.0%
6.1% 45
6.0% 5.7% CONSECUTIVE QUARTERS
OF COMPARABLE STORE
SALES GROWTH 5.1%
THROUGH 2007
4.3% 4.3%
4.1%
4.0%
3.3%
2.3%
2.0% 1.7% 1.6%
1.3% 1.4%
0.0%
(0.8%)
(1.3%)
(2.0%)
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Note: Fiscal year end changed from August to December starting in 2006. Beginning in 2011, DD U.S. comparable store sales growth is calculated
using only sales from franchisee- and company-operated restaurants that have been open at least 78 weeks and that have reported sales in the
current and comparable prior year week. Prior to that period, DD U.S. comparable store sales growth was calculated including only sales from
franchisee- and company-operated restaurants that had been open at least 54 weeks and that had reported sales in the current and comparable
prior year week. There is a comparison of 78 week vs. 54 week comparable store sales growth for 2011 through Q3 2015 available on the
7 Company’s website.
Dunkin’ Donuts is a Brand that can Win
11 consecutive
9,000+ Served 3 billion+ cups
years of being
named #1 Coffee
U.S. Restaurants of hot coffee in 2016 chain by consumers
$8B+ #1 seller of donuts
#1 seller of bagels
#2 seller of muffins
Systemwide #1 seller of hot drip coffee #2 seller of iced espresso drinks*
#1 seller of iced drip coffee*
Sales in 2016
Broad DD product Fan-centric
5 year growth in
accessibility: ready-to-drink digital following
Breakfast Sandwich
bottled Iced Coffee,
servings
DD K-cup, bagged coffee
in grocery and retail
8 *NPD/CREST for LTM September 2017
Unlocking Dunkin’ Donuts U.S. Growth Potential
Menu Innovation Broad
Accessibility
Unparalleled Restaurant
Convenience Excellence &
Simplification
Ø Strengthening core Ø Delivering frictionless Ø Increasing access to Ø Removing complexities
menu enabling room guest experience brand through strategic from the restaurant
for future growth through focus on speed restaurant growth and Ø Delivering consistent
Ø Convenience enabled packaged goods guest experience
by digital leadership
9Unified POS system provides backbone for leading digital and
mobile innovations that will unlock super convenience for guests
10 MILLION+
DOWNLOADS
SINCE MAY 2016
LAUNCHED
ON-THE-GO MOBILE
ORDERING
IN JUNE 2016
70%+
RETRIAL RATE
7.5 MILLION AMONG USERS
DD PERKS MEMBERS
SINCE JANUARY 2014 1
0Delivering frictionless guest experience
through focus on speed
ORDER THE
WAY YOU WANT
PAY THE WAY
YOU WANT
GET
FOOD &
DRINKS
THE WAY
YOU
WANT
THEM
1
1Unlocking Dunkin’ Donuts U.S. Growth Potential
Menu Innovation Broad
Accessibility
Unparalleled Restaurant
Convenience Excellence &
Simplification
Ø Strengthening core Ø Delivering frictionless Ø Increasing access to Ø Removing complexities
menu enabling room guest experience brand through strategic from the restaurant
for future growth through focus on speed restaurant growth and Ø Delivering consistent
Ø Convenience enabled packaged goods guest experience
by digital leadership
12Building brand value through new occasions, strengthened loyalty,
and incremental earnings
$800M in Consumer Packaged Goods retail sales in trailing 12 months including
$100M in DD ready-to-drink bottled Iced Coffee in first 9 months since launch
Our
Grab and Brands/
Go Your
Home
Brewed
On-the-Go
Sources: IRI MULO 52-weeks end 10/8/2017, partner
information, and estimatesUnlocking Dunkin’ Donuts U.S. Growth Potential
Menu Innovation Broad
Accessibility
Unparalleled Restaurant
Convenience Excellence &
Simplification
Ø Strengthening our core Ø Delivering a frictionless Ø Increasing access to the Ø Removing complexities
menu to enable room for guest experience brand through strategic from the restaurant
future growth through a focus on restaurant growth and Ø Delivering a consistent
speed packaged goods in guest experience
Ø Convenience enabled channel
by digital leadership
14CONTINUE DD U.S.
CONTIGUOUS STORE EXPANSION
15Opportunity to Double Dunkin’ Donuts U.S. Footprint
REGION STORES1 PENETRATION1
Core 4,173 1:8,600
Established 2,983 1:18,000
Emerging 1,378 1:64,400
West 481 1:270,400
TOTAL 9,015 1:34,200
16 1 As of 9/30/17Significant Long-Term Expansion
Opportunity for Dunkin’ Donuts U.S.
~18,000+
~ 5,000
9,015 ~3,000
~1,000
~300
4,173
2,983
1,378
481
Q3 2017 Core Established Emerging West Long-term
1:8,100 1:13,600 1:20,300 1:23,800 1:17,000
DD PRO FORMA LONG-TERM PENETRATION
17Expecting to finish 2017 as one of the fastest growing QSRs
in U.S. by unit count
DUNKIN’ DONUTS U.S. NET DEVELOPMENT
4301 4151
405
371
291
2012 2013 2014 2015 2016
4.1% 5.1% 5.3% 5.3% 4.9%
18 1 2015 and 2016 excludes the closing of 81 and 18 Speedway self-serve coffee stations, respectivelyCompelling Unit Economics Driving U.S. Growth
2015 West & Emerging Store-Level Economics – Traditional Stores
AVERAGE INITIAL CAPEX
~$500,000
AVERAGE UNIT VOLUMES
~$900,000
CASH-ON-CASH RETURNS
~20%
As of 7/27/2017
19 Standalone, Traditional Dunkin Donuts Restaurants onlyCAPITAL STRUCTURE &
SHAREHOLDER RETURNS
20Franchisee-Model Enables Leveraged Capital Structure
and Financial Flexibility
5.8*
5.5* 5.4* 5.7*
Deleverage 5.2 5.2
5.0 4.8
EBITDA growth & required 4.4 4.6 4.6 4.6
4.4
amortization payments
Share Repurchase
Offset dilution from exercising of stock
options & other opportunistic repurchases
Dividends Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q3P
2014 2015 2015 2015 2015 2016 2016 2016 2016 2017 2017 2017 2017
Raised quarterly dividend by 7.5% from
$0.30 in 2016 to $0.3225 in Q1 2017 • Completed $1.4B refinancing of the existing notes due 2019 (~$730M) in
Q4 2017
• Completed $2.6B refinancing of existing long-term debt through
securitization in Q1 2015
* Estimated pro-forma net-debt-to-Adjusted-EBITDA ratio following Q1 2015 and Q4 2017 refinancing
transactions. Does not include excess cash proceeds from the re-financings prior to being used
21 under the Company's authorized share buyback programs or other general corporate purposes.Dunkin’ Brands MORGAN STANLEY
GLOBAL CONSUMER &
Investor Presentation RETAIL CONFERENCE
Q3 2017
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