‘Never a dull day’ for Dunkin’ Brands finance chief
When CFO Kate Jaspon joined Dunkin’ Brands 15 years ago, “digital was an imagination ... and nobody worried about the environment,” she told Franchise Times. Today, online strategy and foam-cup elimination are high on her to-do list.
The November day we sat down with Kate Jaspon, CFO of Dunkin’ Brands, started with a bang, as Dean Foods filed for Chapter 11 bankruptcy protection. Dean Foods supplies ice cream to Baskin Robbins (8,000 stores under the Dunkin’ umbrella) and dairy products to Dunkin’ (13,000 stores formerly known as Dunkin’ Donuts.)
“I’ve been dodging analysts all day,” she joked, but actually she and her staffers had been assuring analysts, shareholders and franchisees “there’s no major concern” because Dunkin’ knew about the pending filing and made contingency plans.
“Never a dull day,” she told Franchise Times, going on to tout the publicly held franchisor’s “very asset-light model,” noting its 21,000 stores are 100 percent franchised and the parent company doesn’t own its supply chain. But she said the brand made a notable diversion last year: a $40 million investment to buy the intellectual property of its online ordering app and bring it in-house.
Kate Jaspon, CFO at Dunkin’, believes one of the biggest benefits of guests ordering ahead is a reduction in labor.
That followed an effort by Jaspon and CEO Dave Hoffmann, who joined in October 2016. “We went to the board to invest $100 million alongside our franchisees,” split 50/50, in espresso equipment and related items. “It was a big risk, one the board put a lot of pressure” on the management team before approval. After about a year, “and espresso is up 40 percent,” she said. “You’ll see a lot of our peers have shifted with us, in investing alongside our franchisees.”
Dunkin’ is in an enviable position, she believes, with a long history of operations but until very recently mostly in the Northeast. “We’re 70 years old so we have the brand heritage,” she said, but “we have so much white space.” The franchisor “re-thought” its development strategy when Hoffmann came on board, announcing it would reduce its number of new stores from 400 per year to 200, noting that opening new stores in far-off locales like California or Texas takes more time than adding an infill on the East Coast.
Even though shareholders don’t normally like a slowdown in unit sales, “our investors were very receptive because we were going to move into that white space,” she said. Hoffmann also put the operations department and the development department together out in the field, to enhance coordination and speed the openings. And he charged his team to identify its top 10 markets and focus efforts there: In addition to California and Texas those include Atlanta and surroundings, Nashville and all of Tennessee, and the Carolinas.
Jaspon also served on a panel November 12 with fellow CFOs at the Restaurant Finance & Development Conference, presented by Franchise Times’ sister publication. Topic one was mobile ordering. In October, Dunkin’ announced two major improvements to its app. “You used to have to add tender onto our app. We removed that requirement,” so customers can pay any way they want. “We think that will put us in play with other restaurants,” Jaspon said.
“We also did what we call guest checkout,” so people can use the app to order without entering information into the loyalty program, overcoming some guests’ objections to that step.
Above, the first Dunkin’ Donuts store in Quincy, Massachusetts, opened in 1950. Top photo, Dunkin’s NextGen store, which has about 400 units open.
She believes one of the biggest benefits of guests ordering ahead is a reduction in labor. “Obviously everybody’s concerned about wage increases, but our franchisees tell us their No. 1 concern is availability of labor,” and online ordering takes 30 percent of the labor out of each transaction.
Dunkin’ is developing what it calls the NextGen store, with one aim “making the stores more fun to work in,” including installing tap systems for pouring beverages. “We say they’re bartenders not baristas,” she said about employees. NextGen stores will also do away with the “Donuts” in the Dunkin’ Donuts name, a decision announced last year that roiled the blogosphere and she concedes has been spotty in its implementation.
In the new markets “it’s just Dunkin’,” she said about the name. “Why you see it inconsistently, the products have changed but you haven’t seen the sign changes” because the signs are expensive. About 400 NextGen stores are open and the franchisor has been flexible so far about conversions. But no more: Remodels will take top priority in 2020, she said. “They have to close the stores to rebuild, for several days,” so it’s a big deal for franchisees. “We’ve put trucks in parking lots so they don’t lose customers.”
A final initiative falls under the category of corporate responsibility—removing polystyrene foam cups from the stores—and it’s causing just as much hassle as dropping the “Donuts.” “Dunkin’ breaks up with foam cup—and fans start hoarding foam,” a Wall Street Journal headline said in November.
For Jaspon, it’s all part of a dynamic position at a storied and ever-changing quick-service restaurant brand. Fifteen years ago when she joined Dunkin’, “digital was an imagination when I started and nobody worried about the environment,” she said.