With so many Americans now scooping frozen yogurt and gelato—and the rest watching their weight—Baskin-Robbins has faced dark days. The ice cream chain steadily closed stores in recent years as parent company Dunkin’ Brands (DNKN) focused on an ambitious expansion of its flagship doughnut shop. The 69-year-old brand once celebrated for its 31 flavors, it seemed, was losing steam. But there are signs now that it’s making small improvements.
Last year, Baskin-Robbins added U.S. stores for the first time since 2006. Sure, it was only four outlets—paltry compared with the 371 doughnut shops Dunkin’ opened—but Chief Executive Officer Nigel Travis said at a conference, “We see that as a very significant achievement.” Baskin-Robbins ended 2013 with 2,467 U.S. outlets, compared with 2,872 seven years earlier. Expectations for 2014 remain modest: another five to 10 new Baskin-Robbins stores. By comparison, there will be another 380 to 410 Dunkin’ Donuts in the U.S.
Blame frozen yogurt, said QSRmagazine.com, which covers the “quick serve and fast casual” restaurant industry: “Some of the nation’s top ice cream concepts took a beating with fro-yo’s arrival.” For instance, Cold Stone Creamery’s annual sales dropped from $430 million to $366 million, and it shed more than 100 stores between 2009 and 2011, according to the article.
For Baskin-Robbins, the problem was compounded because “it was seen as a declining brand, and got less support than it should have,” said Travis in a phone interview. In 2010, the company appointed new management and focused on improving operations and service through ongoing training programs. Baskin’s same-store sales were positive in 2011 and 2012. To refresh its image, it introduced a new store design last year with LCD menu boards and graphics on the wall.
The next order of business is luring customers via advertising. Doing so is limited by Baskin-Robbins’ relatively small ad budget, $25 million compared with Dunkin’ Donuts’ $350 million, Travis said. To grow it, the chain has to attract new franchisees that in turn pay into the advertising fund, and with only five to 10 new stores expected in 2014, there’s unlikely to be much progress in the near term.
As far as products go, the CEO sees ice cream cakes as an important growth category, and believes online ordering can boost cake sales. And to update its offerings, the chain is bringing in Greek frozen yogurt in May. “We feel good about another year of growth,” Travis said. It may still be taking baby steps.