Ice Cream Cakes Are Selling Like Hot CakesCraig Giammona
Baskin-Robbins, the world’s largest frozen-dessert chain, saw sales of ice cream cakes surge last quarter, helped by a new online-ordering system and burgeoning demand for the treat at kids’ birthday parties.
Despite cold weather in much of the U.S. during the final weeks of 2014, Baskin-Robbins same-store sales climbed 9.3 percent in the period -- with cake orders helping fuel the gain. The new online-purchasing feature, which lets customers choose from dozens of designs and pick a message, accounted for 5 percent of ice cream cake sales.
“It gave a halo to the whole ice cream cake category,” Nigel Travis, chief executive officer of Baskin-Robbins’s parent company Dunkin’ Brands Group Inc., said in an interview. “It’s very important in the U.S. -- every kid’s birthday has an ice cream cake.”
The trend helped Baskin-Robbins outpace the total sales growth of Dunkin’ Brands, which is facing increasing competition at its flagship doughnut chain. The cakes are more expensive than cups or cones, prompting customers to spend more at Baskin-Robbins stores, Travis said. The company’s fourth-quarter cake sales growth was the highest on record.
The Canton, Massachusetts-based company posted a comparable-store gain of just 1.4 percent for domestic Dunkin’ Donuts locations. Concerns about slowing growth at the chain weighed on the company’s shares on Thursday. The stock fell 1.2 percent to $46.03 at the close in New York.
Baskin-Robbins has about 7,300 locations worldwide, putting it ahead of Dairy Queen and other frozen-dessert chains. Still, Dunkin’ Brands only gets a quarter of its revenue from the business, with Dunkin’ Donuts accounting for the rest.
Dunkin’ Donuts is trying to fend off incursions by Taco Bell and Chick-fil-A into the breakfast-food market. Starbucks Corp. also has expanded its menu, aiming to double its food revenue to more than $4 billion in the next five years. Breakfast-sandwich sales surged 29 percent in the U.S. during the fourth quarter, Starbucks said last month.
“Because it’s the fastest-growing part of the quick service industry, it attracts people in,” Travis said. “It doesn’t mean people can sustain it -- you can have an initial burst and then lose it.”
To continue reading this article you must be a Bloomberg Professional Service Subscriber.
If you believe that you may have received this message in error please let us know.