Dunkin' Donuts Customer Visits Slip Amid Fast-Food Deal Fight
NEW YORK (AP) — Dunkin' Donuts, feeling squeezed by a discounting fight in the fast-food industry, is planning to jump into the game with its own deals.
The coffee-and-doughnut chain said Thursday that customer visits slipped at U.S. stores open at least 18 months in the last three months of the year. Dunkin' CEO Nigel Travis blamed the rollout of aggressive promotions at burger chains, which he said was sparked by McDonald's rollout of all-day breakfast.
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Wendy's, for instance, launched a "4 for $4" deal in October, which Burger King later one-upped with a "5 for $4" offer. McDonald's more recently introduced its "McPick 2" deal that lets people pick two items for $2.
To win back customers, Travis said Dunkin' is planning three national value promotions of its own for 2016, and meeting with franchisees next week to finalize plans. He compared the situation to politics, noting that presidential candidates such as Donald Trump and Bernie Sanders, if elected, would need to get Congress to go along with their plans.
"We have to figure out how to bring franchisees along," Travis said.
His remarks were a reference to the tensions that price promotions can cause between fast-food companies and their franchisees. Companies make money by getting a percentage of sales at restaurants, while franchisees have to think about covering costs like food ingredients with the prices they charge. As such, franchisees don't always like deals.
Subway also joined the fray this month with a "$6 Footlong," even though the sandwich chain has said it is moving away from relying too heavily on price promotions to drive traffic to stores.
Subway Chief Advertising Officer Chris Carroll said he got support for the $6 Footlong deal by telling franchisees it was a one-time deal intended to "kick traffic into restaurants," rather than a recurring promotion like the chain's $5 Footlong.
The last time Subway ran national advertising for the $5 Footlong was two years ago.
For Dunkin', a national promotion will be tricky because the chain's sales mix vary more depending on the region. In the Northeast, the company says it sells more drinks, while other markets rely more heavily on doughnuts. A representative for Dunkin' did not immediately know the last time the chain ran a national value promotion.
Some offers around the country could provide some clues on what Dunkin' has in store. The chain has been offering sandwiches for $2.99 in the afternoons in Boston. In Chicago, it has been offering two egg-and- cheese sandwiches for $3.
Travis noted that even in the afternoons, Dunkin's breakfast sandwiches outsell its lunch sandwiches.
"Breakfast is something people are willing to have all day. Not many people are willing to have a hamburger at 6 a.m.," he said.
For the last three months of the year, Dunkin's sales at U.S. stores open at least a year fell by 0.8 percent, as a decline in traffic dragged down higher spending per visit. The chain forecast sales would rise up to 2 percent for 2016.
Dunkin' Brands reported a loss of $8.9 million, or 10 cents per share. Earnings, adjusted for one-time items, were 52 cents per share.
The company, which also owns Baskin Robbins, said total revenue rose 5.5 percent to $203.8 million. The figure was boosted by new store openings.
Shares edged up 50 cents to $41.36.
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