Dunkin' Donuts to ramp up deals in fight to win breakfast: CEO

(Reuters) - Dunkin' Brands Group Inc DNKN.O is brewing up more value offers as its flagship U.S. Dunkin' Donuts is locked in a bitter market share battle with rival coffee sellers.

FILE PHOTO: The sign of a Dunkin' store, the first since a rebranding by the Dunkin' Donuts chain, is pictured ahead of its opening in Pasadena, California, U.S., August 2, 2017. REUTERS/Mario Anzuoni

McDonald's Corp MCD.N, Burger King QSR.TO and others have ramped up pressure by expanding coffee and breakfast menus and backing them with low-priced specials.

Dunkin’ Donuts franchisees are warming to such deals in their fight to win breakfast, Chief Executive Nigel Travis told Reuters on Thursday.

“Our franchisees are now seeing the value of value and you will see a lot more in the future,” said Travis, who is turning his focus to digital strategies that include using the trove of data from Dunkin’ Donuts’ loyalty app to send customers personalized advertisements and perks.

Shares in the company were up 0.9 percent at $55.90.

Traffic to U.S. Dunkin Donuts restaurants fell about 2 percent in the quarter, marking the sixth straight quarterly decline. It would have been “very close to break even” if not for the hurricanes that shuttered hundreds of units during the quarter, Travis said.

Same-store sales at U.S. Dunkin’ Donuts restaurants, which account for roughly 70 percent of overall company revenue, rose 0.6 percent.

“In the face of intense competition from McDonald’s, we still regard the positive comp as constructive news,” Maxim Group analyst Stephen Anderson said in a note.

McDonald’s on Tuesday said an increase in U.S. traffic helped drive strong third-quarter results. It plans to be more aggressive with value offers. Current deals include $2 small McCafe espresso drinks and a buy 5 get 1 free McCafe promotion on its new app.

Dunkin’ Donuts had a “2 for $2” egg and cheese wake-up wrap offer that boosted customer spending in the third quarter. It also offered prizes on large and extra large drip coffee, tea and hot chocolates. Its newest deal is a “2 for $5” offer on croissant breakfast sandwiches.

Mobile orders hit 3 percent of total transactions in the quarter, when many of the chain’s urban and high-volume stores reported mobile sales approaching 20 percent.

Starbucks Corp SBUX.O, which beat most rivals to market with its app, said mobile orders accounted for 9 percent of all U.S. orders in its latest quarter.

Canton, Massachusetts-based Dunkin Brands said third-quarter net income fell to $52.2 million from $52.7 million a year earlier. Excluding one-time items, it earned 61 cents per share.

Total sales climbed 8 percent to $224.2 million.

Reporting by Lisa Baertlein in Los Angeles and Vibhuti Sharma in Bengaluru; Editing by Marguerita Choy and Meredith Mazzilli