Starbucks, McDonald's Put the Squeeze on Dunkin' Donuts
Dunkin' Brands' (NASDAQ: DNKN) Dunkin' Donuts faces high-end competition from Starbucks (NASDAQ: SBUX) and lower-end, price-driven pressure from McDonald's (NYSE: MCD). That puts the company in an odd position. It's not the place to get the fanciest coffee nor is it the place to get the cheapest cup of joe. Dunkin' sort of sits in a weird middle ground. It has good-enough espresso-based drinks and reasonable prices, but it loses customers to Starbucks and McDonald's.
Dunkin's lack of a clear place in the market has put a squeeze on its sales. Its numbers are by no means awful -- comparable sales in its U.S. cafes rose by 0.6% in the third quarter -- but foot traffic dropped by 2%. The company expects only low single-digit same-store sales growth for the full year.
To energize its brand and return to faster growth, Dunkin' Donuts has tried everything from testing a name change (to just Dunkin') to simplifying its menu. Now, the chain has a new plan to lure customers away from Starbucks and McDonald's that takes a page out of the burger chain's playbook: discounting.
Source: Fool.com
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