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Dunkin' Donuts Fights to Reclaim Breakfast in McDonald's Battle

Published on Feb 24 2016 3:22 PM in Restaurant tagged: Coffee / Dunkin’ Brands

Dunkin' Donuts Fights to Reclaim Breakfast in McDonald's Battle

Dunkin’ Donuts, facing declining sales and tougher competition with McDonald’s, is fighting to reclaim its turf: breakfast.

The chain is revamping its menu boards to emphasise coffee and “all day” breakfast foods, a bid to remind people that it served eggs and sausage during afternoon hours long before McDonald's got the notion. As part of the changes, which will overhaul counter menus and drive-thru windows at 8,400 US shops, Dunkin’ Donuts is no longer touting combo meals.

The stakes are high for the company, which is owned by Massachusetts-based Dunkin’ Brands Group. Its domestic same-store sales - a closely watched measure - fell 0.8 per cent last quarter, marking the first such drop since Dunkin’ Brands went public in 2011. The chain also said customer traffic declined in the period.

Dunkin’ Brands Chief Executive Officer Nigel Travis has cited “revitalized burger players” as hurting the chain. The entire fast-food industry is getting more aggressive - with deeper discounts and other promotions - but McDonald’s decision to start selling breakfast all-day is causing particular hardship to rivals.

“The competition is fierce and getting fiercer,” Travis said on a conference call this month. “Many of our guests want something more. They have plenty of options from which to choose to get their morning coffee and afternoon pick-me-up.”

That’s why Dunkin’ has to re-establish itself as the breakfast specialist. The chain had been focusing on introducing new sandwiches and wraps to its menu - items like black-pepper bacon croissants and guacamole flatbreads. But that distracted the company from selling its core breakfast fare, as well as coffee drinks, which are more profitable than food. The new menus will put a bigger emphasis on beverages, especially iced- and espresso-based ones, aiming to entice customers to drink more java.

“It’s an area we want to grow,” said Scott Hudler, the company’s vice president of global consumer engagement. “Owning the coffee space is going to allow us to drive more transactions.”

Dunkin’ Brands shares are down 3.5 per cent over the past 12 months, compared with a 24 per cent gain at McDonald’s and a 25 per cent increase at coffee rival Starbucks.

News By Bloomberg, edited by Hospitality Ireland

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