Dunkin' Brands (DNKN) Loses Ground As Execs Admit Strong Afternoon Competition

Shares of Dunkin’ Brand Group, Inc. (NASDAQ:DNKN) closed the day down 3.98% to $54.48 per share following Dunkin’ executives conceding that McDonald's Corporation (NYSE:MCD) and Burger King, owned by Restaurant Brands International (NYSE:QSR) , have been cutting into afternoon traffic.

Early Wednesday morning, Dunkin’ executives presented at the Jefferies 2017 Global Consumer Conference, where CEO Nigel Travis discussed the competition Dunkin’ has been facing. He said that convenience stores have challenged Dunkin as they have been forced to shift focus from cigarette, e-cigarette, and gas sales to food and coffee offers.

Travis also said that McDonald's and Burger King cut into Dunkin’s afternoon sales. Dunkin’s brand revolves around being a beverage on-the-go, which encourages customers to buy their products in the morning when they’re busiest. However, customers tend to not come back later in the day.

McDonald’s and Burger King also have best-selling breakfast items on their menus. McDonald’s, in particular, has shifted in the last two years to selling breakfast food all day, challenging Dunkin’s all-day breakfast food staples like donuts. Both companies also offer low coffee prices comparable to Dunkin’.

To challenge this competition, Travis said that Dunkin’ will focus on their On-the-Go app. The company reported that consumer research from last summer has shown that customers want to use Dunkin as a quick, convenient option, so they will continue to emphasis this part of their company.

“I think once we get people to try it, they realize that this is true convenience. And this is a really strong competitive weapon against be it McDonald’s, convenience stores, because people want speed and convenience,” Travis said.

The company will also test delivery and curbside pickup services in order to attract customers throughout the day.

DNKN remains a Zacks Rank #3 (Hold). The company expects positive year-over-year earnings growth for the current year, with ten upward revisions in the last 60 days compared to none lower.

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