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Dunkin’ Donuts sales have been falling, as McDonald’s has finally gained more ground, it has recently been announced.
The Canton, Massachusetts-based Dunkin’ Brands holding company which runs the Dunkin’ Donuts fast food restaurant chain and the Baskin-Robbins ice cream store chain recently revealed the latest quarterly sales results for Dunkin’ Donuts, propagating a wave of disappointment among investors.
According to a survey conducted by Consensus Metrix, market analysts had predicted that sales for the last quarter of 2015 would surge by approximately 0.8%.
Instead, customer traffic decreased by around 1% and consequently sales also took a tumble, dropping by an 0.8% margin in the quarter ending on December 26, when contrasted against results achieved by the company during the same quarter of 2014.
According to company officials, there are several reasons behind this unexpected downward trend. One possible explanation is the introduction of McDonald’s all day breakfast, starting from October 6, 2015.
Allowing menu items previously purchased by 10:30 a.m. to be sold at any hour generated more interest in the Golden Arches. Other well-timed initiatives that new chief executive officer Steve Easterbrook implemented also proved successful in attracting more customers, and eventually last quarter sales rose by 5.7%.
In contrast, Dunkin’ Donuts was also negatively impacted by competition-based pricing undertaken by rival restaurant chains, as more and more discounts and promotions were offered by Burger King, McDonald’s, KFC and Wendy’s.
For example, Burger King has been selling 10-piece packs of chicken nuggets for just $1.49, while also providing its customers with “5 for 4” deals featuring a bacon cheeseburger, chicken nuggets, fries, a beverage and a chocolate chip cookie.
At the same time, KFC has been advertising 5 “Fill Up” combinations, costing just $5 for a full meal including an entree, a dessert, a drink, a biscuit and a side dish.
Similarly, McDonald’s has been offering “McPick 2” menus, allowing customers to pay just $2 for two meal items selected out of the following: French fries (small pack), McDouble, mozzarella sticks and McChicken.
Wendy’s has also been promoting its “4 for $4” promotional offer, featuring 4 chicken nuggets, a junior bacon cheeseburger, French fries, and a beverage.
As explained by Nigel Travis, chief executive officer of the Dunkin’ Brands Group ever since 2009, all these price wars have negatively impacted the business, but not all hope is lost, as losses are relatively small and can still be offset.
In fact, company officials still believe that in 2017 Dunkin’ Donut sales will experience a recovery, rising by approximately 2%. Executives also expect that the Baskin-Robbin ice cream store chain will fare well, boosting its sales by up to 3%.
Apparently, this much-needed resurgence of the Dunkin’ Donuts business will be achieved by introducing premium espresso beverages like the Macchiato, as well as other meals and drinks, in order to provide a wider selection of items for customers to choose from.
In addition, three special offers will be launched throughout the nation in 2017, hopefully allowing the fast food chain to win back customers that have flocked to rival companies attracted by their generous discounts.
In the announcement made by Dunkin’ Brands officials it was also revealed that overall, Dunkin’ Donuts net losses amounted to $8.9 million during the fourth quarter of 2015, while profit was calculated at approximately $52.5 million.
Across the year 2015, the company’s revenue experienced a 5.5% increment, reaching $203.8 million and surpassing analysts’ predictions, which had hovered around $203.3 million.
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