Dunkin’ Donuts CEO Nigel Travis is trying to rally his troops to mount a fresh attack after coffee rival Starbucks gained ground in the latest quarter with a low-priced assault.
Shares of Canton, Mass.-based Dunkin Brands fell to a 52-week low on Thursday after the doughnut and coffee chain blamed bad weather for disappointing US same-store sales growth of 1.8 percent in the second quarter.
Later on Thursday, Seattle-based rival Starbucks — seemingly unaffected by the unseasonably cold and rainy start to spring — beat the Street’s estimates with a 7 percent gain in US same-store sales, thanks to discounted coffee prices that took direct aim at Dunkin.
While Travis tried to put a positive spin on the results and talked about the chain’s march westward into new territories, he struck a different tone in a rare all-hands-on-deck conference call with more than 200 franchisees concentrated in the Northeast.
As part of his plan of attack, he urged store owners to push pricier options, such as steak sandwiches, to get people to spend more per visit.
“We need to drive the top line,” he told the franchisees during the call.
He also pushed dark roast coffee, which he says compares favorably with Starbucks.
“Everyone needs to get behind dark roast coffee,” Travis said. “It is critical to our war with Starbucks.”
The CEO is pushing the franchisees to boost the dollars per ticket after a rewards program he championed largely failed to perk up business.
While the DD Perks rewards program now has 1.3 million members, traffic in its stores has risen only slightly, while the average ticket price fell for the first time.
“I would say the rewards program has not been a success,” Pacific Management Consulting Group founder John Gordon told The Post.
A Dunkin’ spokeswoman defended the perks programing, saying it “will be a significant driver of growth in the future.”
Unlike Starbucks’ chain of company-owned stores, Dunkin’ relies on franchise owners to carry out its coffee war. This prompted one Queens franchisee to ask Travis during the call, “How are we going to turn this around?”
“We are obviously a franchisee system,” Travis said in response. “Starbucks can turn on a dime,” adding that its larger rival can sell certain products for little profit to move volume, while Dunkin’ cannot force its franchisees to eat a loss.
One problem for Travis is that Northeast franchisees control the $300 million-plus ad budget, and prefer not to highlight dark roast coffee in Dunkin’ ads since it is not as popular in their region. Dark roast has more appeal in the West, where Dunkin’ is trying to expand.
During the call, Travis also spoke about rolling out a new “Blender” drink program, such as the Island Oasis Blender that will be tested soon in the South.
Dunkin’ shares tumbled 4.2 percent, to $42.01, on Thursday while Starbucks rose $1.66 to close at $80.45.