Dunkin' Brands stock tumbles as growth slows
Dunkin’ Brands shares tumbled more than 10% Thursday after the company estimated slower sales growth at U.S. Dunkin’ Donuts stores for the third quarter and announced plans to close 100 stores by next year.
Facing increased competition for breakfast consumers from fast-food competitors such as Taco Bell, Dunkin’ missed analysts earning predictions for the quarter that ended in September with estimated growth of 1.1% compared to the 2% growth it had in the same quarter last year. Dunkin' had 2.9% sales growth during the second quarter of this year.
The company also maintained its full-year forecasts of adjusted earnings of $1.87-$1.91 per share and revenue growth of 6% to 8%, according to its investor day presentation.
Dunkin’ Brands (DNKN) stock was trading at $43.35 just before 3 p.m. ET, down 11.5%.
The Canton, Mass-headquartered company will also get new competition to its all-day breakfast menu, with McDonald's launching a pared down breakfast menu that will be available beyond traditional breakfast hours starting next week. More than 60% of Dunkin' sales are generated between 4 a.m. and 11 a.m., according to company data.
Analysts on average were expecting earnings of $1.92 per share, but the company — which also includes the ice cream franchise Baskin-Robbins — maintained its forecast of $1.87-$1.91 per share.
The company did not detail which stores it would be closing but said the locations represented less than 0.1% of Dunkin’ Donuts' U.S. sales.
The company also announced it will begin testing mobile ordering at Dunkin’ Donuts in Portland, Maine, in November and will test delivery in the Dallas market before the end of the year. The company said it expects to expand mobile ordering nationwide in 2016.
Taco Bell begins testing delivery service at 200 stores
For its delivery experiment, Dunkin' will team with third-party mobile delivery services DoorDash and Favor.
Taco Bell announced in July that it would partner with DoorDash to test delivery at 200 outlets in their Dallas, Los Angeles, Orange County, Calif., and San Francisco Bay area markets.
Starbucks launches don't-wait-for-your-frap app across USA
The push into mobile comes as competitor Starbucks announced last month that it was expanding the availability of its mobile order and pay app to all of its more than 7,400 U.S. stores.
Starbucks says it plans on testing delivery service by the end of the year with Postmates in Seattle and another service at New York's Empire State Building called Green Apron.