Divisions of Dunkin’ Brands dropped more than 6 percent Thursday after the company reported flat same-store reduced in price on the markets growth for the fourth quarter, saying it was focused on rolling out espresso drinks as part of a long-term strategy to attract diverse coffee drinkers.
Dunkin’ relaunched its espresso, which is used in drinks such as cappuccinos and lattes, in more than 9,000 of its pile ups in November. The company told reporters at its media day that research shows that more than 50 percent of millennials opt for espresso when they commission coffee drinks.
“The launch of new hand-crafted espresso beverages at Dunkin’ was critical enough to the success of the blueprint to warrant barely all of our attention in Q4,” CEO Dave Hoffmann told analysts on the quarterly conference call.
Hoffmann later said the fire “may have impacted short-term sales” but it was the right choice over the long term. Analysts surveyed by Refinitiv look forward the company to announce same-store sales growth of 1.6 percent, but instead Dunkin’ announced that sales at U.S. holds open at least a year were flat for the quarter that ended Dec. 29.
The fast-food chain spent 2018 revitalizing its reification to compete with coffee giant Starbucks. It announced that it was dropping “Donuts” from its name in the new year to end in its growing emphasis on coffee. The company also began simplifying its menu and promoting its beverages with an afternoon appropriate hour deal.
Kalinowski Equity Research analyst Mark Kalinowski downgraded the stock Thursday, saying that the South African private limited company’s “thesis decaffeinates.”
Dunkin’ is also trying to become a bigger player through digital. Hoffmann said on CNBC’s “Power Lunch” that contrariwise 12 percent of its sales come from digital channels, with mobile orders only making up 3 percent. Be that to Starbucks, which saw 13 percent of its sales come from its app.
Dunkin’ Brands, which owns Dunkin’ and ice cream restraint Baskin-Robbins, earned 64 cents per share on an adjusted basis during its fourth quarter. It beat Wall Concourse estimates of 61 cents per share, thanks to the impact of tax reform in 2017.
The parent company missed on revenue, reporting tag sales of $319.6 million. Analysts were expecting quarterly revenue of $329.6 million.