Starbucks, Dunkin' Eye Dinner Foods to Boost Evening Sales

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Credit: StarbucksStarbucks' artichoke and goat cheese flat bread
By Brian Sozzi

NEW YORK -- In an attempt to keep the sales and profits flowing nearly around the clock, Dunkin' Donuts (DNKN) and Starbucks (SBUX) are planning to sell more dinner-friendly foods in 2015.

The endless-work clock that many folks are on -- constantly checking emails and text messages -- may be causing the need for certain restaurant chains to evolve in order to compete with go-to fast food dinner destinations Chipotle (CMG) and McDonald's (MCD).

"Though breakfast remains our core, today people are seeking all-day dining, and they want to eat what they want, when they want it and where they want it -- that's why we are so committed to menu innovation and giving our guests even more options that they can enjoy any time of day," John Costello, Dunkin' Donuts president, global marketing and innovation, said in an interview with TheStreet.

Dunkin' Donuts has already begun to introduce a dinner staple -- steak -- this fall, recently making a steak sandwich and a wrap with eggs permanent additions to its menu. Only 40 percent of Dunkin' Donuts' sales come after 11 a.m., leaving a lot of room for growth.

Sales Boost

With hardier menu items typically reserved for dinner, sales could grow at the more than 2,300 Dunkin' Donuts in the U.S. that are open 24 hours. Most Dunkin' Donuts, Costello said, are open until 10 p.m.

Dunkin' Donuts may draw inspiration for dinner from overseas. "We have a variety of products and flavors that are tailored to the regional preferences of our guests around the world such as donuts stuffed, topped and glazed with everything from rice pudding to saffron to crushed pistachios in India," Costello said.

Dunkin' Donuts India also offers burgers and wraps.

Dunkin' Donuts' focus on food for those on the go contrasts with Starbucks' goal of trying to keep customers inside its remodeled coffeehouses.

Moving Forward

Starbucks is pressing ahead with its evening menu, which consists of small plates to be shared and of wines and beer, after testing the menu in 32 U.S. stores in seven markets since 2012.

The home of the fall-favorite pumpkin spiced latte plans to "add several hundred evening stores as we move the program into the full launch phase that thoughtfully leverages the insights we gain during the test period," Starbucks Chief Operating Officer Troy Alstead said on the company's earnings call last week.

Starbucks now offers 10 standard small plate options as part of its evening menu, such as truffle macaroni and cheese and double chocolate brownie bites. There are also five choices of red wine, three white wines, a sparkling rose and proseco.

New Ideas

On Dec. 4, Starbucks will hold its biannual investor meeting where it intends to share more "details around new food and beverage innovations, reimagined store designs and new store formats, mobile order and pay, and the expansion of our evening programs," CEO Howard Schultz said.

Starbucks declined to comment for this story.

Starbucks is trying to capitalize on what has been a successful foray into offering consumers lunch options, including warm sandwiches and packaged platters called "bistro boxes" that contain vegetables and hummus.

"We saw strong growth in the midday between 11 a.m. and 3 p.m., and this is another encouraging sign that our food and beverage innovations are geared towards expanding the afternoon day part are gaining momentum with customers," Alstead said on the call.

Sales of food, notably breakfast, contributed two percentage points to Starbucks' 5 percent increase in Americas same-store sales in the third quarter. Alstead said that sales growth in food, "indicates that Starbucks is increasingly recognized by our customers as an attractive option for lunch."

At the time of publication, the author held no positions in any of the stocks mentioned.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

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