Updated from 1:18 p.m. with new information.

Americans didn't run as much to Dunkin' Donuts for their coffee and breakfast sandwiches over the holidays.

Dunkin' Donuts U.S., a division of Dunkin' Brands Inc. (DNKN) - Get Report , surprisingly saw sales decline 0.8% in the fourth quarter, while traffic to its restaurants fell 1% year over year. The result marked the second straight disappointing quarter in the U.S. for the donut and coffee chain, whose tagline is "America Runs on Dunkin."

"Competition is fierce, and getting fiercer," said Dunkin' Brands chairman and CEO Nigel Travis on a call with analysts Thursday morning. Travis highlighted "revitalized burger players" and convenience stores as some of the fierce competition that is driving sales from Dunkin' Donuts in the U.S.

The revitalized burger player referenced by Travis is likely none other than burger behemoth McDonald's (MCD) - Get Report .

The Golden Arches reported recently that fourth-quarter same-store sales in the U.S. surged 5.7%, significantly better than Dunkin' Donuts. The results in the U.S. marked the second consecutive quarterly increase for McDonald's, and the quarter was given a jolt by the October launch of its all-day breakfast platform. The ability to buy Egg McMuffins and pancakes around the clock has drawn in customers who were no longer visiting the fast food heavyweight.

Dunkin' Donuts rivals have gotten stronger recently. Source: TheStreet

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"All-day breakfast exceeded our expectations, it's driving incremental business," said McDonald's CEO Steve Easterbrook on a Jan. 25 earnings call, adding, "all-day breakfast was the primary driver of the quarter."

The potential impact to Dunkin' Donuts from McDonald's all-day breakfast is something Travis has downplayed in the past. "We believe we are the leader in all-day breakfast, so we could build on McDonald's marketing -- we think their roll-out could be very good for Dunkin' Donuts," said Travis in a Sept. 18 interview with TheStreet.  

But, Travis conceded in an interview with TheStreet on Thursday the all-day breakfast roll-out by Mickey Dee's took its toll. 

"I was a little surprised -- I think McDonald's did a very good job with it, they advertised it well, it's everywhere you look. But now, we have the opportunity to show you could get our full menu, not a limited menu, all day as we have had for many years at Dunkin' Donuts," said Travis.

Meanwhile, Starbucks (SBUX) - Get Report served up a robust 9% same-store sales increase for its U.S. segment in the fourth quarter, far surpassing Dunkin' Donuts. Supporting that growth? Demand for new breakfast sandwiches and bistro boxes.

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"Our food business is growing across all day-parts with bistro boxes up 65% [sales] and breakfast sandwiches up more than 40% year over year," pointed out Starbucks president and COO Kevin Johnson on a Jan. 22 earnings call. Added Cliff Burrows, Starbucks Americas president, "We now have some authority in our breakfast sandwich range and we continue to refine both the product and our availability."

Faced with all this growing competition, Dunkin' Donuts has several initiatives in the works. First, it plans to offer more premium coffee products, along the lines of the 2014 introduction of its dark roast blend and more recently, a line of macchiatos. It will also become more aggressive on value promotions, such as a current program offering two egg and cheese sandwiches for $3.  

And Dunkin is prepared to take those deals nationwide. 

"We have steered away from national promotions -- having said that, for the first time in my time here we expect to have three national value promotions this year -- the whole idea is to drive people to the store and then we have these more premium items they could buy," said Travis.

When asked about the potential to do something more dramatic to get value-seekers through the door, Travis dropped an interesting hint. "We've tried a dollar menu before, and I think we may do that in certain markets," Travis said.  One thing Dunkin' Donut's won't be doing, said Travis, is offering the bundle deals that have popped up recently at Restaurant Brands Inc.'s (QSR) - Get Report Burger King and Yum! Brands (YUM) - Get Report Pizza Hut.

"I don't think you will see us go out with an all-day value menu that some others have talked about, such as 4 items for $4 or 4 items for $5," noted Travis.

In addition, a delivery service launched in five markets last year with delivery app Doordash is set to be expanded.

The sluggish revenues from Dunkin' Donuts U.S. overshadowed a decent quarter of profits for the company. Earnings, adjusted for one-time items, came in at 52 cents a share versus forecasts of 50 cents a share. Total revenue of $203.8 million also beat estimates of $203.5 million. Sales at Baskin Robbins in the U.S. rose 4.4%. For the year, Dunkin' Brands sees earnings of $2.17 to $2.19 a share. Wall Street had expected $2.18 a share.

Shares of Dunkin' Brands fell initially in early trading on Thursday but then rebounded.