Trouble Brewing for Dunkin' Brands' U.S. Operations, Despite Earnings Beat - TheStreet

NEW YORK ( TheStreet) -- Dunkin' Brands (DNKN) - Get Report served up a another lukewarm outlook for 2015 amid unsavory price competition in good old-fashioned brewed java. But CFO Paul Carbone says the company is hoping planned new product launches will help to pick up the slack. 

Ahead of the start to summer, Dunkin plans to introduce blender made fruit smoothies with yogurt and a lower calorie take on its Coolatta iced coffee drink that will sell at a higher price than brewed coffee, and most iced coffee varieties. Carbone also hinted at a bigger rollout of items featuring steak beyond just breakfast wraps, and greater variety for the croissant donut that was introduced last year. 

"Some of the things I have seen, that we have here (at HQ), are a filled croissant donut, a croissant donut with icing on top and while I haven't seen this yet, there could be a shaped croissant donut." Steak could be expanded from wraps to bagels, burritos, or something Carbone referred to as "Steak Big and Toasted", a sandwich featuring steak as the star stuffed between buttery Texas toast.

According to Dunkin Donuts, breakfast sandwiches performed well in the fourth-quarter.

But don't expect sales of K-Cups, which continue to be weak for Dunkin and hurt same-restaurant sales in the U.S. by 0.6% in the quarter, to improve anytime soon.

The company's K-Cups are only sold in Dunkin' Donuts U.S. restaurants as a way to drive traffic to franchisees instead of to grocery store aisles that are overrun with K-Cup options from Starbucks, Green Mountain Coffee (GMCR) and others. "We are a franchise company, we will only get into retail sales if there is upside to our franchisees, four wall profits drive everything -- but we continue to explore it," remarked Carbone when asked if 2015 is the year K-cups will be available in grocery stores. 

Carbone offered up two things the company is exploring in deciding whether to branch out where its K-Cups are found. The first is the revenue Dunkin would earn from sales of K-Cups in grocery stores getting shared with franchisees. Another is called a "bounceback", where a person buys Dunkin' K-Cups in a grocery store and the bottom of the cup offers reward points to be collected at Dunkin restaurants for purchasing a coffee or sandwich.

The concept of a bounceback was implemented by Starbucks for its bagged coffee back in May 2013. If a person buys a bag of specially-marked Starbucks whole bean or ground packaged coffee at a grocery store, drug store or club store, they can incur Starbucks Rewards card points. Gather up enough card points and customers could score a free cup of coffee or food item at a Starbucks retail store.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.