Mar 27, 2017 12:37 PM EDT
Wall Street notes many people are starting to buy their drinks at Dunkin' Donuts instead of the popular caffeine company Starbucks. Dunkin' Brands' shares, which houses Dunkin' Donuts, went up 10 percent this year and 25 percent over the past 12 months.
The earnings and sales skyrocketed Wall Street's forecasts. Its stocks are even trading at an all-time high. On the other hand, Starbucks is lagging way behind Dunkin' Donuts' performance over the past year. CNNMoney stated this is because of the launch of Starbucks' mobile app that has caused some obstacles not only for the company but also for its demand and employees.
The mobile app allows customers to place and pay orders in advance that takes away waiting in long lines at the checkout counter. Starbucks incoming CEO Kevin Johnson said in the company's earnings call in January that the success of the mobile app has faced a lot of hurdles and unintended consequences. For instance, many have opted to use the app to order in advance, which has created a rush of orders that is too much for the baristas to handle. Long lines to order have now been replaced with long lines to get coffee.
Johnson, who will succeed Starbucks founder Howard Schultz, said during its annual shareholder meeting on Wednesday that the coffee chain has taken necessary steps to address the issue. Accordingly, Starbucks has added two employees per store to deal only with the mobile app orders. Johnson said this has helped ease the congestion.
But it seems like this is not the only problem Starbucks is facing as so many of its rival companies are trying to become the next coffee king, including Dunkin' Donuts, Peet's, Caribou, Tim Hortons and McDonald's. Dunkin' Donuts has been particularly aggressive in the coffee wars as evidenced by its earnings and sales. The company plans on ditching its Coolatta iced coffee in favor of a fancier one soon to be made available this summer.
"Frozen Dunkin' Coffee will offer our guests a more authentic, energizing coffee drinking experience compared to the Coffee Coolatta," Chris Fuqua, senior vice president of marketing for global consumer insights & product innovation for Dunkin' Donuts said in a statement. Dunkin' is also trying the nitrogen-infused cold brew similar with Starbucks. Other new products the donut company is set to offer are Coconut Crème Pie flavored iced coffee, a Chocolate Pretzel Donut and Peanut Butter Delight Croissant Donut.
This has put Starbucks on defensive mode but Schultz rejects Wall Street's claims and believes that this year is the company's strongest and best years in history. Schultz is taking pride for standing up against Trump's immigration ban with plans to hire up to 10,000 refugees. The decision, however, was not political. Still, stocks show that Dunkin' is in a sweeter spot than Starbucks.
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