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Dunkin’ Donuts franchisee closing 100 stores

Dunkin' Donuts To Challenge Starbucks For Coffee SupremacyDunkin' Donuts To Challenge Starbucks For Coffee Supremacy
Dunkin' Donuts' U.S. sales were hurt by tough competition from McDonald's and other rivals.Photograph by Tim Boyle — Getty Images

Dunkin’ Brands (DNKN) said on Thursday one of its franchisees would close 100 Dunkin’ Donuts kiosks, and gave a results forecast that disappointed investors, sending its already suffering share price down sharply.

The Dunkin’ locations that will be closed in the next 15 months are in-store self-serve kiosks run by convenience store chain Speedway and generate only 0.1% of sales. Dunkin’ said these closings give it the opportunity to re-enter some areas with a full service outlet. The company reiterated its 2015 plan to have 410 to 440 net new Dunkin’ Donuts restaurants in the U.S. Speedway will remain a franchisee.

At its analyst day presentation, which was webcast, Dunkin’ said that it expects a profit of $1.87 to $1.91 a share this year, below the $1.92 analysts expected. That, along with tepid 1.1% growth in same-store sales, spooked Wall Street.

That growth was below what Dunkin’ has posted in recent quarters, and reflects how aggressive the breakfast wars have gotten. McDonald’s (MCD) is eager to claw back market share (all-day breakfast is coming soon), and Starbucks (SBUX) is expanding its array of pastries. What’s more, Dunkin’s clientele is lower income than Starbucks’, making it more vulnerable to the vagaries of the economy.

For a look at the presentation, which Dunkin’ filed with regulators, click here.

In a worrisome development for the company, Dunkin’ stores said the number of visits to its stores last quarter fell 0.7%. Before the presentations, Dunkin’ shares had been slumping, falling 20% in since June.

The story was updated to make clear that the outlets being closed are run by a franchisee.