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Dunkin' Donuts will not sell $1 coffee in U.S. market share war

(Recasts, adds CEO comment, context on industry, byline)

By Lisa Baertlein

July 27 (Reuters) - Dunkin' Donuts will not match McDonald's $1 coffee specials in the United States, where fast-food restaurants are brawling for every sale amid intense competition from direct rivals, convenience stores and other food sellers.

U.S. Dunkin' Donuts shops will offer a variety of local and national promotions, but will not aggressively discount the product that underpins the business, Nigel Travis, chief executive of Dunkin' Brands Group Inc, said on Thursday.

"You will not see us doing $1 coffee," Travis said. "We think there are other ways of communicating value."

Dunkin' Donuts promotions will include specials on breakfast food and offers for users of its loyalty card, he said.

McDonald's Corp earlier this week said it was taking back sales lost to other fast-food chains with help from $1 and $2 specials on soft drinks, coffee, smoothies and espresso drinks.

The comments from Travis came shortly after Dunkin' Brands reported second-quarter profits that topped Wall Street's view, even as traffic to its mainstay U.S. Dunkin' Donuts cafes fell for the fifth quarter in a row.

That business accounts for more than 70 percent of the company's total revenue. Second-quarter sales at U.S. Dunkin' Donuts outlets open for more than a year, rose 0.8 percent, but missed analysts' expectations for a gain of 1.3 percent, according to Consensus Metrix.

Travis said results from the latest quarter were dampened by unseasonably cold weather in the Northeast, where it has a heavy concentration of stores.

Dunkin' Brands' net income was up 12.3 percent to $55.7 million, or 60 cents per share, for the quarter that ended July 1.

Excluding items, the company earned 64 cents per share, 2 cents more than the average of analysts' estimates compiled by Thomson Reuters I/B/E/S.

Shares in the Canton, Massachusetts-based company were up 0.8 percent at $52.95 in midday trading after it also cut its target for new U.S. Dunkin' Donuts restaurant openings to between 330 and 350 from 385 previously. (Additional reporting by Siddharth Cavale and Karina Dsouza in Bengaluru; Editing by Martina D'Couto and Chris Reese)