Dunkin' Donuts Is Having A K-Cup Crisis

Sales of Dunkin' Donuts K-Cups are crashing.

The brand's K-Cups, which are plastic pods for Keurig single-serve coffee brewers, are doing worse than competitors' products, $4 at Bloomberg Businessweek.

Executives recently revealed that sales of the K-Cups "had double digit negatives" last quarter. That compares with a 14% sales increase for Keurig Green Mountain.

Dunkin' Donuts' ineffective strategy is to blame.

"Unlike competitors such as Starbucks that sell K-cups through multiple channels, Dunkin' sells its pods only in its restaurants, not in grocery and other mass retail outlets," $4.

Executives fear that if they offer coffee in stores, people will brew it at home instead of coming to restaurants. Overall comparable-store sales increased by 1.4% in the quarter, but would have increased by 2% without the K-Cup decline.

Sales of single-serving coffee pods have been soaring in recent years because customers like the options for convenience and customization.

This year, Keurig launched a machine that also allows customers to brew up to 30 ounces of coffee at once.

While the invention was touted as the next George Foreman Grill, consumers were furious that their old K-Cups didn't work on the new machine.

The machines are RFID-limited, meaning only items with a Keurig code work. This restricts consumers from buying coffee pods from other brands.