The Winner From Starbucks' New Loyalty Program Is...Dunkin?

Dunkin Brands Group Inc's DNKN comps should benefit from Starbucks Corporation's SBUX recently announced changes in its loyalty program, according to Maxim Group.

Coffee giant Starbucks changed its My Starbucks Rewards program to a dollar-based program from a transaction-based program. The move benefits only high-dollar customers, but provides less of a benefit for low-dollar spenders.

Under the current My Starbucks Rewards program, customers are awarded one star for each transaction, such that they are awarded a free beverage after 12 stars and "gold star" status after 30 stars. The revamped program, which will be launched in the U.S., Canada, and Puerto Rico in April 2016, will give two stars for each dollar spent, regardless of the number of transactions.

Gold star status will be reached at 30 stars ($15 spent), and upon reaching this status, customers will need to earn 125 stars ($62.50 spent) in order to receive the first beverage reward.

Lower-Value Customers Could Shift To Dunkin

"In light of the higher dollar threshold for SBUX's program (relative to that of DNKN), we believe that customers with a lower average dollar spend will shift visits to DNKN, which we argue has a more generous rewards program," analyst Stephen Anderson wrote in a note to clients.

On the other hand, Dunkin Brands' DDPerks program awards five points for every dollar spent. Rather than waiting to attain a certain status, DDPerks customers receive a free beverage immediately upon signup, and only have to earn 200 points ($40) to earn a free beverage.

Specifically, only those customers spending more than $5 per transaction would be at an advantage from Starbucks new program, according to Anderson's model.

"According to our model, the average SBUX customer who spends $2.19 for a medium coffee (based on the average price in the Northeast U.S. markets where both DNKN and SBUX compete) will need to make 29 visits before earning a reward, while the average DNKN customer who spends $2.00 for a medium coffee will need to make only 20 visits before earning a similar reward," the analyst said.

Mobile Could Help Too

In addition to the more attractive rewards offered by DDPerks, another potential catalyst offered by DDPerks will be the rollout of mobile payments, which is expected to boost transaction growth.

Anderson estimates that the combination of mobile payments through DDPerks and potential customer defections from SBUX would add about 50 bps-75 bps to comp growth in 2016 (half of which is expected to come from SBUX defections alone).

The analyst, who has a "buy" rating and $54 price target on Dunkin stock, said the company's valuation remains attractive, even after the recent rebound. The stock has gained 2 percent this year, while Starbucks shares have lost 3 percent since January.