Source: Starbucks

April 24 was a pretty big day for coffee lovers! Before the market opened, Dunkin' Brands (DNKN), the parent company of Dunkin' Donuts and Baskin-Robbins, reported revenue and earnings for the first quarter of its 2014 fiscal year. This was followed up after the market closed with Starbucks (SBUX 0.06%) reporting the same metrics for the second quarter of its 2014 fiscal year. With some interesting results out, which of these businesses looks the most appealing, and which should the Foolish investor probably take a pass on?

Source: Dunkin' Brands

Dunkin' came up short
For the quarter, Dunkin' reported revenue of $171.9 million. While this is just a hair shy of the $172.2 million analysts expected but it's a respectable 6% higher than the $161.9 million management reported in the same quarter a year ago. According to the company's earnings release, its uptick in revenue is due to a combination of store openings and comparable-store sales improvements.

During the quarter, management saw 96 net new stores open, most of which took place in the company's Dunkin' Donuts U.S. segment. This increase in store count was complemented by a 1.2% increase in comparable-store sales, driven by increases in all of the company's segments with the exception of its Dunkin' Donuts international segment, which saw comparable-store results decline by 2.4%.

Source: Dunkin' Brands

Profitability was the company's worst metric, unfortunately. For the quarter, Dunkin' reported earnings per share of $0.21. Although this is only $0.01 lower than the business reported in the first quarter last year, it's far removed from the $0.36 analysts expected. Even though sales were higher, the company was negatively affected by a $13.7 million loss from the early extinguishment of debt.

Source: Starbucks

Starbucks' results could use some caffeine
For the quarter, Starbucks did better than Dunkin', but the company still fell shy of forecasts in at least one respect. Over the past year, the coffee giant saw its revenue rise 9% from $3.55 billion to $3.87 billion. Despite the fact that management enjoyed a 6% increase in comparable-store sales, revenue still failed to meet the $3.95 billion investors anticipated.

Unlike Dunkin', which disappointed on both the top and bottom lines, Starbucks handed investors earnings that were in line with forecasts at $0.56 per share and 10% above the $0.51 reported in last year's quarter. This was driven largely by the company's jump in revenue but was also due to the cost of revenue and other operating expenses declining as a percentage of sales.

Which coffee chain's business is brewing just right?
Over the past five years, Starbucks has been quite a growth engine. Between 2009 and 2013, the company saw its revenue soar 52% from $9.8 billion to $14.9 billion, while its net income increased 304% from $390.8 million to $1.6 billion (after adjusting for a $2.8 billion litigation charge it incurred in 2013). During this time period, the business benefited from a 19% increase in the number of locations it operated, which jumped from 16,635 to 19,767, while improved comparable-store sales helped account for the rest.

Revenue 2013 2012 2011 2010 2009
Starbucks $14.9 billion $13.3 billion $11.7 billion $10.7 billion $9.8 billion
Dunkin' $713.8 million $658.2 million $628.2 million $577.1 million $538.1 million

Source: Starbucks and Dunkin' Brands Group

From a profitability perspective, Starbucks saw its metrics improve because of the rise in revenue it experienced, but it also benefited greatly from reduced costs. Chief among these was the business' cost of revenue and selling, general, and administrative expenses, which fell from 44.2% of sales to 42.9% and from 39.7% of sales to 35.1%, respectively.

Unfortunately, Dunkin' hasn't been so lucky. Between 2009 and 2013, the company saw its revenue rise only 33% from $538.1 million to $713.8 million. Despite being a smaller business which should, in theory, be able to grow faster than a larger rival, Dunkin' saw its store count increase 18% from 15,373 locations to 18,158, while its comparable-store sales increased modestly.

Net Income

2013 2012 2011 2010 2009
Starbucks $1.6 billion* $1.4 billion $1.2 billion $945.6 million $390.8 million
Dunkin' $146.9 million $108.3 million $34.4 million $26.9 million $35 million

Source: Starbucks and Dunkin' Brands Group   *Excludes one time charges

Looking at net income, however, Dunkin's performance has been nothing short of extraordinary. Over this five-year period, the company's net income soared 320% from $35 million to $146.9 million. On top of benefiting from higher revenue, the company saw its cost structure improve significantly. The largest contributor to the business' heftier bottom line was its interest expense, which plummeted from 21.4% of sales in 2009 to 11.2% by year-end 2013.

Foolish takeaway
Based on the data provided, it looks like both Dunkin' and Starbucks failed to meet analyst expectations. While this could be a problem if both businesses continue this trend of disappointing results, the long-term growth of each company suggests that they will probably continue seeing increasing revenue and earnings moving forward.

Neither company appears to be a terrible investment right now, but for the Foolish investor more interested in seeing revenue growth, Starbucks would probably make for a more sensible investment, while Dunkin' looks promising for investors seeking out margin expansion.