An Overview of Dunkin’ Donuts
There are few names that are as recognizable to morning commuters as Dunkin’ Donuts. The nationwide fast-food style purveyor of fried donut pastries, coffees, bagels and a limited assortment of other breakfast and snack items is a household name that has achieved a rarified level of cultural and economic success in the United States. However, like any company, Dunkin’ Donuts is not impervious to the challenges wrought by competitive markets, economic recession and shifts in the cultural paradigm where food retail and food services are concerned. The discussion hereafter offers a concise overview of the company with consideration to its balance between sustaining its existing success without resting on its laurels.
It is appropriate to begin with a brief look at the background of the company that would go on to be most explicitly associated with the doughnut. According to Daszkowski (2009), the company traces its origins to a Bostonian entrepreneur named William Rosenberg, who invested $5,000 in a local coffee break snack delivery company called Industry Luncheon Services. Rosenberg parlayed the success of Industrial Luncheon into the Open Kettle coffee and donut shop before, in 1950, opening the first Dunkin’ Donuts in Quincy, Massachusetts. (Daszkowski, p. 1) As Daszkowski reports the success of Dunkin’ Donuts was almost instantaneous, with the Quincy location performing well enough to encourage franchising within only five years. Daszkowski notes that “by 1963, there were over 100 Dunkin Donuts shops open and by 1979 over 1000 locations open.” (Daszkowski, p. 1)
Key Success Factors:
Dunkin Donuts’ long-term success is largely driven by a business model that promotes franchising. This allows for a more centralized coordination of marketing efforts than most of its competitors are capable of achieving. According to Taulli (2011), “almost all Dunkin’ Donuts’ locations are franchises. Because of this, the company can spend more time on marketing and menu innovation. What’s more, the franchise model is fairly capital-light, which allows more resources for expansion of new locations.” (Taulli, p. 1)
This also accounts for the second of Dunkin’ Donuts’ most determinant success factors. Its brand recognition is fully unmatched in its markets, a result of its ability to create nationwide campaigns that correspond with feature length films, chain retail and department stores kiosks, mall food court stalls, television commercials, food specials, sales or holiday specials. All of these have contributed to a logo, brand and identity that are highly familiar to most Americans.
Strengths and Weaknesses:
This underscores the key strength of Dunkin’ Donuts, which is its accessibility. The low cost of its food and the array of options within the low cost framework make it a type of fast-food establishment specializing in breakfast, dessert and coffee-break snacks. Within its own industry, it has had a resurgent capability in the face of all comers, many of them registering as immediate threats but long-term also-rans. Indeed, this is largely attributed to Dunkin Donuts’ effective balance between a coffee shop experience and a low cost to consumers. According to Van Riper (2007), “Dunkin’ Donuts, a brand that seemed to be losing its luster a decade ago, is continuing a run of success since beating back Krispy Kreme during the early 2000s. Dunkin’ has forged a strong identity as a kind of Starbucks-Krispy Kreme hybrid, a coffee destination with ample seating and a tasty menu board that grows incrementally.” (Van Riper, p. 1)
Its primary weakness, it would seem, is its slow willingness to evolve to certain prevalent consumer demands. As its competitors respond to rising consumer interest in nutrition and acknowledgement of latent food allergies, Dunkin’ Donuts leans heavily on traditional fried snacks and freeze-dried coffee. This has delayed it in offering a wide variance of options for the modern nutrition or health conscious consumer. According to Chen (2011) in, an interview with Dunkin’ Donuts’ Vice President and Executive Chef of Product Innovation Stan Frankenthaler, the officer would indicate that “at this time, none of our items are gluten-free. We’ve been asked that question in the past. I can tell you that we’re continually adding to and changing our menu, and are examining ways to make more offerings at Dunkin’ Donuts for guests with a variety of food allergies.” (Chen, p. 1) This is an example of the relative limitations that may be seen as a weakness for investors interested in a firm with positive long-term prospects as consumer needs continue to evolve.
This is not to say that Dunkin’ Donuts has not at least sought to make changes in its menu. Among more recent implementations, Dunkin’ Donuts has begun to respond to the presence of formidable competitors like Starbucks with broader menu offerings by channeling its fast-food style approach into a larger array of ‘on-the-go’ snacks. Its ‘Hearty Snacks’ campaign was launched in the spring of 2011 and reflects the company’s view that it must expand beyond its modestly-sized breakfast menu to maintain its appeal. It is thus that Vice President and Executive Chef of Product Innovation Stan Frankenthaler tells, “industry studies and our own consumer research clearly show that people are busier than ever and seek items that can be enjoyed on-the-go, any time of day. Hearty Snacks. . .deliver guests fast, fresh, and satisfying snacks. The new Stuffed Breadsticks offer a savory choice, while Warm Apple Pie satisfies cravings for something sweet.” (Chen, p. 1)
Another of the more recent implementations at Dunkin’ Donuts would be unrelated to its menu. It would instead concern its modes of contact with its customer base. Giving its company website a facelift, Dunkin’ has launched new mobile applications that take advantage of permeating mobile cellular technology. According to Morris (2011) “Dunkin’s new mobile site now boasts a section where you can enter your zipcode or leverage GPS to find locations and info like hours, wi-fi availability, and soon promotions (not yet integrated). The company’s “Trip Planner” tool (desktop and mobile) will also allow you to find a route to Dunkin locations.” (Morris, p. 1)
A final implementation of note is Dunkin’ Donuts’ marketing focus on Iced Coffee in the summer months. Dunkin’ acknowledges that this is a more recent phenomena and observes that the expansion in popularity and variety of its iced coffee flavors had contributed to this rising popularity. Dunkin’ Donuts (2005) reports that “according to the National Coffee Association, more than 41 million Americans switch to iced coffee during the spring and summer months. And millions of these iced coffee lovers turn to Dunkin’ Donuts because they recognize the quality of their iced coffee stands apart from the competition, made with the same high quality Arabica beans used to make hot coffee.” (Dunkin’ Donuts, p. 1)
In spite of its occasional surges against the competition, Dunkin’ Donuts remains a sturdy but embattled brand in its industry. Chief competitors like Starbucks and McDonalds are a constant force to be reckoned with, quite often besting Dunkin’ Donuts in national coffee taste tests and economic performance. This fluctuates from year to year. According to Abelson (2009), Starbucks has already taken the top spot in the industry from Dunkin’ Donuts and McDonald’s has become a real threat to its market share. Abelson indicates that “not only has the Golden Arches stolen share from java leader Starbucks as the place most preferred by coffee drinkers, but McDonald’s has also dislodged Dunkin’ Donuts from its second-place spot, according to the May 2009 survey by BIGResearch of more than 8,000 consumers.” (Abelson, p. 1)
In order to address the threat of this competition, it seems appropriate for Dunkin’ Donuts to seize on the most apparent opportunity immediately before it. That is, Dunkin’ Donuts is highly recognized but has penetrated certain rich markets only marginally. As Taulli reports, “east of the Mississippi, there is only one Dunkin’ Donuts location for every 48,400 persons. Unlike other major chains — like McDonald’s (NYSE:MCD) and Starbucks (NASDAQ:SBUX) — there is not much saturation.” (Taulli, p. 1) Improving its presence and visibility should be considered chief objectives in protecting the company’s market share from further relative decline.
Abelson, J. (2009). Coffee Competition. Boston.com.
Chen, S. (2011). Dunkin’ Talks Trends, Competition, and Breakfast For Dinner. Yumsugar.com.
Daszkowski, D. (2009). The History of Dunkin’ Donuts. About Franchises.
Dunkin’ Donuts. (2005). Dunkin’ Donuts Puts The Competition on Ice with a New Line of Flavored Iced Coffee. Dunkin’ Donuts.com.
Morris, C. (2011). Dunkin’ Donuts Goes Local With New Site Design. Bostinnovation.
Taulli, T. (2011). Dunkin’ Donuts Stock IPO-3 Pros, 3 Cons. Investor Place.
Van Riper, T. (2007). Dunkin’ Donuts Edges Starbucks. Forbes.com.
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