When you walk into a Dunkin' today, you'll notice way more coffee

options and far fewer donuts than you would have just a few years

ago. And it's not just drip coffee on the menu anymore.

There's everything from Cinnamon Sugar Pumpkin Lattes to Coolatta's

to premium espresso.

At the chain's newest stores you'll even find Nitro Cold Brew on tap.

It's all part of Duncan's $100 million investment to refresh the

brand and become a major player in coffee.

CEO David Hoffmann believes espresso is key to fueling the company's

long term growth.

The aggressive push into beverages comes at a time when the coffee

wars are heating up.

Competitors like McDonald's are slashing prices through deals.

While coffee giant Starbucks is taking bets on more expensive drinks,

a revamped loyalty program and delivery.

But Duncan's rebrand strategy encompasses more than just coffee.

The company also wants to aggressively expand across the country and

revamp its restaurants with new technology.

The chain changed its name, simplified its menu and started rolling

out new store designs.

It got a new CEO and made some changes to leadership at the top.

Dunkin' needs this strategy to work.

Traffic in stores has slowed and annual comparable store sales at

Dunkin took a one percent dip in 2017.

While slow traffic and lagging same store sales aren't unique to

Dunkin', they are dialing up pressure on the chain.

So will that $100 million dollar investment be enough to fuel

Dunkin's move into the big leagues with McDonald's and Starbucks?

Or will the hit to profits just cost the company in the end?

Dunkin' got its start here in Quincy, Massachusetts.

When Bill Rosenberg left school in the eighth grade, he dabbled in

catering but soon realized 40 percent of his revenue came from two

simple products -- coffee and pastry.

In 1948, Rosenberg opened a restaurant that sold five cent doughnuts

and 10 cent cups of coffee.

Two years later, Rosenberg renamed the restaurant "Dunkin' Donuts".

The restaurant was a hit.

In 1955, the first Dunkin' Donuts franchise opened.

That same year, the first McDonald's franchise opened too.

By 1963, Dunkin' Donuts opened its 100th location.

"This is one of the original publicly traded 100 percent franchise

businesses. I mean, it's a true asset light model.

Versus, you know, McDonald's is trending towards its 92 or 93 percent

franchise globally, moving towards 95, Wendy's is 95 percent, but

they weren't there five years ago.

Whereas Dunkin, when it went public, I think in 2011, it was already

100 percent franchised.

And it really built the appreciation for those types of businesses in

the industry."

That growth model worked well for Dunkin'.

Franchising meant fewer actual assets and higher profits.

Dunkin' started expanding internationally in 1970 when it opened its

first overseas location in Japan.

As of Q2 2019, there are over 12,800 Dunkin' locations, in more than

40 countries.

Dunkin' Brands went public in 2011, selling around $423 million worth

of shares. For comparison, Chipotle raised $193 million when it went

public in 2006 when adjusted to 2011 dollars.

Then CEO Nigel Travis told CNBC, the company would use profits from

its IPO to expand West and internationally and pay down its debts.

Analysts said the stock was overvalued because its price hinged on

the hope that Dunkin' would recreate its success in the Northeast,

across the rest of the country.

At the time of the IPO, there was only one Dunkin' Donuts on the West

Coast, in Portland, Oregon.

The company has since expanded its West Coast presence with 102

locations in California and 12 in Hawaii as of 2019.

But even as Dunkin' has pushed to grow its footprint west of the

Mississippi and internationally, it hasn't forgotten about the

Northeast.

Dunkin' is the largest chain in New York City for the tenth

consecutive year, with 624 locations as of December

2018.

In 2018, after 70 years of Dunkin Donuts, the restaurant dropped the

doughnuts and became just Dunkin'.

"We think about it less about dropping doughnuts then just leaning

into Dunkin'. Dunkin' is what we're known as

for almost 20 years.

We've been America runs on Dunkin'".

Beverage sales make up almost 60 percent of Duncan's revenue, so

growth in the category is essential to the company's overall health.

In 2017, Dunkin' told Nation's Restaurant News, that most stores

would offer fewer than 20 different donuts.

That was a big decrease from the 30 varieties it typically offers.

While Dunkin' has simplified its food offerings, it keeps adding to

its coffee menu. For about 45 years, Dunkin's coffee offerings

extended only to its original blend drip coffee.

But in 1997, Dunkin' decided to make a big push into the beverage

market. That was the year it rolled out the Coffee Colada slush

drink. In 2000, Dunkin' started selling the blended Dunkaccino.

And by 2003, it began to offer espresso.

Dunkin' relaunched its espresso lineup in 2018 with new machines, new

recipes and new training for employees.

It's a move some say has a whole lot to do with Dunkin' angling to

become a premier brand on par with Starbucks.

"I think that the initiative to modernize would absolutely come from

their largest competitor, which is Starbucks, which it has really

reinvented what coffee means to consumers on a daily basis.

So, yeah, it's always good to kind of have a, you know, an arch

enemy, if you will, out there, a bad guy, whatever you want to call

them, because they force you to stay on your toes."

It seems to be working.

Espresso sales for Dunkin' are on a tear.

In its annual report for fiscal year 2018,

Dunkin' U.S., said it sells approximately 1.7

billion servings of hot and iced coffee each year, and espresso

accounts for about 10 percent of Duncan's overall sales mix.

The company reported sales of espresso based beverages were up 40

percent in the second quarter of 2019 when compared to the year

prior. "That move into the espresso beverages,

this is a space that their key competitor really owned and had an

advantage over them.

Think about the length of the order that somebody might give a

barista at a Starbucks, for example, versus, you know, just a cup of

coffee at Dunkin'".

But Dunkin' can't just mimic Starbucks to succeed.

It needs to stay true to its brand.

Dunkin' is all about a quick, affordable menu and making trends

accessible to everyone.

That's not necessarily a natural fit with espresso.

So analysts warn that Dunkin' has to be careful about its move into

espresso. Customers are typically suspicious when a brand tries to do

something that doesn't feel authentic.

But if Dunkin's espresso based beverage sales so far are any

indicator, this product could unlock big potential for the chain.

However, coffee remains a crowded market, and Dunkin' is fighting for

market share against some formidable opponents.

Starbucks with its vast footprint, McDonald's with all day breakfast

and the regional but beloved Tim Hortons and Krispy Kreme.

As of September 2019, Dunkin' has a $6.8

billion dollar market cap and its shares are up about 8 percent over

the last 12 months.

But, it still has a ways to go to compete with giants like McDonald's

and Starbucks, which have about a $167 billion and $115 billion

market cap, respectively as of September 2019.

In fiscal year 2018, Dunkin' U.S.'s

sales were also dwarfed by the competition.

Dunkin' reported revenues of $606.8

million dollars.

McDonald's sales were more than 12 times that.

And Starbucks brought in $16.7

billion in the Americas, which includes the U.S.,

Canada and Latin America.

Espresso is a premium product and typically costs more than other

beverages. That means it pushes the average check price higher, which

in turn makes up for slowing traffic because people are spending more

when they do walk through the door.

In 2018, a party's average check at Dunkin' was eight dollars and

five cents. That's higher than its Canadian competitor, Tim Hortons,

but lower than Starbucks.

The most recent check averages don't include 2019 data, so it may be

too soon to measure Duncan's revamped espresso lineup, which started

to roll out at the end of 2018.

Dunkin' has long struggled with how to drive up afternoon foot

traffic.

It has extended cold beverage offerings and offered deals ranging

from two bagels for $4 dollars to $2 lattes.

"The beverages in the morning, that's their core.

And that's where the franchisees make their money.

But as far as the afternoon business is concerned, the "Dunkin' Run"

and the "Go2s", a lot of times those promotions, if they are on

beverages, they're usually after two o'clock in the afternoon.

So, you know, the afternoon "Run" seems to be stabilizing the

afternoon business."

Dunkin' Brands has also tried, and arguably failed, at using ice

cream to drum up afternoon sales.

Baskin Robbins and Dunkin' are both operated under Dunkin' Brands,

but Baskin hasn't performed as well as Dunkin'.

Its sales growth has been lackluster.

From 2007 up until it changed course in 2011, the chain posted

negative annual comparable store sales.

Baskin Robbins again posted negative same store sales for the fiscal

year 2018.

Analysts say, Baskin might not be adding much in sales to the brand,

but it's not really deadweight either.

A dual store with both a Baskin and a Dunkin' is attractive to some

franchisees to boost sales outside the morning coffee rush.

A dual store costs as little as ten thousand dollars more to open

than a standalone Dunkin' and doesn't require extra workers or

machinery.

Dunkin' is also trying to keep up with change in the fast food

industry by testing plant based meat and a partnership with GrubHub

in some locations.

"The online ordering system now is much more robust.

And our guests can get products anytime they want, anywhere they

want. And, you know, we're living in a culture now of everything

being on demand. Now you can get your coffee on the demand."

Dunkin' started offering Beyond Meats sausage in Manhattan, and the

company says, it's selling well and drawing repeat customers to

Dunkin'. Dunkin' has been testing delivery through partnerships with

GrubHub, DoorDash and other local companies.

It plans to expand the partnership with GrubHub to other major cities

in the U.S.

"Consistency of experience.

It's not a big deal when you're ordered from a mom and pop pizza or

taco place. But for us, the consistency is really important."

But there are unique challenges in delivering coffee.

Experts say Dunkin' and other cafes might not be a natural fit for

delivery, because coffee has to maintain its temperature to be

appealing. Think, watery iced coffee or a room temperature latte.

It's also betting big on store format.

Part of that $100 million cash injection went toward the rollout of

an entirely new kind of Dunkin' shop.

It's a layout called the "Next Generation" store and Dunkin' hopes it

will modernize the brand's image and keep it relevant

for the next generation of customers.

Dunkin' plans to add 200 to 250 net new restaurants a year for three

years starting in 2019.

"It completely changes the way the customer interacts with our crews.

There's nothing between the crew from the customers, so the customers

can now engage with our crews and ask questions and learn about the

product."

Dunkin' says the new store is slightly more expensive than previous

remodels because there's more technology in this design.

The company didn't disclose the cost of the new layout to CNBC.

"The returns are actually very exciting and better than the previous

iterations. So working very closely with our franchisees, we've

gotten to a place that we feel very good, both sides on the

investment that they'll be making for this next gen transformation."

Next gen stores are also a big part of Dunkin's push to digital

ordering. Mobile ordering is another area where Starbucks has Dunkin'

beat. About 4 percent of orders at Dunkin' are made through mobile

phones. At Starbucks the number is closer to 16 percent.

Experts are optimistic that the next gen store will improve that

metric. The designs have a larger space for people who are picking up

online orders.

"And the next gen store has an even bigger area dedicated to this and

we're seeing probably twice the average percentage of on the go