Name: Why Dunkin' Is Taking On Starbucks And Betting On Coffee
Uploaded: 2021-04-20T04:09:09.000Z
Duration: 15 min 26 s
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When you walk into a Dunkin' today, you'll notice way more coffee

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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

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

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

Competitors like McDonald's are slashing prices through deals.

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

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

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

Traffic in stores has slowed and annual comparable store sales at

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

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

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

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

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

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

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

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

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,

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

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

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

consecutive year, with 624 locations as of December

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

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

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

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.

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

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

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