America may run on Dunkin’ but the donut house is currently trying to keep up with evolving American taste.
After some troubling times in which Starbucks, QSRs, and fast casual were all dunking all over Dunkin’s face, there is reason to believe they are turning it around. With their newly installed CEO David Hoffman, they have the right man with a timely plan, a $100 million investment in a series of initiatives they describe as paving the way for the Next Generation of Dunkin’ Donuts (translation: a place millennials like).
These include doubling down on non-breakfast dayparts, an emphasis on on-the-go beverages, and focusing on speed-of-service as their predominant differentiator.
Indeed, taken together, these initiatives will, according to Hoffman, focus on “strengthening the areas of the business that will produce sustainable long-term results” (translation: millennials will eventually also take their kids there).
So, get a glazed raised and two-and-two, as we serve up some food service market research to understand why and how Dunkin’s house is transforming itself, what it says about the state of food service in general, and even offer up some free strategic consulting regarding a subtle but oh-so-significant edit.
Coffee: It’s Not Just for Dunking Your Donut
The Canton, MA-based chain, which operates on a 100% franchise model and currently claims 12,500 US locations, is, by its own admission, in a transformative moment. Their CEO explained, “This is part of a unique chapter in our brand’s history, one of significant change in transformation to ensure relevance for generations to come.”
Again, this transformation comes with a ~$100 million price tag, $65 million of which is going to streamlining and expanding their on-the-go beverage capacities as the Donut house leans more and more into its burgeoning beverage branding. This includes a tap system and a redesigned layout that includes a separate beverage-only line in the back of the shop. Coffee-based beverages are, thanks in large parts to Starbucks, no longer confined to breakfast time, as consumers now view them as an any-time-of-the-day indulgence—a fact Dunkin’ hopes will propel its transformation.
Cheap, Fast, Good: This Time You Can Pick All Three?
Of course, beverages aren’t the only part of their transformative ambitions. They also are aggressively expanding into lunch and dinnertimes through two separate promotions.
First, there is the Go2s, Dunkin’s new deal wherein, for between $3-$5, customers get two sandwiches (no mixing and matching), selecting between three of Dunkin’s most popular egg-based breakfast offerings. (It should be noted that your humble blogger is pretty darn nimble with his words, but it nonetheless took ten agonizing minutes to figure out how to explain this promotion.)
In an oft repeated talking point, Dunkin’s CMO notes the Go2s “let[s] people come in, get what they want and then get on with their day.” If Starbucks wants you to linger so long you end up naming your first baby Frappuccino, Dunkin’ is going for the opposite: they want to be known for getting you in and out in a cost- and time-effective manner. They have no pretentions of ever becoming your neighborhood coffeeshop where true romance can blossom (true story!), they just want to serve the entire neighborhood in as little time as possible.
In that same vein, Dunkin’ is also partnering with CardFree for mobile ordering, competing with Starbuck’s proprietary ordering system for customers who need a rapid pick-me-up. It also explains why they shrunk their menu over the last year, removing “slower moving” items and streamlining their production, and ultimately their speed-of-service. Goodbye tuna salad sandwich (which, ick!) and turkey cheddar bacon sandwich (which, hmmm, maybe); hello efficiency.
Symbolic Donut Fries
Indeed, if speed is the name of the Dunkin’s game, it should come as no surprise their other promotion is branded “Dunkin’ Run.” The lunch, dinner, and midnight munchie menu offers customers five different items for $2 each. These include ham and cheese tortilla rollups, pretzel bites, waffle-coated chicken tenders (ok, not gonna lie, those sound really good), a gluten-free fudge brownie, and donut fries. Sure, this is just a tarted up $2 menu a-la McDonald’s and every other fast food player, but the point here is that Dunkin’ is trying to stand with the big boys of post-breakfast dayparts.
Before we move on, let’s briefly discuss the donut fries. If any one item is symbolic of Dunkin’s aspirations, it is these fried buttery croissant-like offerings, which seemingly bridge the gap between breakfast and lunch, an unholy hybrid of multiple mealtimes. Through them, Dunkin’ connects its past to its future, giving us their spin on fast food’s most iconic item, the french fry, while also reminding us that they still make a darn good donut. Sure, reception has been somewhat tepid, but, like the waffle-coated chicken tender that I will be trying within 15 minutes of publication, they connect the breakfasts they are known for with their future later-in-the-day aspirations.
At Least They Didn’t Change Their Name to Dunkin’ Lunchin’
They are, of course, not unique in this mission. Let us not forget that IHOP recently put its thing down, flipped it, and reversed it (oh, IHOb) and that Starbucks desperately would like you to reserve a table in their homier restaurants that also serve wine and beer. Indeed, the barons of the breakfast daypart are all trying to expand into lunch at the very least, and, God willing, dinner as well.
Breaking people’s deep-seated association of Dunkin with breakfast has led to some other interesting moves. They have partnered, for example, with Harpoon brewery to create a co-branded coffee porter (a thick, dark beer for you rosé sippers out there) made with Dunkin’s very own special coffee blend.
They are already counting on these changes to propel them forward, with plans to open 1,000 new locations by the end of 2020. That’s almost a ten percent increase, and many of these locations (90%) will be outside Dunkin’s Northeastern home, which it truly dominates. Seriously, this blogger attended college in Providence, RI and it was seemingly impossible to walk from preparty to actual party to afterparty without tripping on at least 3 Dunkin’ Donuts. The downtown arena even bears its name, The Dunkin’ Donuts Center, where this blogger once saw U2 (don’t judge, it was a long time ago!).
Some Free Food Service Strategic Consulting
True to its in-store mission, Dunkin' sure is turning out this transformation quickly, and we like their long-term chances. As Starbucks tries to be your friend and neighbor, there is room for a cheaper and quicker coffee brand, and Dunkin’ seems to fit the bill. Emphasizing coffee over deep-fried carb bombs seems like a wise move, as is their expansion into lunch and dinnertime.
Just one quibble though, and we are speaking directly to Dunkin’ here: have you thought about dropping the Donuts from your name? We usually charge for consulting, but that one’s so obvious, let’s just call it a freebie.
