Dunkin’s DNA is built around speed & convenience as a beverage led (traditional drip coffee) to-go brand with a mid-level positioning above c-store & QSR but below Starbucks. Dunkin’s famous coffee, donuts & munchkins are legendary in core Northeast markets and the brand’s coffee authority supports its expansion into espresso (2018 upgrade), cold brew & frozen coffee. The brand’s coffee value equation includes: bean to grind fresh; brew fresh every time; short hold times; and free flavor shots. Notably, the ongoing roll-out of its new “smart brewers” promises to provide even higher quality and more consistent drip coffee products. Its ongoing brand repositioning includes: national value; a focus on speed & convenience (speed of Dunkin’); digital leadership (as reflected by the strength of its Perks loyalty program); an upgraded espresso experience; and “better for you” food items. Consistently, Dunkin’s menu strategy is to: grow & protect the core; leverage espresso-based drinks into a greater reach with a younger demo & new afternoon occasions; and drive traffic with innovation & national value (Go2s). The system is surviving post-lockdown and the average franchisee operating cash flow should approximate 80% of pre-lockdown target by the end of 2020 and unlike the 2008-2009 recession, franchisees are not having difficulty accessing capital. Having said all this, Dunkin’s positioning remains challenged by competitive coffee discounting from QSR & c-store players that drive traffic with discounted coffee which explains the brand’s push into higher-end espresso products as a way to help position the brand above the discounters. Dunkin’s challenge is to take share from Starbucks’ higher-end customers – a tall order given Dunkin’s functional brand experience based upon quick service and lower prices. Further, while its menu size has been paired significantly, the menu board remains crowded & complexities are aggravated by extensive promotional layers. In conclusion, Dunkin’s work is to translate a complete and thoughtful repositioning into sustainable traffic growth and this is no easy task as it requires the brand to compete with the ongoing coffee value war at the bottom while trying to cajole the brand’s core base of middle America to the upside.
