Dunkin’s famous coffee (#1 in drip coffee), donuts & munchkins are legendary in core Northeast markets and the Dunkin’ way (get in, get out & get on your way) is consistent with its famous “America runs on Dunkin'” tagline. The chain’s high-frequency, low-touch, affordable-ticket business model is well suited to a modern lifestyle. The brand enjoys roots with ritualistic blue-collar customers “who help make America run”, with a mid-level positioning above c-store and QSR but below Starbucks. Its coffee value equation includes: bean to grind fresh; brew fresh every time; short hold times; and free flavor shots. The chain’s push into espresso/premium options is designed to “democratize” higher-end drinks for a younger demo by quickly serving high quality products at an affordable price. Ample product innovation is designed to drive trial and frequency while also seeking to reposition more upscale/trendy. AUVs are at an all-time high and long-term sales growth drivers include: appeal of drive-thru model; drip coffee leadership; democratization of upscale/trendy espresso, cold brew, foam & non-dairy products; progress in digital & loyalty; rollout of NextGen store design; and ops & tech innovation to further improve service speed. All-the-same, Dunkin’ remains challenged by the QSR and C-store practice of discounting coffee to drive traffic. This explains Dunkin’s push into higher-end espresso and cold beverage products which help position the brand above the discounters. A push into newer, trendy beverages also helps increase the chain’s sales mix during the slower PM dayparts. An astoundingly large menu and endless customization options adds complexity to both the customer ordering process & operations. Further, the chain is challenged to build coffee authority in new markets (South & West) which would help in its pursuit of developing a true national footprint. In conclusion, Dunkin’ is progressing in its strategy to execute a more upscale repositioning, allowing the chain to tap into the purchasing power of a new, younger clientele to layer onto a stream of sales from the brand’s core base of middle America.
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